All Forum Posts by: Costin I.

Just be aware, there is more to foundation repairs than just the foundation. Here is what I collected as "warnings" or lessons (from various sources and some experienced myself) about foundation problems and/or repairs:

1. If you have brick on the exterior, you might have to do tuckpointing. $$$

2. If you have tiles inside, the tiles will crack. And if they have to drill holes for interior piers, you pretty much will have to replace the entire flooring. $$$$

3. You'll have drywall cracks, so you should factor in drywall repairs and repainting. $$$

4. If the doors were adjusted to a crooked foundation, you might need to readjust or even buy new doors. $$$

5. A hydrostatic plumbing test is recommended to be performed by a licensed plumber post Foundation work. Plumbing leaks may void warranty. Old houses have cast iron pipers that will disintegrate (because of age and/or foundation shift). You'll have to replace all plumbing at that point. $$$$

6. Depending on how bad is the foundation state (how many inches you have to correct), is very possible the sewer line will disconnect/break in the horizontal portions. Repairing that requires tunneling, a repair that could be very expensive. $$$$

7. If the driveway- garage differential is big (for example, the driveway slab is sunken and you need to raise the house, you'll end up with an even bigger gap after repair) you might need to replace the driveway. $$$$

8. If you are dealing with an addition built on 12" beams (or if the original foundation is old and not built to current standards), the repair company might not be able to push the piers down to refusal depth or psi due to the beam not taking the load, thus leveling it, but not guaranteeing it will not continue to move in the future, thus not providing warranty.

9. The owner may be required to provide a structural engineer's evaluation prior to warranty work.

10. Read the fine print in the foundation repair contract: "Damages to the property, interior and exterior as a result of the foundation movement are not covered, during and after works completion. This usually includes but is not limited to PLUMBING, flooring, landscape, utility lines and masonry. The foundation repair does not cover any repairs that may be needed to the home during and after works completion." And you'll have new cracks in unexpected places, old cracks that will not close, but instead enlarge. My suggestion is to add at least 25% to the cost of the foundation repair as mitigation to the problems that will come from the foundation repair.

11. The foundation repair company salespeople (and even owners, in some case) of structure companies are not engineers and though they may be right most of the time, there will be gaps in their assumptions. Unless it's a small job with an obvious solution, get an engineer ($250+) to look at it and sketch up a scope of work for a contractor to do.

12. Many foundation problems have water as a root cause - be that infiltration in a crawl space, drainage around the site, cracked sewer line or water line. Before solving the foundation you might want to get to the root cause of the foundation issue and resolve it, otherwise you might repair the foundation for nothing.

13. If you repair the foundation on only select places, don't be surprised if the other sides will suddenly start "working". If the house is stabilized on one side, you might get cracks in the other side soon after. In other words, if you do a foundation repair, it's better to get the whole house stabilized and the warranty for the whole house.

If anyone has more experience with any of these, please correct me if mistaken.

4 Votes

Quote from @Robert Schwenkler:

And nobody's answering the actual question I have... taking out personal loans on properties that are held by a business.

I get that there are questions in this can to bring to an attorney, but this is not one of them.

Does anyone have any input on that?

@Robert Schwenkler - you are mixing personal with business if you are taking personal loans on properties held by a business (who is giving you such loans?) and you are weakening your asset protection provided (by an LLC?).

But the loan itself, and the recorded mortgage note are a form of asset protection, as there would be little equity to protect in the case of a lawsuit and left after a forced sale if it gets to that.

The other mentioned scenarios still apply (personal loan then transfer to LLC triggers DOS with all the possible problems; proper insurance is the first layer of protection, umbrella insurance second, proper property management is third and you should have those well established before more complicated asspros).

Here are some diagrams that might help you further on this quest:

Asset Protection Decision Diagram - to help assess the need for asset protection, and what to implement: https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-decision-diagram

What is needed for complete asset protection OR the domains that need to be intersected to find asset protection. - https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-spectrum-diagram

How a fully implemented asset protection layout might look. - https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-structures

0 Votes

Boise, Idaho

@Alinda Saffell - here are some short* suggestions:

1. Proper lease documents, with clearly spelled out rights and responsibilities, maintenance rules and fees, review of docs and house orientation at lease signing.

2. A spreadsheet tracking all the major mechanicals, appliances, and components, with real-time lifetime expectancy tracking and associated expenses.

3. Periodic maintenance visits (every 3-4months) with a short checklist (~20 points).

4. Annual maintenance inspection with a detailed checklist (130 points).

5. Photo journaling of each visit.

*short because each one is worth a much longer conversation, PM if you want more details.

0 Votes

Washington, DC

@Drew Petro - I'm not an attorney, nor CPA, so take all this with a big grain of salt:

1. You shouldn't need 12 CC or bank accounts as long you can clearly track transactions per property (think Quicken or Quickbooks and categories and subcategories) (and of course, not mingling personal funds/transactions with business funds/transactions).

2. Your Holding LLC should do just that - holding the assets and nothing else. No interactions, nor transactions with the public/tenants/vendors/contractors. You should have a property management contract with (your other) PM company.

3. The PM company is a shell company that holds no assets and holds minimal funds, just enough to be properly capitalized. This is the company that collects the rents, deals with tenants/leases/vendors/contractors/rehabs/repairs, etc....the public-facing entity.

0 Votes

Grand Rapids, Michigan

First, you get your house in order and build a solid foundation for the future. That is Dave Ramsey.

Then, when you have learned to tame your debt, control your expenses, properly manage your financials, understand good debt and bad debt, and know how to manage and mitigate risk, then you expand and conquer the world. That is Kyosaki's Rich Dad Poor Dad, BiggerPockets and OPM.

Few will manage to do both in parallel. Most need DR first, before BP & OPM.

0 Votes

Fayetteville, North Carolina

@Warren Shinnamon

If you are new to REI you should be primarily concerned with finding good deals and growing your business first. I would not suggest looking into establishing LLCs and asset protection strategies till you have at least $100-300K in equity (!) and only after you covered the "other" aspects of risk management (insurance, umbrella insurance, proper property management, etc.).

Here is something to help assess the need for asset protection, and what to implement - my Asset Protection Decision Diagram : https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-decision-diagram

Asset Protection Onion Diagram - what, when and at what cost one should implement in terms of asset protection - https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-onion-diagram-v2

What is needed for a complete asset protection OR the domains that need to be intersected to find asset protection. - https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-spectrum-diagram

How a fully implemented asset protection layout might look. - https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-structures

Thanks

Costin

PS. Read this book - https://www.amazon.com/Every-Landlords-Property-Protection-Guide/dp/1413307000 - before getting into more complicated and expensive measures of protection.

1 Vote

Portland, Oregon

@Brittany Daubner
For inspections, get this book: Consumer Advocate's Guide to Home Inspection: Avoiding the Nightmare of Purchasing a Money Pit

For under-contract checklist, vacant property:

		VACANT
	#	Task	Date	Completed?
Offer Acceptance	1	Schedule inspection
2	Attend inspection and fill out the repair list
4	Send earnest money check to escrow company
5	Send option money check to escrow company
Purchase Closing	3	If you are satisfied with the results of the inspection, REAwill notify your lender and tell them to order your appraisal if he/she has not done so already.
6	It usually takes 3-5 days from the date your lender orders the appraisal for the appraiser to schedule and conduct the appraisal.
7	The appraisal takes 3-10 days for the results to be returned to the Lender and for us to know the number.
8	During this time your lender should have all of the required documents. It’s best to check in with your lender to confirm he/she has everything they need.
9	You should call a local insurance company to get homeowners insurance quotes at this time. It’s best you email your insurance agent a copy of the MLS Listing of the home you are purchasing. - Add Property Insurance - Add to Umbrella policy insurance
10	When you’re about 5 days away from closing you should call the utility companies and ask to “Transfer Utilities” for the date of your closing. You may not be able to transfer / turn on water until after you have closed on your home.
11	You should do a “Final Walk Through” of the property you are purchasing within 24 hours before closing to confirm the property is in the same condition that it was in when you agreed to purchase the property and that all inspection required repairs have been completed.
12	On the day of closing, all signers will need to bring their driver’s license or Passport and a Cashiers Check in the amount you are required to bring to closing. Your lender will be the one to give you the amount you will need to bring to closing. The Cashiers Check should be made out to the closing attorney. This is very important.
13	If your name is on the purchase agreement, you will need to be present at the closing or have signed a power of attorney for someone to sign on your behalf. If you are doing a power of attorney, you will need to notify our Client Care Coordinator and your lender at least seven days prior to closing.
14	The day before closing or sometime the day of closing, you should communicate with your lender because they will need to tell you exactly how much you money need to bring to closing. Don’t be alarmed or upset if you receive this number the day of closing or even an hour or two before closing. This is very common. For whatever reason, the banks often wait until the last minute to get their paperwork to the closing attorney and to their gather final numbers. It’s not your lenders fault; there is a lot of coordination in the final hours between Closing Attorney and lender preparing all of the documentation and Closing Disclosure Statement.
15	Closings are typically done Monday through Friday between 9:00 a.m. and 5:00 P.M. The closing should around 1 hour depending on if everyone is on time and whether or not the loan funds right away. We recommend that you plan at least a 3 hour window for closing in case there are any unforeseen delays. If this is a late closing say 3:00 or later, there is a very good chance it will not fund until the next day. If this happens you may NOT get keys at that time and will have to wait until the loan funds and the Closing Attorney receives the funds.
	What to check the day before closing
16	Call the closing agent to confirm the date and location of the closing
17	Request a preliminary or final closing statement if there is one
18	Review closing figures for any mistakes
19	Confirm insurance, deeds, trust deeds, and mortgage documents are correct
20	You should do a “Final Walk Through” of the property you are purchasing within 24 hours before closing to confirm the property is in the same condition that it was in when you agreed to purchase the property and that all inspection required repairs have been completed.
After Closing	After Closing
21	Check property insurance (check policy documents, billing and auto-pay
22	Confirm addition to Umbrella policy insurance
23	Check on Title Registration, Taxes, Insurance and Home Warranty - 30 days after closing
24	If leasing, then set up a "Landlord" account which defaults to you to avoid hooking up utilities fees between tenants

If you are taking over one with tenants:

WITH TENANTS
#	Phase	Task	Finish By	Assigned To	Completed?
1		Send earnest money check to escrow company
2	Send option money check to escrow company
3	Option Period	Schedule inspection (regular and termite)
4	Attend inspection and fill out the repair list
5	Is foundation inspection needed?

6	Schedule foundation inspection, if needed
7	Attend foundation inspection, if needed
	Check public records for any liens against property and/or owner
	Check owner on social websites
	Check public records for any liens against tenant (once application is received)
	Check tenant on social websites (once application is received)
9	Receive and carefully review the following documents: - the tenant's application - a copy of the current lease - How well does it align with yours and when does it expire? Is the tenant a relative of the seller? Contact tenant and verify lease and condition form. - a copy of the inventory condition form - the tenant's payment history (deposit slips, etc.) records - a copy of the picture ID of each tenant and person over 18y.o. living in the house
10	Get clarification on the house inventory - see email for full list
Option Period Ends
11	After Option Period	If you are satisfied with the inspection results of the inspection, REAwill notify your lender and tell them to order your appraisal if he/she has not done so already.
12	It usually takes 3-5 days from the date your lender orders the appraisal for the appraiser to schedule and conduct the appraisal.
13	The appraisal takes 3-10 days for the results to be returned to the Lender and for us to know the number.
	Contact tenant and verify lease and condition form + inform them that after close date to make checks to you from now on
	Ask title to add home warranty. (Research z-groups for best one)
	Advise title of security deposit and pro-rated rent transfer
14	During this time your lender should have all of the required documents. It’s best to check in with your lender to confirm he/she has everything they need.



15	You should call a local insurance company to get homeowners insurance quotes at this time. It’s best you email your insurance agent a copy of the MLS Listing of the home you are purchasing. - Add Property Insurance - Add to Umbrella policy insurance
16	When you’re about 5 days away from closing you should call the utility companies and ask to “Transfer Utilities” for the date of your closing. You may not be able to transfer / turn on water until after you have closed on your home.
17	On the day of closing, all signers will need to bring their driver’s license or Passport and a Cashiers Check in the amount you are required to bring to closing. Your lender will be the one to give you the amount you will need to bring to closing. The Cashiers Check should be made out to the closing attorney. This is very important.
18	If your name is on the purchase agreement, you will need to be present at the closing or have signed a power of attorney for someone to sign on your behalf. If you are doing a power of attorney, you will need to notify our Client Care Coordinator and your lender at least seven days prior to closing.
19	The day before closing or sometime the day of closing, you should communicate with your lender because they will need to tell you exactly how much you money need to bring to closing. Don’t be alarmed or upset if you receive this number the day of closing or even an hour or two before closing. This is very common. For whatever reason, the banks often wait until the last minute to get their paperwork to the closing attorney and to their gather final numbers. It’s not your lenders fault; there is a lot of coordination in the final hours between Closing Attorney and lender preparing all of the documentation and Closing Disclosure Statement.
20	Closings are typically done Monday through Friday between 9:00 a.m. and 5:00 P.M. The closing should around 1 hour depending on if everyone is on time and whether or not the loan funds right away. We recommend that you plan at least a 3 hour window for closing in case there are any unforeseen delays. If this is a late closing say 3:00 or later, there is a very good chance it will not fund until the next day. If this happens you may NOT get keys at that time and will have to wait until the loan funds and the Closing Attorney receives the funds.
21	Day Before Closing	Call the closing agent to confirm the date and location of the closing
22	Request a preliminary or final closing statement if there is one
23	Review closing figures for any mistakes
24	Confirm insurance, deeds, trust deeds, and mortgage documents are correct
25	You should do a “Final Walk Through” of the property you are purchasing within 24 hours before closing to confirm the property is in the same condition that it was in when you agreed to purchase the property and that all inspection required repairs have been completed.
26	After Closing	Inform tenants to make checks to you from now on
27	Check on Title Registration, Taxes, Insurance and Home Warranty - 30 days after closing
28	Confirm addition to Umbrella policy insurance
29	Check on Title Registration, Taxes, Insurance and Home Warranty - 30 days after closing

For due-diligence checklist - PM - I have a large word doc template with 35 sections used for all the things we check when buying a property.

Good luck 2U!

3 Votes

Just to add my 2¢ to this fun fest...

1. The OP picture shows two correction officers doing a cell toss-up. Not two PMs.

2. We do "maintenance visits" every 3-4 months, with a short 21 checkpoints list and once a year a bigger one with a 132 checkpoint list. Primarily for the property status, but also checking on lease compliance.

0 Votes

Gilbert, Arizona

All Forum Posts by: Costin I.

Costin I. has started 62 posts and replied 953 times.

Post: LLC or not to LLC

Post: Residential rental and flips - Individual LLCs under a holding company?

Post: Are foundation issues a deal breaker?

Post: Managing liability (via LLCs) while using residential loans

Post: Planning quarterly rental property inspections: suggestions wanted

Post: HoldCo Complexities and Simplification

Post: I'm torn between Dave Ramsey and Everyone else!!

Post: Do I need an LLC, or is Landlord Insurance enough?

Post: Due Diligence General Checklist?

Post: Stop Inspecting Occupied Rentals