All Forum Posts by: Andrea Lane

I have been in good and bad partnerships with investors and with family at different times over 30 years.  I use LLCs for all my businesses.  I believe the most important document is your operating agreement.  You need to clearly define everything there.

- How is the income split?

- How is the depreciation split?

- What does your partner get, since you are living in the house?

- What happens if one of you marries, divorces, becomes unable to act on your own behalf, dies?

- How is a decision made to sell the property?

...

These are a few of the questions you should have defined before you start, being in partnership can be a blessing and a curse.  It can ruin a relationship, so make sure you go into it with a clear written understanding of all eventualities.

If these are all solo LLCs, you can write your minutes on a yellow pad and say I meet to determine there are no changes to the LLC and file it a draw. (Or create a Word doc and store it on your computer (after you signed it). There is no need to make it complicated. There is a great book with good information Veil Not Fail by Garret Sutton. It is worth the time to read it.

Why do you need an agent, especially if you already know where you want to buy?  Have you spoken to the builder, does he have models you can visit, can you get a contract with him or is there a need for an agent?

There are many lenders who will do portfolio loans, and banks are not usually our first choice.  You usually pay a higher rate, not lower than a bank (the rate may depend on your experience).  

If you have never done a portfolio loan before, be aware that you will find a lender for the package, but there is usually a hefty price if you decided one of the units is underperforming and you want to sell it separately from the portfolio.

It sounds like you understand the area well.  New builds are generally more desirable rental units and much less maintenance.  

You say you want to build.  I have some questions. Are you new to investing?  Have you done construction before?  Are you hiring people to do all the work? Do you own the single-family you want to convert?  These are questions that would affect my answer.

I would not suggest a new build for a new investor with no building experience, starting with a good rehab will give you a taste of what is involved.  Finding a lender may be a challenge, Erik Browning already answered about contractors, do you have the time to oversee the construction or have a reliable PM to do it for you.

Good luck, I'd like to know what you decide.

Arnelia,

I am not sure what you are looking for.  It looks like you own this house,  Are you moving into this house and want to purchase another one?  Are you looking to upgrade this house and house hack?

Great information.  I have been in the business for more than 30 years - things go up and things go down.  However, I think this market is not a normal swing as in the past.  Usually, rates go up & prices go down.  I don't see a big dip in prices.  If the recession continues maybe - but otherwise current owners have rates you will probably never see again, so why sell?  That creates a greater shortage of inventory and no reason for a price decrease.

As a buy & hold person, I never buy without cash flow (at least $1.00).  I purchased on appreciation in the past and it did not work out as well as it should have.  Real estate as a landlord is a long slow process.  I know if I do my numbers right and cash flows from day 1, I will have a property that will produce year after year.  My cash flow is after ALL expenses including property management and reserves.  If the property needs rehab or is not rented, I research the current market to make a decision.

Travis, if you want to do STR a few things to consider, will the property cash flow as a full-term rental? If the laws change, are there too many air B&Bs in the area to support full-time rentals? STR rents are great as long as you can ensure a consistent supply of renters. You should always have a backup plan

Ronan,

I highly recommend you check out Google,  there are many real estate events in the Boston area.  Find one or 2 and start going.  Look for events where there is networking and maybe some training, not for events that are hosted by people trying to sell you into their program.  When you go try to meet as many people as you can (if you are shy and uncomfortable, at least meet one person), get their business card, and follow up.  The information is in the follow-up.  Meet for an actual or virtual; cup of coffee and learn how they started their business and what tips they have.  Any seasoned professional I have met at REIAs (and I go to many) is always willing to share their experiences. Bigger Pockets has a lot of information for free, take advantage of it.  

When you are starting you should not pay a fortune for training.   Many people offer free events or the price of a beer.  I have a weekly national Zoom call where you can network with fellow investors and then we have a speaker who will share information about different topics related to real estate.  It is free so let me know if you would like to join a call.

I am not in the Boston area, but if you have specific questions, feel free to reach out.

Brad,

Congratulations on taking the first step.  If I can make a suggestion, as a new investor why don't you pick one location in NC and do your due diligence?

First, what do you want to invest in?  Buy & hold, buy, rehab & hold?

Then understand the location.  Every area is different and your pricing, rentals, and rehabs can change from block to block.  Are you looking for an A, B, or C class area?  Are you looking for a specific price range, cash flow, or return on a rehab?

These are very few of the things you should consider, so concentrating your efforts in one place to start is probably a good idea.

Please feel free to reach out if you have any questions.

Shawn, 

There is always a need for good, reliable contractors.  Do you have any experience with contracting?  What is your specialty? Does your state require a license?  These are all important questions to answer before you change careers.

You can also look at opportunities for joint venturing with someone who has money but no time or experience to get a rehab done.  If you attend your local REIAs, you have the opportunity to network with investors who may need your skills.

Feel free to reach out if you have any questions