Common Questions


COMMONLY ASKED QUESTIONS: 

1. How do I reach my goals?

  • Find a property advisor.
  • Pick investment location (city).
  • Acquire financing (ask advisor).
  • Locate property.
  • Hire property management team.

2. What methods are available to purchase a house?

  • Cash. We will need proof of funds.
  • Lines of credit (Home equity or Business line). We will need a statement showing liquidity sufficient to purchase the home.
  • Self-Directed IRA or 401(k).  We will need proof of funds, as well as a statement from your custodian stating that you are legally in compliance.
  • Conventional Financing or FNMA Financing.  This typically takes 20-35% down and usually has stringent qualifications by the bank loaning against investment property.
  • Private Financing Program.  This creative approach works with 40-50 percent of the sales price down and the private lender will carry the loan balance for 5-25 years. This is only available to our clients.  This method allows you to purchase investment properties while not using FNMA financing.

3. How do I insure the houses are properly repaired? 

  • Home inspections. Independent home inspector reviews the home.
  • Repair guarantee by the seller.
  • Photo and video record of the home.

4. What is Section 8? 

  • Section 8 is a rental program where the government subsides all or a portion of the rent sending the rental payment directly to the owner or the owners’ management company.

5. How do I know there are no other liens on the property? 

  • The closing attorney will do a title search for any outstanding liens.  If the attorney finds any liens they will have to be paid at closing by the seller giving you clear and free title.

6. What is title insurance? 

  • This is an insurance policy to ensure the closing attorney did not miss any liens. It is required by all lenders.

7. Do I need a home inspection? 

  • We recommend that everyone get a home inspection on any house being purchased.  While we do an outstanding job renovating, this ensures that all need repairs are completed as it is easy to miss a needed repair if you have never lived in a house.  A home inspection professional will find any necessary repairs that need to be fixed.

8. What taxes are paid on the investment properties? 

  • You will have annual city and county property taxes in Shelby County (Memphis).  There is no state income tax.  If you have a Limited Liability Company (LLC). You will have a $300 annual fee for your LLC to the state of Tennessee.

9. Do I need an LLC? 

  • If you are from a country other than the United States you will have to have an LLC for tax purposes.  If you are a U.S. citizen you can use an LLC or your social security number.

10.   How do you obtain an LLC? 

  • We have attorneys who will help you set up your LLC.  They will prepare Articles of Organization and Operating Agreement allowing you to do business in the U.S

11.   How much does it cost to set up an LLC?

  • About one thousand dollars.

12.   How much does it cost to close an investment property? 

  • Usually between $1,500 and $2,000 depending on whether your loan is escrowed.

13.   What is included in a closing? 

  • In a typical closing you have attorney’s fees, escrow funding, recording fees, proration of taxes, title insurance, title search and loan fees.

14.   What are loan fees? 

  • These are the fees required by the lender.  These can be points, documentation fees, flood cert and appraisals.

15.   What are points? 

  • A point equal s one percent of the loan amount.

16.   What is a flood cert? 

  • The U.S. government does a study to determine if a house is located in an area that will flood every one hundred years.  If the house is in the one hundred year flood plain flood insurance is required.

17.   What is an appraisal? 

  • An independent contractor that is licensed to do appraisals is hired to verify the house is worth the amount it is to be sold.

18.   Is an appraisal required? 

  • An appraisal is only required if the lender requests it.

19.   How do I determine which house to buy? 

  • This comes down to personal taste and risk tolerance.  Once you have chosen a turnkey provider to advise you, take their information and decide on which house fits your investing needs.

20.   How do I determine if the home is in a good area?

  • This is where finding a good property advisor comes into the equation.  Do not purchase the home if the seller is not willing to manage the property. Ask the company you are dealing with for pictures of the street where you are looking to buy a house.

21.   How many houses can I buy? 

  • The answer is how much money do you have and how much leverage do you want?

22.   How do I get a U.S. bank account? 

  • If you are not a U.S. citizen you must obtain an LLC with an ITIN an EIN tax ID number.  Once you receive the EIN number for your LLC we can help you obtain a U.S. bank account?

23.   What resources do you have for foreign and U.S. investors.

  • Outstanding property management.
  • Local and international financing
  • Assistance with setting up bank accounts for foreign investors.
  • Non-recourse financing for Super Annulation and 401(k) financing.
  • Negotiated insurance rate to lower insurance rates.
  • Attorneys to assist in obtaining Limited Liability Companies.(LLC)
  • Closing attorneys that handle closings for U.S. and foreign buyers. These closing duties include closing settlements, title work and title insurance.  The attorney can handle many of the details when closing Super Annulation and 401(k) retirement accounts.