All Forum Posts by: Andy Collins

When you ask for revenue and expense numbers from the seller, tell him you must see tax returns....of course he will probable say "it's a cash business, so some may not get reported, etc", but the only thing to really go by are the tax returns.

If he insist the numbers are really better,  tell him he signed the tax return that they are accurate (if he will lie to the IRS that can throw him in jail, he will lie to a prospective buyer)

If you are managing the properties or involved in the rehab, an LLC won't protect you from something you do wrong.

If a tenant tells you they smell gas, and you don't do anything about it, the house blows up and someone is hurt or killed, I don't care if you have 100 LLC's each being held by another entity,,,you will held personally responsible,,,which is why insurance and management style are your first line of defense in protecting from lawsuits

Waiting won't fix the problem.  Why has your management company allowed someone to fall 2 months past due,,that alone would be enough to throw them out.

Find a new management company, it sounds like the management company was arranged by the group selling the house, find your own management company.

Your new management company should start the eviction process on the late tenant now,,if the tenant can come up with the cash to pay as they have promised, they can still do so.

On the maintenance cost, it isn't unusual for a small item to need to be replaced even after a full rehab, but it sounds like yours is excessive,,,get a new management company as soon as possible

Electric, I don't worry as much about fire as I do a gas leak ,,as stated by @Kathleen Leary  I don't want tenants hooking up a gas line,,the thought of that makes me feel sick (I can just hear it now, 'well I put it on as good as I could with my hands",,,,,scary

I have a short sale under contract right now I've had under contact since December,,so be patient.

You need to really read more on these boards to get a little better handle on the numbers, for one your saying you would have $12k in income in the first six months, but your having to rehab the property,,that takes time, plus you have to find a tenant  and get them moved in,,,so if things go great you will have a tenant in 3 months after you buy, not the first day.  You also have insurance and  taxes you need to calculate.

Can you find houses closer to $100k that rent for a little over $1k?  Every area is different, but I wouldn't touch a $200k house for  a rental here

Let's just look at house #1, there is no reason at all to go hard money,,this house can be financed as is (since no rehab is needed),,why add the extra expense (say 4 points, plus the interest, plus the cost of an additional close),,,,then refinance.

Hard money lenders (or the ones I've dealt with) normally loan 70% of ARV,, banks will probable loan 75% of what you pay for the propery,,,there is no advantage to using hard money unless you can't qualify without the rental income.

Your buying at $200k, bank would loan you $150k,,go the hard money route and they would loan you no more than $175k, and you would probable spend $15k in extra money

Hard money would be used if you are buying a house for $60k, spend $15k to rehab, and it would then be worth $100k,,,,the hard money lender would loan you $70k, you would bring closing costs plus $5k of rehab to the table at closing,,then you would later refinance based on the $100k value (assuming appraisal agrees on that).

Since your putting this in an LLC, you can't get a conforming mortgage, you will have to use a commercial loan.

If you want to go the conforming mortgage route, you can't loan the money (like a hard money loan) to yourself, but a brother, cousin, etc, that doesn't live with you can (I've done it before),, you have the title company draw up a loan with the closing paperwork.

When you finish with the rehab you go to 'refinance' your mortgage with a traditional lender, not a  problem (or at least I haven't had one).

My mother was getting 1% on savings, and I was paying 14% interest to a hard money lender, which made no sense, so we started doing it this way, she got 6% interest, and I felt like I was helping her out,,everyone won.

Don't have a spouse loan you the money, keep it someone that doesn't live with you (I know someone that did that and it caused some issues)

@Deanna McCormick , I'm not sure you understood,,you WANT capital gains, but instead this will be taxed just like ordinary income, including social security and full taxes on the money,,,

Your intent was to flip it,,and you did, and you will pay the higher taxes as outlined by Steven

Unless you have a lot of money your worried about protecting, or a situation like @Marcia Maynard don't run out and form an LLC thinking it will save you, and you can put any clauses you want in your lease, if someone wants to sue you they can, and if they have a valid reason for suing you, they could win.

Get a good umbrella policy, at least $1 million, and manage the property properly,,the insurance will provide your defense if someone does sue you.

I always put it this way, if your tenant tells you they smell gas and you do nothing, they tell you again that a few days later, you do nothing, and the house blows up and hurts someone, your in trouble, I don't care if you have an LLC, series LLC, 19 different shell corporations etc,,,you didn't take action to resolve the situation and will be held personally liable (after all you were the one that didn't take action). Manage your property effectively, be especially careful in the area of safety, use common sense, and have a lot of liability insurance.

 This could resolve one problem, you could be in prison so you won't have to worry about where to live,,as stated by others, this is fraud,,