All Forum Posts by: Costin I.

• @Adil Azad - 
  Read Dave Ramsey book "The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness." and complete the baby steps there.
  Read Scott Trench’s book “Set for Life.”
• Read ideal-vs-desperate-investor
  Finish the school and get your degree - you'll need it later, especially if it's business management.
  Get a job first where you have W2 income. Save 50 percent after tax income. Find deals in your market. Buy at discounted prices. Rehab. Rent. Refinance. Repeat.
  Work slave job with W-2 documentation for 2 years to gain favor with banks. Freddy/Fannie conventional loans want to see those 2 years. Keep same job no matter how crappy. It's only a stepping stone to break free.
  While you are slaving, eat ramen, roommate up or live in trailer, avoid Starbucks and tuck every dollar you can squeeze out into a bank account. need 20% down and money for materials. so for 80K home (trashed), you will want 35K banked to get started, just a rough idea.
  Then, get pre-approved. Buy property. Buy another and another until you have enough equity to refinance one for large amount of cash. Take cash and start BRRRRR process (read up all you can on BRRRRR). Give boss notice. (sorry about all the school time you invested). Your free. Done.
  Find a mentor to help with the process.
  Doing an internship with someone that is serious about their business, and then making sure that you're just as serious about their business as they are, is an awesome way to gain invaluable experience and support for yourself in the long run.
  Intern with a flipper. Intern with a wholesaler. Intern with Rental Investor. Then decide what you want to do long term. You have a long journey ahead.
  Aggressively save money and buy a Multifamily 2-4 units with 3.5% FHA loan and house hack. Find a duplex/triplex that needs a little work, live in one unit rent out the rest. Raise the rents to market values and rehab to force equity and sell in 2 years to avoid capital gains. If you decide to keep the property you can refinance into a conventional loan and hopefully you have enough equity to eliminate the PMI/MIP. Then move out and repeat the process. Repeat. Do this four or five times and you'll never have to work again if you choose. [Beware = https://www.biggerpockets.com/renewsblog/house-hacking-drawbacks/]
  I would look for a 2-4 unit too house hack. You can get into these with 3.5% down for an owner occupied FHA loan. Great way to get started FHA makes sure its a cash flowing deal before they allow you to buy. And house hacking allows you to make a little off the property, and seriously subsidize your rent. And lastly, you gotta live like a college kid. Rent out rooms, go the cheap route. Having those cheap expenses will really catapult you forward financially!
  Income from RE investing is slow and boring (in a good way). The RE investing that makes fast money is not really “investing” - it’s a self-employed RE business. For example, flipping, deal finding, wholesaling, syndicating.
  Boosting your credit score is the no-brainer investment. Go on My Fico and learn the credit hacks. Do them!!!
  [Biggerpockets] is notorious for the no and no money down niche, but you really need to have a good financial runway prior to investing otherwise you will lose your bottom when it goes sideways.
  Read all the usual books. But to be honest with you, If you do not learn some construction skills, your progress will be a lot slower as contractors will be raking in the majority of your profits.
  Get a pro account on this site so you can access the PRO only blogs and avoid all the goofy stuff that can confuse you sometimes.
  Take NO advice from salesmen such as realtors/brokers. Not because they are wrong, but because they are salesmen.
  Take NO advice from anyone who does not own more real estate than you do. Why chance it.
  Just keep reading, saving, researching your target area. Know the rents! Know the values.
  Do all this and you'll be on a very good path. Just remember, there are no secrets and shortcuts in real estate investing, just slow and steady progress. You want fast, you are closer to speculating than investing and your risk skyrockets​.
  "Ignorance is bliss. Knowledge is power, but also a burden. The cure to both - the 4 ions: education, action, progress(ion), not perfection".
  
  Learn to use BP to its whole potential:
  Subscribe to BP blog and podcasts and start reading posts and listening to their podcasts collection.
  Find and connect with other BP members that are in your area: http://www.biggerpockets.com/m...
  Set up keyword alerts to be notified of the topics that interest you: http://www.biggerpockets.com/a...
  Read Beginner’s Guide: http://www.biggerpockets.com/r...
  + https://www.biggerpockets.com/...
  
  You can find a glossary of some acronyms here: https://www.biggerpockets.com/...
  
  You might also want to read: The Ultimate Beginner’s Guide - https://assets2.biggerpockets....
  ...actually the entire section: https://www.biggerpockets.com/...
  
  BP has a whole section dedicated to education and starting up - https://www.biggerpockets.com/...
  
  Get busy with the entire Education section on BP:
  https://www.biggerpockets.com/...
  https://www.biggerpockets.com/...
  https://www.biggerpockets.com/...
  https://www.biggerpockets.com/...
  https://www.biggerpockets.com/... (including TENANTS MAINTENANCE)
  https://www.biggerpockets.com/... (and the sub section on REAL ESTATE MARKETING TOOLS & TECHNOLOGY TAXES & ACCOUNTING LEGAL TEAM)
  
  One way or another you will pay your "real estate tuition" - either in time, effort or money. My suggestion - better in time and effort, and money (through the mistakes you going to make), than paying a guru.
  
  Between BP and books and all the other podcasts and blogs available for free, you shouldn't need any paid training - don't fall for that. Just find a good mentor to shadow, someone willing to impart from his/her experience, take them to lunch and make yourself useful to them, and they will teach you.
  
  Here some recent articles good for starters:
  - one to raise you up: https://www.biggerpockets.com/...
  - one to bring you back down to earth: https://www.biggerpockets.com/...
  - one in the middle: https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://royallegalsolutions.co...
  
  You might want to read and follow these threads:
  https://www.biggerpockets.com/...
  https://www.biggerpockets.com/...
  https://www.biggerpockets.com/...
  https://www.biggerpockets.com/...
  https://www.biggerpockets.com/...
  
  Bonus for the weekend, my collection for starters (read the comments too, and then if you like the author, go check out what else they wrote):
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  - https://www.biggerpockets.com/...
  
  If that's not enough, ping me and I'll give you a whole collection of blogs and podcasts to follow.
  
  Bonus 2:
  1) Read at least one hour per day every single day.
  2) Remember the quote by Jim Rohn "You are the average of the five people that you spend the most time with."
  3) Check for toilet paper before sitting down.
  

@Michael Plaks - what if you used a HELOC to buy the rental or a refi on the primary residence to buy the rental and now the rental is paid off, but want to get cash out to pay the HELOC/mortgage on the residence instead?

@Eamonn McElroy @Michael Plaks - "The interest on the cash out refi will likely not be deductible as you're using the proceeds for personal expenses." - really???

@Jason Bilbrey IF the deal is that great and worth pursuing despite all this trouble, get a statement from the owner detailing the situation - what work was done and when, for what amounts, how and who was paid. Maybe the live-in manager has a valid request - if he done extensive repairs to the property for which he was supposed to get N months of free-rent equivalent and still has M rents remaining, then of course he is upset and not "collaborating".

Get the same statement from the live-in manager and see how it reconciles with the one from the seller. Tell him you want to make things right and ensure he is getting paid what's rightfully his (maybe he did repair all the carpentry around the building right before the seller put the property for sell). That way you'll get an idea on what you are dealing with - maybe it's a small amount, maybe it's a substantial amount - and you'll decide on a course of action based on that. Maybe he already got paid in "rent", or maybe he has a small amount left - explain to him you are not operating the same as the seller, pay him the small amount while securing a lien waiver (a document stating he got paid for all the work done at the property and there is no unpaid work - you can use this document to remove liens if he later files one) and don't give him any more more work. Or make all this a condition of the purchase and have the owner secure all these documents. Don't trust the word of either one, double check what the seller tells you in the entire deal.

Once you are clear on who owes what to whom, you can settle things in writing. Complete the purchase and then you can give notice or evict the not paying tenants, with the proper notice. But I would be more worried why the property needed or needs so much maintenance that you need months of rent equivalent as maintenance expense. There is more to this story than you get from both.

@Chip Marchand - around here, best time is May to beginning of August. At the end of August, beginning of September when the schools start there is a definite drop in traffic/interest as most families settled already and prepared the kids for school. 

During holidays (Thanksgiving and Christmas, New Year) there is little "movement" too - plus, if you are in the northern states, you have to deal with nasty weather too - so I would say mid-Nov to end of January is the worst time to list. 

That being said, it depends on where you are - I would expect in rural area to be slow all year long, while in a busy city to matter little when you list.

@Alex Black - as much as don't like PM's and self-manage my rentals, I'm not sure you can pin this on the PM. Usually, the notice to renew or vacate is sent 30 days before the end of the lease, so to expect your tenants to sign a renewal 5 months before is not realistic (I wouldn't sign something like this unless I was extremely clear on my long term plans and the rental deal was excellent - there is so much that can change in 5 months).

Ultimately, you need to take ownership of your mistakes - you are supposed to manage the PM. Did you follow up to see if the lease was sent and signed? Did you ask for your copy of the document? Do you have reminders and followups for all the important events in the "life" of a rental - annual taxes payment date, insurances renewal dates, lease termination date, renewal notice dates, etc?

What was done in June and July to re-rent the place? You had 2 months to secure new tenants - heck, why was not rented in the first month? How is this situation different from hearing all the way to June "we aren't sure what we gone do, if we gone renew or not" or not hearing anything till renewal time? What was your contingency plan?

 Do you know why they didn't want to renew? Did you do all what @Patricia Steiner suggest above? Do you know why there was no interest? When was last time you visited the property? It looks to me there might be some underlining problems with the property - make sure it's in excellent state and ready for new tenants.  

Most of the time, you need an umbrella insurance policy. And that is not a "umbrella or LLC" question, as the umbrella is not an alternative or replacement to the LLC and vice-versa. You need it before the LLC and even if you have an LLC.

Question is if you need an LLC for your asset protection. The mortgage note in itself is a form of protection and you need substantial equity before you need to worry about an LLC, and even then you still need to do other forms of risk mitigation.

Plus, with the rental in CA, that comes with additional complications due to the expensive $800/year/LLC fee so other structures might be more beneficial (like DSTs) - talk with @Scott Smith, he can provide expertise to the particulars of your situation.

Here is a diagram to help you on your quest: asspro-cya-diagram-v6a-solo-401k (but half of it might not apply to your case as you might need/want a DST):

@Ben M. - the PM fees are often 8-12% of the monthly rent. That is what gets deducted of the rent monthly. But you often have a lease fee (which can be up to a whole month of rent, going in various percentages to your PM and to the tenant agent) and a renewal fee (which can be smaller or the same as the original lease fee). Then some PM charge a service fee every time they send someone to service the property or if they go to inspect the property - in other words, you might get nickel-dime'd with all kinds of other fees, that could easily raise the "PM fee" to 12%+ (we once got charged $45 service fee + $9 per battery to change the smoke detectors batteries at make-ready).

Regardless, you need to factor in at least 8% PM cost, even if you self manage (after all your time costs too) as there might be a time when you might want to (or be forced to, like sickness or old age, or desire complete passive participation) to be completely hands-off and you'll need a PM.

@Kolby Wright What makes you think you can rent it for $500-550? Just because you are willing to make cosmetic repairs it doesn't mean the market supports that kind of rent in the area - what does the Lease CMA telling you? Vacancy rate?

Owner says, but does he have a tenant in place paying currently $450? Did he show you any executed lease contracts, regular deposits or something proving the $450 rent history?

Regardless, if you can get it with 30K and rents for 450+, that sounds like a good deal to me. Just make sure the state of the house - the roof, WH, HVAC, etc. on a 30K costs as much as on a 100K house and $450 rent doesn't cover much of these repairs.

@Julie Torres - you have 2 rentals, but do you have a lot of equity to protect? Having properties and having equity are two different things. Do you have lots of other assets and/or income or are involved in activities that make you a target for litigation (like a doctor)? 

Have you put in place all the other measures of risk mitigation? If not, you might be rushing into complicating your life and increasing your expenses at a time when you should grow your investments. For sure get the umbrella insurance, you need it regardless, it's not an "umbrella or LLC" question.

Here is a diagram to help you on your quest: asspro-cya-diagram-v6a-solo-401k.

If you reach the conclusion you need it now, talk with @Scott Smith - he can set you up with Series-LLC, and explain your other concerns.