All Forum Posts by: Greg Scott

This is my personal opinion, which probably won't be popular.

If you are worried about the cost of hiring an attorney to create a proper operating agreement for your LLC, you probably don't need an LLC, and if you choose to use an online site to create an LLC, you probably get the protection you paid for.

In a typical home or apartment, HUD guidelines have been two people per bedroom. Babies area gray area.

You can set up an LLC in whatever state you want. If the LLC owns a property in a different state, most of the time, the other state will require you register your LLC as a foreign LLC. (Foreign to the state, not the nation) Furthermore, they typically require you to have a registered agent. They want a mailing address in the state where the property is.

Great post. I would add that the problem extends beyond Class D properties.

Twice I rented B class rentals to Section 8 residents.  In both cases after they moved out I had to spend a lot to bring the property back to its previous condition.  Those rehabs used up all the cashflow I had from their tenancy.  I made zero profit from operating the property.  At least I got good appreciation from those properties.

These days, many state governments are trying to force more landlords to accept Section 8.

Cleveland must have been #7, right?

I read your post a few hours ago and started thinking about. 

I've paid for a handful of programs over the years from cheap to expensive and narrow-focused to broad-based.  It would seem that turning a real estate training program into a successful business is very difficult because most of them are not around any more. 

The ones I've found have the best value were ultimately side-hustles for the founder, and they were making most of their money from their real estate.  Investing was their main focus.  Their side-hustle was helping others become better investors.   Cost was not as much a determining factor.  I got great value from a $200 course on how to use Quickbooks for managing SF rentals.  I also got great value from a very expensive course on how to properly buy & manage residential real estate.

Regardless of cost, the ones that offered low value were the ones where the founder wanted to sell education as their main business.  One middling program I got into, I later learned the founder was trying to get out of managing real estate because "it was hard" so he decided to teach real estate investing instead.  Since he clearly wasn't very successful at real estate, I'm not sure why he thought he would be good at teaching it!  Of course, he flamed out after a couple of years, but he followed some of the path you outlined.

Hopefully you raked in enough cash to buy a warm jacket!

Love the work ethic. Most don't want to work.  But, that is where the money is.

I pick up trash at our properties.  I have many times jumped in the dumpster to get large boxes or furniture out to break it down. 

I"m sure you've done similar.

If your 401K is with your current employer, it is (effectively) impossible to make it an SDIRA.  If it is with a former employer, simply create an SDIRA and roll it over.

Before doing any of that, you should familiarize yourself with Prohibited Transactions. Based on your description, it sounds like you would violate the self-dealing rule and could put your SDIRA at risk.  To avoid Prohibited Transactions, SDIRA investments really need to be passive.

Oh, I'll also mention that SDIRAs are subject to UBIT tax.  Unless you have a Roth, you can easily pay much more in taxes by investing in real estate through an SDIRA.

You should vet the company to ensure they have the resources to pay the rent.

You ALWAYS do background checks on the people living in your property because if you let in an axe murderer and they harm someone, you are likely to get sued.

Whether or not you charge an application fee is up to you.  During COVID we tried not charging an application fee and it backfired.  If they have nothing to lose, more unqualified people will apply.

I'd talk to more contractors on how to solve the problem. The easiest solution is typically keeping water away from the wall.  Improving grading or having downspouts drain into pipes that move the water away from the house often solve the majority of issues.  Fixing the inside of the house is usually the last resort.

Regarding disclosures, it wasn't like the sellers were able to pull one over on you. You found it during inspection and got a $5K discount. You KNEW about the problem, got compensation, and bought anyway. I'm no attorney, but I don't think you have a leg to stand on regarding disclosures.