All Forum Posts by: Ben S.

Finally started some cleanup and demo work on the property this week. Eviction date is in a couple weeks (2 months after court date, ugh). 

I had been in the two trashed vacant homes previously (broken windows and doors, no one has lived in them for years). Of the four homes I went in this week, one was decent (fairly clean, though needs flooring, paint, cabinets, appliances, etc), and the other three were a mess (trash all over, nasty carpets, old cakes on grease and cockroaches in the kitchen, etc). Got trash bagged and carpets pulled in these three houses, and started on kitchens and baths. 

Got a good referral from a friend for some workers, still trying to put together a team as I am managing and working on this project myself. Also need to get a tractor/backhoe and dumpster to cleanup a lot of the trash around the property (probably about 20 yards of loose and bagged trash strewn around the yards and street). 

Other events from the first day included a lady on drugs claiming I removed her door and calling the police (they were friendly and quickly recognized the lady was on something and suggested I just leave her be, which was my intention). Other tenants/squatters came out and were fairly friendly. Also some old guys pulled up, each with an open beer in one hand and an open whiskey in the other (including the driver) saying they had done maintenance on these homes years ago and I should hire them. I kinda wish I had started a reality tv show for this, and I'm sure there will be plenty more odd encounters before I'm done. 

On the business side, I've decided to start new LLC's for each of my properties, with my current LLC as the parent company. I have a good insurance guy and accountant now as well.

This is a bit old, but I was searching for some info and thought some clarification might be helpful.

1. An LLC does not usually protect your personal assets against lawsuit. A lawyer can go down from LLC to personal assets. A lawsuit cannot however cross from one LLC to another LLC. If you own 10 homes in 10 LLC's, and a tenant of one property sues, they can sue for money in that one LLC and your personal assets, they cannot however sue against the other 9 LLC's, protecting the bulk of your assets.

2. Liability insurance is cheap for a large umbrella policy (millions in liability insurance) and can protect in many situations, including lawsuits by tenants. This can help protect your personal assets more than the LLC will and should probably be your first step even if you just have one rental property.

3. Always have good relationships with tenants and try to resolve issues quickly and out of court. 

As I understand it, the combination of the above will protect you more than any one solution. I don't know much about S-CORPs, but I don't think they help much until you have employees or bigger deals.

I would get it. The ability to access the MLS yourself is big. You have full control over your own listings in the MLS as well. Expect to pay out a couple grand your first year for everything, and then a grand a year after. I like that it provides me with one more way to make money in real estate.

It works for appliances and water heaters maybe, but I always find that saving things like flooring and doors isn't worth it. Things don't match, or aren't the right size, or end up taking more time to install due to missing parts, etc. I love the idea of saving lots of materials, but in the end I feel like I just spend too much time and it's not worth it.

You can often dig up old pics from prior listings in the MLS, but it won't show the current condition of the home. And to get access to that, you will need to either be an agent or work with an agent. Unfortunately the Realtors Associations still have a lot of control and make it very difficult to work without an agent.

Mike Fletcher yes, the founders would be appalled by zoning, building codes, licensing, and all the associated regulation and taxation for hotels, rentals, and everything else. The purpose of the government is to protect our liberty to do as we please on our property. Beyond that, we are free to enter into a contract that may limit that liberty, such as in an HOA, or between a landlord and tenant. In that case, the tenant is violating the contract they signed with the landlord, and possibly with the HOA. AirBnB is a marketplace where people can post their homes for rent, they aren't required to verify whether or not a contract was signed not allowing the home to be rented. The same was true for Silk Road, it was an open platform, like social media and forums: the creator of the platform isn't liable for how people use (or misuse) that platform. Freedom carries with it certain risks, but also tremendous rewards, both individually, and to the economy at large. There will always be abuses in any system, but freedom offers the greatest benefit to the most people, far more so than various systems which limit freedom.

Just to point out the bigger picture: there is nothing remotely constitutional that would allow any government in this country to forbid someone from allowing someone else to stay on their own property in exchange for money. The founders of this country would be appalled to find that the government today has given itself so much power that a man cannot even choose who can stay on his own property.

I share your concerns with the market in general, and the stock market in particular, where there will need to be a significant correction. Considering this, my goal has been to be very cautious. I very run down homes and fix them up (I have a construction background, so that helps a lot). I want to have a lot of profit on any deal, so if prices drop or rents drop it doesn't hurt me as much. I'm also considering selling off some properties to have more cash in reserves, both to cover expenses during a crash, and to be able to buy after prices drop. Of course that may not happen, and I'll have left potential profits on the table, but oh well, it's worth not making as much as insurance against losing too much.

It really depends on your market. Where I am it's very difficult to find multi family homes. I think if you can get them in a market you know, and live in one unit to house hack, that's probably best, but there are certainly some complications over a normal single family home. My area it's probably best to start with a house hack and then refi it to get money for a SFH and run that one unit for a year to learn. You can ramp up quickly once you get some experience, but I wouldn't advise rushing it the first couple years.

I'm considering when I might move to full time real estate investing, with my primary income as rental income. Will banks give a mortgage on a primary residence for myself based only on rental income? Do I need a long history of rental income to qualify? I don't want to put myself in a position where I won't be able to buy something for my family down the road.