All Forum Posts by: Greg Scott

If you have 4 or more units you are subject to fair housing laws. HUD has interpreted the law liberally, providing direction that you cannot reject them solely because they have a felony.

At our properties if someone has a violent felony, we automatically reject them.  If it is a non-violent felony from many years ago, we would ignore that.  Repeated felonies would also cause us to reject a prospective resident.

We use SW Agreeable Gray.  It is a light enough gray that you can paint the walls and ceiling the same color, avoiding ceiling cut-in.  When you look up at the ceiling, you will swear it is white.  When you see the wall in contrast to door trim, it looks like you have 2-tone paint which appears more upscale than having everything white.

The picture below is not one of our apartments but from the picture you can see exactly what I described.

We've used numerous banks for SF and apartment rentals.  I'm not aware of any banks that do this.

But, are you sure this is a good idea?   If you actually created multiple accounts and put money into them every month, you should also be tracking those same transaction in your accounting package.  When you do your month-end bank reconciliations, you would have to do one for each account.  It seems to me like you are increasing your workload by a significant amount for very little benefit.

I recommend creating a simple spreadsheet that would do the math for you without adding all the accounting headaches.

I know there are plenty of people on this forum that rent to Section 8 tenants.  About 5 of our 800 residents are Section 8, but we do not accept new Section 8 residents.  In my experience, you tend to get a much rougher tenant.  My average repair costs are higher with Section 8.  The worst part, however, is you've made the government your partner.  If they are incompetent or have a lot of bureaucracy, you get the fun of dealing with that.  I hear that some local Section 8 authorities are easy to deal with.  In contrast, a number of landlords here in Indianapolis were facing foreclosure because IMH, our local Section 8 authority, hadn't paid rent in many months.

FWIW, the Trump administration recently floated the idea of a 2-year cap on Section 8 vouchers.

On the BP podcast they have been talking about scaling lately and I've seen numerous posts here with people asking how to achieve scale.  Here is an exaggerated example of what I have seen:

"I have three rental properties.  They each cashflow $200 per month before vacancy and repairs.  The occasional repair or vacancy has eaten into my cash.  I have $5K in the bank.  I want to do a BRRRR but all my rentals are at 80% LTV.  Can I get a HELOC or a private loan?  I want to grow my business.  How do I scale up?"

When I see posts like this, it seems the worst thing they could do is scale.  Making a bad business model twice as big, doesn't make it a better business, it just digs the hole twice as fast.  Frankly, I think most are getting it backward.

I'd rather see people focus on generating great profits.  If you have figured out a great business model, then scaling is easy.  You have your own profits to reinvest.  If you want to bring on additional capital, there is enough to pay your lender / investor and YOU.

Quote from @Tom R.:

A month ago I got a letter that my insurance company Farmers is discontinuing the cover I have but their partner Foremost will pick up my policy and I will be getting a letter from them with the new policy.

To no surprise the new policy is more expensive. What was a surprise is it is more than double the cost with a higher deductible and lower personal property coverage. I'm pretty sure what they did is illegal in California.

So now I'm shopping a new insurance company.

California's law has held insurance rates artificially low in that state.  This cap on insurance rates is why so many insurers have been leaving over the past decade.  As insurers leave, supply is reduced.  At some point, the pot boils over.  

Yes, I believe you are likely creating a double-tax situation for yourself. Effectively, you are taking post-tax money, running it through your LLC. Yes, you will have some offsetting expenses, like interest, but any cashflow generated is taxable income that would be taxed again. Overall, not a good idea.

Talk to your CPA and lawyer, but I would think this strategy is better. Don't pay fair market rent. Pay minimal rent, perhaps something equivalent to the mortgage payment, so there is no cashflow. A lawyer might argue you are piercing the corporate veil, but let me ask you this. How likely are you to sue yourself for a slip & fall? Now, if you have other properties in this LLC, it becomes a tougher decision.

This is a bit older, a 2022 podcast, but it tells our story, at least the initial launch out of the corporate world.

I did something very similar to what your friends did.

We always expect our hosts to get the river cleaned before we arrive.  How hard is that, really?