All Forum Posts by: Charles Carillo

@Marium Mujahid

I don't think you will be getting a homeowner's policy for a property that is owned in a LLC. Speak to your agent but this usually will be a business owner's policy. Yes, you could still keep renter's insurance if you wanted to in this situation. If you purchased the home traditionally in your name and got a homeowner's policy then that should cover your personal belongings. Then you would not need renter's insurance.

Speak to you insurance agent and get quotes prior to purchasing the property.

@Oliver T.

Does this tenant have renter's insurance? I would give your real estate attorney a call and explain the situation. My goal with this tenant would be to get them out. Your attorney will have some options but you are not going to renew their lease and they are going to be a continuous issue until the lease is up.

@Nate Presti

For most businesses I do not think it really matters what bank you use, they are really similar. If you are looking to get loans from a bank and want to build a relationship though; I would start calling around to local banks and credit unions and ask them if they lend on the properties you are interested in. If you are looking for small investment properties, it is worthless to go to a national bank. National banks most likely won't lend on your 5 unit property or your 3 unit mixed-use building. Once you find a bank that will lend on your target properties, open accounts there and start building a relationship.

Using multiple accounts is a great way of keeping your finances separate.

@Brian Ellis

I don't know exactly what "low" is for you; but typically for this type of property the LTV is around 70%-80%. I would recommend you speak to local banks and credit unions. If you are able to build a relationship there, that will be a great way to secure a loan with a lower down payment on this property and future properties.

You being an owner occupant, could open additional banking options for you. I remember years back that one bank I spoke to would only loan on commercial properties if the owner was an occupant. Usually, that meant an attorney buying a small office building and using one for his practice but, you are still occupying a unit.

Jimmy Edwards is a multifamily investor who currently controls 570 units. He became interested in real estate investing when one of his professors got him to read “Rich Dad, Poor Dad” and that it “pretty much exploded his brain.”
After college graduation in 2013, he started with single-family investing and became a house flipper. It wasn’t until 2016 when he decided to scale the business and that is when he stumbled across multi-family investing, scalability and forced appreciation.
When he started with single family investing in 2013, it was about finding distressed properties, rehabbing, and flipping them. He had a few partners but he then met his current partner Katherine, who was married to a friend of his. She had a background in construction and she managed the rehab process after he found the deal. One time Jimmy remembered that he had a single-family house that sat on the market for months and the interest ate up their profits. He realized that with multifamily properties; you are still receiving cashflow; even when selling a property. In 2017, he started to focus entirely on multifamily investing.
Jimmy recommends that investors know their strengths and find other partners who excel where they fall short. You can learn more about Jimmy and his team here: highfivemultifamily.com.

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@Thomas O'Donnell

In all house hack deals I have been involved with, there is negative cash flow. Especially when you factor in ALL expenses/reserves (not just your mortgage payment). Yes, it would be great to cashflow but if you can decrease your living expenses from $1,000 to $250 and you are building equity; I feel it is a win-win. Just make sure you are including all expenses and reserves in your calculations. Also keep in mind that interest rates might drop in years to come; at that point you can refinance. Hopefully by then you will have 20%+ in equity and you can also avoid paying PMI.

Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing The Importance of Having a Real Estate Website and Email Address. Email addresses and websites are the first thing people notice about you and your company. In this episode, Charles discusses why having a real estate website and an email address at that website will make you look more professional and serious to; brokers, contractors, investors and vendors.

Links Referenced in Episode:

➡ Signup for website hosting here: https://www.bluehost.com/track/pos/

Talking Points:

➡ If you are an active real estate investor; it is imperative that you have a real estate website and an email address at that real estate website’s domain

➡ If you are a passive investor; it really does not matter since you are not trying to win deals and usually the deal operator or general partners only care if you have the funds to invest

➡ I was speaking to a real estate broker we work with and told me that he will not even respond to a FREE email address (Gmail, yahoo, Hotmail etc.) for deals over 50 units; since he has never sold a property to one. He lowered this from 100+ units in 2020 because of the number of inquiries he was receiving and if the deals are under 50 units; he says he requests proof of funds from the beginning if they are contacting him from a free email address.

o The same broker mentioned that nearly all 100+ unit deals involved buyers or sellers with real estate website and email addresses at that domain

o He also mentioned that 2/3 of sellers and buyers he worked with on complexes under 50 units had real estate websites and email addresses at that domain

➡ Some people have a day job or another business and they will use this email but you are really limiting yourself since your email, email address and website are usually the first impression people have of you – if you are trying to buy an asset worth 100s of thousands or millions of dollars; how will a broker know you are serious if you will not invest a little bit of money in branding yourself and your company

➡ On a side note, if people don’t know my story; I am a full-time real estate investor but also a partner in a payment processing company I started in college and when I used to answer emails and respond to inquiries; there was a few things upfront I reviewed with a new inquiry that would allow me to gauge the seriousness of the potential client and how much time I would dedicate to them

o That they had their own domain name for the business – not a free domain name

o How professional was their website?

o The email intro and the email closing (did they say “Hi” or “Hello”) – do they have an email signature?

o The body of the email; correct grammar, spelling mistakes

➡ Now these sound very basic but I bet you have similar procedures when you receive a new email or inquiry in your business; especially if it is a commission job

➡ In closing, if you are a serious real estate investor or are planning on becoming one (even if you are just buying 1 deal – 1 single family house – every 5 years); pay a couple hundred dollars and setup a LLC for your company's brand, build a quick website and setup an email address there; it will cost you a few hundred dollars and take a weekend to write the content and get it setup – you can also add to it in the future – doesn't need to be perfect and you will start being taken more seriously when you are talking to everyone throughout the real estate community

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Spencer started out with his first building in Indianapolis. He has since completed over $1 billion in transactions and has purchased properties with traditional financing and with HUD financing. HUD financing has low interest rates and a longer term than agency financing however; it is a very long process that takes many months to complete in addition to required regular audits and distributions are limited to only 2 per year.
Spencer says to do what you say you’ll do with investors and communicate openly with them. The challenge right now is that it’s a fast-moving market and operators need to act quickly to win deals. However, once you get the first deal, you get momentum. There is a complete imbalance currently of supply and demand so his team believes that multifamily will continue to outperform other asset classes. If you want to excel in commercial real estate it is important to be open to partnerships and surround yourself with other similar minded people.
The newsletter he puts out can be accessed at: grayreport.com and visit his website here: greatcapitalllc.com.

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Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing understanding capital gains as it relates to real estate investing. Capital gains are taxed at different rates than ordinary income; but what constitutes a capital gain? In this episode, Charles discusses capital gains and how they affect real estate investors.

Talking Points:

➡ Make sure to speak to your tax professional for individualized advice

➡ Real estate has a number of tax benefits and capital gains is one of those and it allows you to pay a lower tax rate on assets owned over 1 year.

➡ Long-term capital gains tax rates range from 0% - 20% depending on your income; where ordinary income tax rates top out at 37%; capital gains allow you to pay a much lower rate on certain assets owned over 1 year

➡ Short-term capital gains are taxed at ordinary income rates

➡ In this episode I am discussing capital gains on investment properties

➡ But, if you are selling your primary residence and you are single, you will pay no capital gains tax on the first $250,000 of profit (excess over cost basis). Married couples enjoy a $500,000 exemption. There are, however, some restrictions; so, speak to a tax professional.

➡ There are 3 main ways you can benefit from these rates:

o Selling stock (owned more than 1 year)

o Selling a rental property (owned more than 1 year)

o Selling a business

➡ Wages, rental income and income from flipping homes (owned less than 1 year) are taxed at ordinary income tax rates. Just holding those properties for 1+ years will allow you to pay a much lower rate.

➡ A closing thought being; if you own a good rental property and you are just looking to purchase a new property and use some of the equity you have built up; I would suggest refinancing the rental property or if rates have increased since when you mortgaged the property last; maybe look into a supplemental loan or second mortgage to try and access that equity tax free.

➡ Real estate has so many benefits for real estate investors to pay little to no taxes but make sure to speak to your tax professional for individualized advice

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@Nicholas Alves

There might be business accounts available for those apps but traditionally, the tenant pays with a check or money order made out to the LLC.