All Forum Posts by: Debra Grumbach

Originally posted by @Thomas S.:

The other side to the argument in the case of a law suite is that the suit can and will often name the directors (owners) as being personally liable. This of course circumvents the personal protection.

Lawyers are not stupid and they will try every possible avenue to go after assets held out side a LLC which is why insurance is really your only true protection.

It really comes down to whether the individual, as Michael suggests, wants to wear a hard hat when they go for a walk.

Still waiting for first hand examples.

In a lawsuit everyone and everything will get named. Whether or not the individuals will be held liable is another story. Many times lawsuits against the individual officers of any entity will be dismissed unless the attorney plans to (and usually has some legit evidence of) prove personal negligence that would void any protection of the entity or the liability insurance.

And it may have already been stated in this thread, but if they can prove negligence, no insurance will cover you and no entity will protect your personal assets. EX: allow a staircase to degrade and handrails to get lose over time, etc with tenant complaints (or not) and you don't fix it and someone is injured - you WILL be found personally responsible.

There's nothing wrong with having your primary residence paid off. Why put it at risk if something in your life goes sideways? Imagine the security your wife and children have by having a fully paid for home should you be seriously injured or die. I'm assuming you have life insurance also but that's only good if you are dead. Sounds like you have a significant amount of money available for investing every month. Can you match or exceed the returns you are making in the stock market with real estate in your market? REI, even if the returns are not equal to the stock market, may be a good way for you to diversify your portfolio. It's all a matter of risk tolerance, goals, and desire.

Check your state but some states allow attorneys to be licensed as brokers without taking the class. Just pay the fees.

I know in my area the county reassesses the values (and thus taxes) based on the sale. This happens in January? of the following year. However, bills don't come out until Sept? I believe. But they are annual from Jan - Dec. So if you bought a new construction house in 2017, the 2017 taxes would be based on the fact that it was an empty lot in January (assuming construction started after). In 2018 the taxes would be adjusted to reflect the "improvements." But you wouldn't actually get that bill until late 2018. If you were unaware of this you could be in for a real shock. Now that may be obvious but the same thing happens when you buy a 20 year old home that has appreciated since last sale and you get a big bump that first year. This is the base year and not subject to the tax increase limit (I believe it's 10% per year after the base year for a new owner).

I would first want to see the lease (prior to purchase) and inspect the unit. then make your decision. You could let him paint it with stipulations (workman like quality, color, etc) and a good security deposit.

I've seen those units listed at $70K. I would be very suspect about them pulling in $980+ in rent per month unless you see a lease. 

depending where in Plano you will be working at can seriously affect your search area. If you live in East Plano and work in the Legacy/HQ/Communications area - you will drive for 30 (on a good day) and more (depending on time of day/school zones etc).

We were 4 miles from husband's job in Plano and it took 20 minutes to get there. Moved to Frisco and now 8 miles away and it takes 15 minutes and we have 3 route variations we can use without the tollways. 

Originally posted by @Drew Oberholtzer:

Thanks!  Any method to figure out the premium that you mentioned?

See the second post I made. Ask the investor what he's looking for in terms of ROI. If he says he wants 8%, $218,750 would buy him 25% equity and earn him 8% if the current cash flow on the portfolio is the $70K i mentioned earlier. You have to decide if you think that's "fair" and then present it to him. From a numbers perspective, it seems "fair" to me but I didn't build that portfolio though I have built a business in the past and sold a 25% stake in the business to a partner who eventually bought the whole business.

Originally posted by @Tom R.:

Originally posted by @Debra Grumbach:

If the "deal" can't sustain an extra couple of hundred in repairs, it wasn't a deal to start with.

A couple of hundred in repairs are no problem but electrical repairs in my area usually range in the thousands. Only a licensed electrician will can make the necessary repairs and If there isn't room for a couple more breakers in the breaker box he will have to install a new box and rewire it. The window alone will cost a couple of hundred of dollars add in a hundred more for the other minor repairs and I'm already at 300 before the major repairs have started. In a rental house in CA everything has to be to code. This was advertised as a freshly remodeled move in ready home and I ran my numbers as such. I knew I was going to have to make a few repairs but from where Im sitting Im looking at around $1000 in repairs possibly more.  

I know my budget is a lot tighter than most investors would work with. This is my first home purchase. I don't even own my own home. I sought a lot of advice when looking for a house and everything has been far more expensive than anyone told me. Example my closing costs are over 10% of the loan amount everyone told me to expect 5%. That alone cost me more than $2000 off my budget.

I keep running the numbers as the price goes up and they still work but it keeps getting tighter. Yes I will still make money on the investment if the price goes up another thousand or even five thousand but I set a limit for cash on cash return when I decided to become a real estate investor and I intend to stick to that limit.

It's great to set a goal for CoC return. I believe in setting standards and sticking to them. If you want a 10% CoC return, don't accept less. You will find them. But the question I have is How much do you already have into it? How much will the extra repairs affect your CoC? What will it cost you to start over and "forfeit" the money you have already put into the process? Without knowing those numbers "I" can't advise you. But I would say, run them and make your decision.

get your own realtor. it doesn't cost you anything. make sure they are representing YOU, not the seller. As a buyer's agent they have certain fiduciary responsibilities and confidentiality to you.