BiggerPockets

A friend and myself have decided it's time to start buying properties due to the fact my local market is in a bottom market and interest rates are so low, it's practically free money. I feel in my market it's best to buy and rent due to the property values being so low. Would we want to open a LLC to do this? Should we put our own names on it without a company? Our 1st couple properties will more than likely be 2 family properties that are already rented out to get posotive cash flow. Then possibly a rehab. What tips can anyone give so we don't get over our heads too quickly?

I understand the current market. I've been a Realtor for 2 years mainly selling SFR not multi and my partner is an accountant. Is an LLC the way to go?

I mean this as a positive statement... So don't take it wrong!

Many Loan Officers, Realtors, Financial Planners, Bankers, Accountants, Attorneys, and the like "think" they know how to invest because of their background...

Actually, sometimes (almost all the time) it is better to know none of those... And learn from scratch.

I agree with Mike... You need to understand the "Business" that you are getting into! Period.

A great way to make bad decisions quickly is to think you know what you are doing.

I can't tell you how many people I have seen overpaying at foreclosure sales over the years...

Being an "Investor" with Dad's money. I usually only see them there once... Maybe twice... Just long enough to decide they can't make any money in Real Estate...

I understand the old saying " practice makes perfect" which is why our first couple deals will be 2 family properties that are purchased already rented to gain positive cash flow (minimal at most however they still are positive). I understand like any investment there is risk however I feel a property already rented by good tenants shows the lowest risk. I'll get into a bank owned property once I become more established. Does anyone have any tips they have learned over time to maximize profits? I've been reading up on " discounts" for rent early, charge more for dogs, charging late fees, and incentives

Some great advice here. I wish I had listened to some of it when I first got started investing. I lost a lot of money (for me) " practicing" real estate. Thankfully I didn't give up.

LLC is a good option for protecting assets, but your CPA friend would know more about tax implications.

Want to maximize cash flow? There's tons you can do, but market rents and good tenant screening is a good start. Creating competition doesn't hurt either.

do you guys feel these numbers work out?

I think you need more information here...

In terms of income, what vacancy rate do you expect? To determine this, consider the local vacancy rate for duplexes, how long the tenants have been renting those units, how those rents compare to average market rents for similar places, etc. Additionally, is the town where this duplex is located improving or declining in terms of rents and vacancies?

You didn't include any expense numbers. Are you going to manage the property yourself? What about maintenance/repair costs? Is there deferred maintenance from the previous owner? Advertising costs? Utilities? Landscaping? Are taxes high or low for the area? Is insurance how or low for the area?

What about your financing? How much will you be able to put down? What type of loan will you be able to get? At what rate?

Once you have all this information, you should use these numbers to calculate your NOI and your cash flow to see if you'll make money or not. And remember, if you're cash flow is small, you need to account for large recurring expenses (like a new roof, appliances, etc) and ensure that you have funds to cover those.

You mentioned having a partner. I would definately watch getting into a partnership for any venture. In 90% of cases one partner ends up doing a vast majority of the work, and bitterness will follow shortly behind.

Unless you need the capital, then I would avoid partnerships all together, many headaches can come up because twice as many things could go wrong.

For example if your partner runs into a financial hardship and can no longer take care of his end of the deal, then you are left holding the bill.

If you do decide to take on a partner be sure that you get absolutely everything in writing and I mean everything. Plus look into taking out life insurance policies within the business that are at least equal to your partners part of the biz.

update: We have began to talk to attorneys, insurance carriers, LLC being formed as a equal 50/50 partnership in writing( monthly jobs created, nothing can be done w/o other's consent) We still must speak with a mortgage broker to see what we can get and start relationships with uhaul, home depot, inspectors, general contractors,ect. We have decided to get our feet wet, we will purchace 2 already rented properties with tenants that with to stay for quick cash flow. Also we have also sparked the idea to potential renters and have 2 other 2 family properties already rented once they are purchased and refinished. I hope to have good news soon. This site has helped me more than I could have imagined. It's jam packed with every senerio.