All Forum Posts by: David Clinton III

@Christopher Gathe I agree with Grant above. It’s a great move to pay off credit card debt. 

I think that if you accept prepaid rent for 12 months, you'll be obligated to him for 12 months worth of rental space (even if term of lease is only 6 months).

What if he paid 6 months in advance of rent, and you called the other 6 months "deposit". This distinction allows you to ask him to leave after 6 months if you give him his large deposit back. BUT if he turns out a great renter, you begin to apply the additional he paid you to his rent monthly until the deposit you really want is left in his account. Something like this may enable you to get all the cash up front from him, and still be able to end his lease in 6 months if it goes sideways. Best of both worlds.

Hi @Rob Young, I don't have a direct answer for you, but thought I'd tag @Caleb Webster, because he might be able to help!

Hi @Lum Zuna, welcome.

The main purposes for an LLC are 1) limiting your liability in the case of a lawsuit, 2) privacy, 3) tax strategies. Following are some thoughts to inform your decision:
1) These discussions rage on in the forums, and lots can be found about it. Being well-insured can do a lot to cover the same risk. And in order for any protection to be effective, you must be sure to keep the activities (mainly the books) of the LLC separate from personal expenses and such.

2) Depending on the state your LLC is formed in, almost none of them offer much privacy. Delaware and Wyoming can be the exceptions to this, if they are done correctly. But generally, all it takes is a quick search of the Secretary of State website to find more about who is the responsible party for an LLC.

3) At the level of 1 or 2 rentals, there isn't a lot of tax strategy to necessarily be had. In your personal name, or an LLC, all expenses will flow through to your personal return in the same way.

If you're do decide to form an LLC, it is very easy to change ownership of your existing rental to the LLC. A 1-page quitclaim deed filed at the county will take care of it, and the LLC then becomes owner. The one thing people worry about (and have written a lot about in forums) is that the lender could theoretically call the loan due when ownership changes. In over 100 deals, I have never seen this actually happen. Multiple mentors of mine say the same... we have yet to see a real lender actually call the loan due for that purpose, if payments are being made on time.

Hope this is helpful!

Welcome @Carlos Bermudez-Glean Jr.

People do business with those they like, know, and trust. You’ve got some good rapport built with the history of paying on time and managing the rest of the tenants. 
Next step is to start a conversation to see if they are interested in selling, or even willing to entertain the idea. 
I would try to communicate first. Phone is far better than a letter, if you have can call. 93% of our communication is non-verbal. You want to get on the phone (or in person!) and let them hear your tone of voice, etc. 

I wouldn’t try to qualify for a loan until you know they want to sell. Even if you can’t get a loan, the owner may be willing to take payments over time, effectively being the lender for you. 

@Christopher Hartman, Welcome!

A joint venture deal can work, where you offer somebody a percentage ownership in exchange for the capital they bring, and you manage the deal. There are a number of ways to pull this off; I'd be happy to get on the phone and talk more about it.

What market are you in?

Hi @Richard Booth. In my early days, I underestimated how often my units would turn over. I found the best deals to be smaller unit value-add multi-family. I didn't take into account at the time how transient the residents of studios and 1-bedroom places can be. Turnovers can be expensive.

Now I aim for 2-beds and 3-beds when I can. I plan for higher turnover with units that have fewer bedroom counts. Keep all this in mind... it can be more of an art than a science!

Hi @Caitlin Daniel, I tend to have a knack for talking people through their goals and direction (with Real Estate and otherwise). If you're interested in grabbing lunch and talking further, let me know :)

hi @Katy Scherr, I sent a message to see how I can help. I'll connect you to some people with integrity that will take care of you (without stealing your deal!)

The Spokane groups are still closed, but those investors tend to meet over here at the Coeur d'Alene meetup the 1st Thursdays of the month still. Worth the drive.