All Forum Posts by: Megan Hirlehey

Hello BP! I’m a newb, under contract for my “first” property (it’s actually my second, but the first one I’ve bought specifically as an investment property). I started an LLC to hold my properties in and I’m meeting with an accountant this week that I may hire as part of my team. My plan was to have a tax professional who is familiar with real estate on board right away so I’m doing things the most tax-efficient way possible from the beginning. I know the family that owns the firm, I went to school with some of the kids and I’ve known them to be decent, honest people, which is why I’m going to them first. My question is, what kind of questions should I ask and what specifically should I look for in an accountant/tax professional? I am meeting with the owner, the guy in charge of their real estate tax planning services, and a “staff” member, but apart from making sure I hire someone familiar with RE, I’m not sure what else I should be looking for. Any comments/suggestions/tips on what to look for or what to avoid would be greatly appreciated!

This is great! Is there anything in the works to fix the job search page (or maybe it’s not broken, maybe I’m the only one having this problem?) when I try to narrow the results by my city or state it will return zero results, but I know there are posts for my city/state because I can find them if I pick through the posts manually. Not sure if anyone else is having this problem?

I took out a HELOC against my primary residence for my first purchase, so since the loan is secured by my primary residence (not in the LLC) and not the investment property it wasn’t a problem. However, if that is not an option for you, then yes it may be more difficult. Honestly though, in the current market environment it really seems that even private money isn’t hard to get. I don’t even have one investment property yet (it’s under contract) and I already have 3 or 4 people who want to invest in my company. I don’t think you should sacrifice the long-term gains and liability mitigation of owning everything in an LLC for the short-term convenience of getting an easier loan. Conventional money dries up pretty quick, might as well start from the beginning being creative in your financing and hit the ground running. Just my opinion.

Contact a professional asbestos removal team in your city. That’s what I did and they advised me (free of cost, over the phone) on what I had to do with a potential asbestos (not tested) issue in a house I was looking at to be legal and up to local code.

After perusing the forums on here and talking a lawyer-family member of mine (licensed in a state other than the one I’m buying in, so unofficial) I decided to start a LLC right off the bat. It seems there are a lot of issues down the road with transferring properties into LLCs due to “due on sale” financing clauses and transfer taxes (2-4% in PA), in addition to the legal ramifications. I had a lot of people advise me that an LLC “isn’t necessary in the beginning because of low exposure,” but that doesn’t make sense to me because the way I see it, this is quite possibly the riskiest phase of running my business, where I have almost no assets other than personal ones, and if someone wanted to sue me and they win, and the damages weren’t fully covered by insurance and liquidating my one or two “cheap” rentals, well now my personal residence is on the hook and I could literally be put out on the street with nothing. It seems that as your business grows and acquires more assets, you are in a better position to absorb loss and not literally lose the roof over your head. Anyway, only my opinion and that’s how I made my decision. I’m still working with a lawyer on some other aspects of starting my business and haven’t gotten a final bill yet, but I think he quoted just the LLC price at like $500ish. It took about 3 weeks from first phone call to having the formation papers in hand, but that may vary by state.

A little late to the party, but I liked the way you handled it. I’m just getting into this business and sometimes I wonder if it’s possible to be successful and moral at the same time. Your story gives me hope that it is. While I’m new to being an active investor, I’ve studied and been around business/investments enough to see what greed can do to people if they don’t have a moral compass to guide them. Before everyone jumps all over me, I have a MBA and I know how businesses work. I realize sometimes you have to make tough decisions to be profitable and succeed long-term, but I don’t necessarily believe that always taking the highest profit at the expense of everything else is necessary to still succeed. But I guess that also depends on your individual definition of success. Maybe I’m just naive, but I hope that there’s room for ethics in this industry or I already know I’ll fail because I believe when push comes to shove, the ultimate determining factor will be whether or not I can live with the consequences of my decision. I think that thought should guide everyone because at the end of the day, none of the people in this thread or in your network or anywhere else you sought advice have to live with your decisions and their consequences, only you do.

To alleviate all of the issues everyone is bringing up, I started an LLC from the beginning and am under contract to acquire my first property under it. Call it overkill for one property, but I’ll have none of the financing issues, sales/transfer tax, insurance issues etc everyone is mentioning down the road as I (hopefully) acquire more property and increase my risk exposure

I just went trough the same process myself and settled on a HELOC because they were significantly cheaper than Home loans (I borrowed against my primary residence as opposed to financing the property I was buying, so as another responder pointed out, this was essentially a “cash” deal because the money to buy the property was not tied to the property itself). I talked to about 6-7 banks before closing on a loan and the loan fees were anywhere from 7-10% of the loan amount for a home loan and the HELOCS were all a flat origination fee of under $100, with a yearly fee of $50-75 depending on the bank. No other fees for HELOCS and all the banks I looked at paid for the appraisal for either the HELOC or the home equity loan with the exception of Quicken loans, Quicken charged a flat fee of $400 to cover the appraisal whether it cost more or less to actually get it done. (I don’t recommend Quicken at all, the loan officer I dealt with with was extremely pushy and dishonest and refused to listen to what exactly I wanted and just tried to sell me the only product they offered so he wouldn’t lose his commission). I decided on the HELOC because my plan is to refinance my rental in 6-12 months once I have a renter in it, pay off the HELOC with the cash from the refi, and then I can reuse it for another investment property. With a home loan/mortgage, once it’s paid off, it’s gone, you have to apply for a new loan for the next piece of property. Long story short, there are definitely better/cheaper options out there you just have to do the leg work. Talk to community banks, credit unions, or other investors in your area. Also, if you add a financing clause to your purchase offer then it should give you more flexibility as far as having time to shop around for a good loan (Verify with your agent, laws differ across states). Don’t ever let any financial professional tell you that “you don’t have a choice.” That is a bold-faced lie in the world of lending and that individual does not have your best interests in mind. Also, don’t EVER let sellers pressure you into a crappy financing deal by tightening the timeline. You’re better off losing the property than financing it wrong and losing hundreds, if not thousands of dollars. There will always be another deal down the road, but a bad financing situation will ruin you

What do you mean by “Can’t use it like a checking account?” Do you mean that you want a reusable line of credit like a credit card? Don’t confuse Home Equity Lines of Credit (HELOC) and Home equity loans (which function exactly like a one-time use mortgage). Laws may differ in Maryland (I can’t imagine they would differ THAT much though..) but I just took out a HELOC myself for that exact reason. HELOCs typically function exactly like a credit card except thy are secured by the property you are borrowing against, whereas a normal credit card is unsecured. I took out a HELOC against my primary residence to pay for an investment property as well as the upgrades and it functions like a credit card. Basically, I have a set limit that I can’t go over, and I only pay interest on the amount of credit I use, when I use it. So if I use $10,000 worth of credit, I only have to pay interest on $10,000 and once I pay that $10,000 off, I am able to borrow against this line of credit again just like I would with a credit card. If that is what you are trying to do, I would say look at other banks, if they are saying it is not “reusable” like a credit card (or checking account) they likely aren’t aware of what it is you want and are offering you the wrong product. On a related note, if you are in fact able to secure a HELOC, using it to pay off your mortgage may not be advisable in our current interest rate environment. HELOCs typically have adjustable interest rates that are tied to the prime rate, while mortgages typically have a fixed rate. If your mortgage has a fixed rate, you may be better off just making extra mortgage payments instead of taking out a HELOC to pay off the mortgage and risking the rising interest rate on the HELOC. This is just my experience with HELOCs, I’m not licensed to give any kind of financial advice, check with your accountant or financial advisor to ensure you are utilizing the correct financial products to reach your goals.

I love your ambition. I wish I was that driven and smart at your age. I agree with what everyone is saying about school, you don’t need an expensive, fancy degree, but in the world we live in, unfortunately a degree (or some other kind of formal education such as a trade school) is a must, even for entrepreneurs. Haven’t read all of these, some people may have already made these suggestions: 1. I agree with the military if you’re looking for cheap/free school. There are a lot of options besides “joining the army and going to war” that still cover the cost of school and will open many doors for you once you’ve earned the title of “Veteran”. If you’re interested in more info on that, message me. 2. Does your high school offer AP courses? If so, take every AP course you can and pass the tests. You can graduate high school with a semester or 2 of college already complete if you play your cards right. Also, check with your local community college and see if they allow non-graduates to take credit awarding courses. Another way to rack up college credit cheaply and early on in life before you have “real” responsibilities. 3. As far as earning capital, like everyone on here has said, due to child labor laws there really aren’t many options for someone your age other than mowing lawns, walking dogs, etc. it’s slow money, but at 14 you shouldn’t have any other expenses so you can save every penny. There’s tons of apps you can download now or websites you can sign up for that you can do side work on your own schedule (check the age requirements before signing up for anything). Wag, Task Rabbit, Upwork, etc 4. I don’t agree with the people saying not to invest. At your age, you have nothing but time and you’re in a better position than probably anyone on this website to invest. The only caveat being that you can’t open a brokerage account by yourself, you’ll need someone to be on the account with you. Ask a parent to open a cheap brokerage account with you (some of the cheapest out there right now are vanguard and Charles Schwab) and put your money in a low-cost index fund such as VTSAX which just tracks the stock market. Requires minimal knowledge and research and provides a high return 5. In the meantime, like everyone on here is saying, learn everything you can about real estate so when you do have the money and are of legal age, you can jump in and get started!