All Forum Posts by: Michael Shadow

My goals for this year are to purchase 1 small multi-unit property and to wholesale one small property, either SFH or multi.

I am currently in the closing process on the multi and once the dust settles (no really the dust settling from the week or two of minor rehabbing) from that deal I want to get started on a wholesale deal.

After working on this deal I'm not sure I could ever go a week again in my life with out working somehow on a RE deal, I'd feel to much like I was wasting time.

I've been here for some time now and I am finally getting around to closing my first deal. I've been researching REI off and on for the past 3 years now and seriously (like at least an hour every day) for the past 6 months. We want to buy and hold small multi unit properties and do some wholesaling in between the multis for some quick cash and to help with the debt ratio on the multis.

My wife (30) and I (33) have run quick numbers on hundreds of MLS listings and gone to look at somewhere in the neighborhood of 40-50 of them. We made offers on about 6 or 7 multis and have had many of them flat out refused. We have mostly been looking in a town about 50 miles from our house because the area we live in is an appreciation only area. What I mean by that is almost nothing in this area cash flows until you put at least 30% down.

Well about two weeks ago we found a duplex 2 miles from our house that would cash flow. We set the closing for 20 days from that original contract date and we're sticking to it. We just finally got the negotiations finalized and had 10 days to close after the final contract was signed.

Well amazingly we are still on track for our closing this Friday. I feel like I don't have anything to do for these last 3 days. I spent probably two days working on my lease agreement and I have it finalized to where I want it to be. Just have to run it past my attorney.

I was a little scared about doing a 20 day closing for my first deal but it turned out to be plenty of time to get everything done and the sellers even stalled for a week with out getting back to me with one of my counter offers.

I still have 3 properties that are a possibility in the town 50 miles from my place but I think I might try and wholesale one of them once I get everything settled in the property I am currently buying. I have about 2 weeks worth of work I am planning on doing in it and I want to get tenants in it Sept 1st. I already have the one unit rented out, I was telling someone I knew that I had the place under contract and was going to be buying it and he asked me about it, looked at the listing to see the pics of the inside and did a drive by and said he'd take it. Imagine that I have new tenant for the prop before I even bought it.

So now I have to wait until close so I can send in the paperwork to AOA Tenant Screening Company (anybody ever use these people?). I hope they're quick at getting me inspected and approved so I can start running checks by Sept 1st.

Well that's a little about me and where we're at with our process.

I think Klotz was asking about OH. I'm in PA buying a property in PA.

Has anyone ever used ingdirect for a mortgage? Their rates look pretty good and their closing cost of 895 looks good to but what all does that include? Does it include everything, title insurance, recording fees, origination fees, etc...?

I talked to my attorney about it and he said that the biggest drawback to doing it that way is that if it's titled in the name of my LLC then I have to pay a PA corporate stock tax which is 9.9%. I'm closing next friday so I'm just going to stick with what we have setup right now. I don't think the tax will be that much of an issue the first two years or so because I'm just starting up and there are many many deductions I can take to offset that. (haven't talked to my accountant about it yet though)

I'm planning on in a year doing a cash out refi on it anyways once I get some of the work done on it and with that hopefully paying off my HELOC which has a higher rate so we can work on getting our next property. That'll also give me more time to talk to my attorney and accountant to see how I really want to structure things to get the best asset protection with the lowest cost.

Thanks Scott for your tips. I'm setting things up the second way. I haven't found an accountant yet but I am currently looking for one. I want to get as much setup on my own and learn as much as I can about QB before asking him/her about my remaining questions.

When you purchase a property do you create an asset or do you just track everything in the classes category?

I use quicken for my home finances and I have our house listed as an asset then everything I buy for it as an upgrade goes into that asset account and everything I buy to maintain it goes to a home maintenance category I have set up so it's not reflected in the "value" of the home. I'm thinking about setting up my QB the same way. Is this logical?

I"m wondering because now I'm under contract and I want to transfer my earnest money which is reflected in an account I created called "money in earnest" to the place it belongs, the asset. And in the next couple of days I'm going to be writing checks to the inspectors so I want to try and get things setup and gain a deeper understanding of using QB to manage properties.

Thanks for anyone who can give some clarification on this.

If this is your first purchase why would you want to buy something that big? I'm in the process of closing on my first deal and it's a duplex and my hands are plenty full. I had considered a few 8-10 unit deals in my area then decided that until I had a system down for closing the deal, bookkeeping, filing, and managing the properties I needed to go with a much smaller deal. Now I'm glad I did.

I also like the Real Estate Radio Guys, you can search for them in iTunes. IMO GetReal and RE radio guys are the best two podcast out there. The Real Wealth Show isn't to bad either. You can search for that one in iTunes too.

I called an attorney yesterday to get some information about closing cost and in the process I asked about the transfer tax if I buy the property in my name and then move it to the LLC. He said I shouldn't be putting properties into an LLC. This really baffled me. Does anyone know why he would say this?

I have since then contacted another local REI and he gave me the name of another local attorney that also invest in RE. I'm going to call him today to see what he says about it.

I'm interested in hearing how some of you are using quickbooks to manage rental properties. What's the best way to set it up?

Thanks,