Closing on my first multifamily... questions

6 Replies

I have a ton of questions, but first and foremost the situation Is that my wife and I will be managing this 4plex ourselves. we also have more units we wIll be purchasing and managing before the end of the year. Primarily I’m looking for any tips, references, recommendations on legal and accounting, management software, LLC setup for each property (legalzoom?), should I setup a management company to keep the ownership/mgmnt separate? Or anything else, please feel free to offer any advice from multifamily management experience. I’m all ears! Thanks as always BP!!

@Brian Orr Congratulations! Our lawyer suggests 3 properties per LLC and keep them around the same value. We have properties in LLc's and others in a 1031x. If you use LLC's buy the properties that way switching them later will cost more and add a little more complexity. LLC's are all the rage these days; but they are not the panacea folks think they are. Make sure you have ample liability insurance whatever you choose. If you were to get sued an opposing lawyer will not be stumped by your LLC. We manage most of our properties ourselves and use a PM for others. We have separate bank accounts and credit cards so for us there is no need for any additional software etc. The bank takes care of reports and I hate unnecessary complexity. I am not suggesting you do it that way, simply what works for us. Make sure you have a decent CPA and use him/her to help you evaluate financials of apartment buildings etc. aside from just doing your taxes. In addition we belong to our state LL association, they have been a tremendous help and fun networking too. Between them and BP it has worked out well. All the best!

@Brian Orr Congrats on your investment! You can setup a separate mgmt co if you plan to add more units. In terms of the software, QuickBooks is by far the most popular bookkeeping software out there. In terms of property management software, some people still use Excel, we use AppFolio for one of our properties. Other popular ones are Buildium and Rent Manager. Online payments are paperless and hassle-free if you can get your tenants sign up for it. 

As far as the legal structure, I'd consult with a real estate attorney in your area for your specific case to get the best recommendation. 

@Brian Orr

Brian: I'm not as versed on legal structure, but I can tell you that a number I work with are transitioning their management software to Yardi. They have a solid, easy to use platform. 

Best of luck.