All Forum Posts by: Dave DeMarco

@David Woz Unfortunately these are very common issues with PM's. I highly recommend you manage your expectations with new management and heed @Shirley R.'s advise. You have enough properties to test a few PM's and get the right one. Split them between 2 or 3 PM's and see who suits your needs best. It will be a pain in the a** to manage 2 or 3 PM's but in the long run it will be worth it. 

A good PM is worth their weight in gold.

@David Taylor PENFED is rock solid

@Arif Siddiqi They are not under a legal entity. I have 5 and there is really no benefit to having them in an LLC until I scale up further. The tax burden still falls to me personally. If you must have them in an LLC you will find that you'll have to get the loans or HELOCs in your name and then put them in the name of your LLC or finance them commercially which could be another set of issues depending on your strategy.

@Lisa Rogers DO NOT go into East Cleveland. There is a reason there are so many properties for so cheap and nobody is buying them. I know the numbers look great on paper but the city is still not "ready for primetime" IMO.  The list of issues in EC are long and classic. The city has been in perpetual fiscal emergency since almost its inception. There are so few police officers that a busy Cleveland Police Dept has to cover them. The city can't afford any additional police and you will be lucky to have the trash picked up regularly. For the most part people live there because they have too.  

An old job had me in the city regularly working with the population directly. I was on the ground and in the homes. I cannot tell you the amount of issues I saw on so many different levels in that city. When/If it does turn around it will be a great place to invest if you get in early but now isn't that time.

If you ignore this advise you better be a local, have a SUPERSTAR PM (that will even work in the city) and make sure your numbers work in the $450 - $550 pr/mo range. Make sure there is A LOT of cushion in your rehab numbers and have reserves, reserves, reserves. Understand that your play is at the very top of the speculative scale and that you are at high risk of losing your investment.

You've been warned and good luck!

@Arif Siddiqi This is how I do it. Penfed is who you are looking for. Open a savings acct online ($5 minimum) and you are a member. Super easy. 80% LTV on NOO rentals, your choice if you want interest only as a payback option and WAY cheaper closing costs than a conventional loan. Takes around 30 days to complete the loan. They will do 3 NOO properties max plus your primary residence.

@Account Closed LOL! Understand this Stuart, the principles of how to this I learned here on BP. My fellow BPers can come across as harsh, opinionated and rigid in their ways but don't dismiss the knowledge base here. 

Remember, there are a hundred ways to skin a cat.

@Account Closed who say that you will get burned doing things this way are both absolutely right and wrong. If you buy in a s***hole neighborhood or pocket area, you will make a ton of money and then give it all back (ask me how I know). What Jay and others miss is LOW-COST DOESN'T ALWAYS EQUAL GHETTO PROPERTIES.

That being said, pay very close attention to Jay when he says local knowledge is key. And that knowledge can come from trust worthy boots on the ground across the country. I'll add that you better have a ROCK SOLID PM. 

Lastly I'll say that you all better stay away from the sub 30K market - so I can buy them competition free!   ;)

Ok guys, thanks for the replies. Looks like it's time to speak with an accountant and figure out how to best proceed from here. My background is in psychology and I have never had to deal with this side of a business before so I really do appreciate the help. 

@John Woodrich

@Ashish Acharya

Aren't I taxed at a lower rate than I would be if the properties are in a pass through LLC?

@Jake S.

Yes it’s a sole member.