All Forum Posts by: Landon Elscott

I haven't done any flips nor do I plan on doing any flips in the near future, but I'll attempt to give my input on your questions?

1.) Personally (and some may disagree), starting out with just a couple properties, an LLC is not necessarily of the most priority. When it comes to your financial responsibility to pay off the debts, you're still personally liable as you or your fiancé is personally securing the debts. What really becomes the main concern are liability coverage and protecting your personal assets in case you are sued - but even then there are cases where they can track ownership of the LLC back to you.

At any case, unless you've got more than a couple properties, a decent umbrella policy will more than cover you. Then, as you start to add more properties to your business, you would consider launching the LLC and start attempting to secure debts through your business income and assets instead of personally. But then, it becomes vital you start to seriously separate yourself personally from the business as much as possible, because likely you're still considered the "property manager" and then tenants might consider suing the "property manager", so some people even separate their property management aspect of the business into a separate S-Corp and furthermore put individual properties in multiple LLCs.

Now, I'm not sure exactly how marriage will fall into this, but it might be wise to seek the council of good tax and/or financial advisor - there may be certain tax advantages based upon when you purchase the properties in relationship to which tax year you get married and there may be certain advantages/disadvantages to purchasing property jointly vs individually.  I'd always recommend having a good attorney on call, but starting out, as long as you do your due diligence, you can usually make due with downloadable forms and leases.

2.)  You can usually find sample business plans online and most can be modified fairly easily for real estate.  When it came to real estate, my community bank was mostly concerned about my current financial statement, future projected financials, and property LTVs and equity.  Having your ideas down on paper is never a bad thing, but most real estate investors you'll be working with will be aware of what the ideas in your head are and will be more concerned with your realistic concepts of cash flow and profitability.

3.)  Hmm...I don't know there.  I'm sure it'll get back to your boss sooner or later in one way or another, but who's to say it wasn't just a coincidence.

4.)  As has been said, focus on what he needs for securing the loan and see what guidance he can suggest going forward.

5.) No comment here on flipping, but I will say, in some markets the general rules just do not apply - and if you want to succeed in that particular market you'll have to adapt to proceed.

6.) Don't use a HELOC, especially since as has been mentioned there is no bank lien on it. Secondly, if you're concerned about separating yourself from your business as much as possible (per having an LLC) then doesn't it seem very counter productive to use a HELOC on your personal home? You are in an amazing financial position with that home, only needing to pay interest, and risking that for a business that may or may not go as planned does not seem smart - have some patience and simply wait to invest the principle balances you are saving each month.

7.)  I wouldn't touch any retirement accounts, and you'll have to consider each individual investment on a case by case scenario, but what I will say is that the stock market is running at all time highs - I'd expect we'll see either a market correction or sell off at some point.  If history can teach us anything, it is that for whatever reason, what goes up in the market will eventually fall and then it'll build back up again.  Now, I could be completely wrong, we may or may not be headed for a bear market and this bull market could continually for quite a while (although I doubt indefinitely).  That said, there is always a certain amount of volatility and risk that I don't think it quite as substantial in real estate.  Personally, and this is just my opinion, given that you can lock in those profits from stocks now, that's exactly what I'd do, with the exception of any well managed funds and roll over those over into what I believe is a more stable investment - real estate.

These are just opinion and not professional financial advice.

 And I believe they just increased pricing again on Buildium as well as reformatted pricing tiers.

I've found that a lot of tenants end up using basement space that doesn't have proper egress for bedrooms.  I've even found that tenants will convert the second bedroom into an office area and then move a teenager into the basement so they can have their own private space. 

So, I've made sure to include a clause in the lease that specifically prevents people from using the basement in such a manner.  It basically says the basement is unfinished and does not provide sufficient egress and that tenants understand the basement is not to be used in such a manner and that doing so is not only a breach of the lease, but a danger to their safety in the event of a fire.  Additionally, it says that I, the landlord, cannot be held responsible for any damages, injuries, or death that might occur as a result of using the space in a way in which it is not intended.

I only ever consider homes in my town.  Not only does that mean I know the market better, but it also means I don't have to worry about managing a property more than 20 or so minutes away.

Do you not have a late fee, perhaps $25-50?

I'd say, if you do have a late fee and so long as their only fault is paying late, I'd say to just let the late fee cover the minor inconvenience.  

If you don't have a late fee, its something you ought to consider - both to dissuade tenants from being late and also to cover your inconvenience and costs associated with serving pay or quit notices.  Not only that, but the late fees should more than offset the difference in 20 days in that you're out their rent income.

I'd say, as long as they are in fact paying the rent - albeit late - and so long as this is their only problem, to just continue as is.  I wouldn't modify the due date because it may entice them to hold off even longer on paying.  Impose a legal and sufficient late fee, consider it additional profit, but be ready to evict at the first sign of actual failure to pay.

Something's not adding up my friend - this is too good to be true if you can get $500/month on a $2-4,000. If it is true, you sir should go to the bank 1st thing in the morning, withdraw the funds and buy it tomorrow! I mean, what is this a slum property with highly saturated market.

I think the next step is to perhaps prod a little deeper into why the credit score is less than desirable and where they stand on being able to afford rent. Make it clear to them that you have some serious apprehensions about leasing to them - and see if you can figure out their game plan. Either that or stop wasting time on them if you think there are better applicants just around the corner.. But first of all, I think it is important to understand that there are certain reason that many people are renters and not property owners - some our too young to have much savings, others are relocated often, some just want the convenience of paying rent, others enjoy the rental apartment living in metropolitan cities, and of course there is a group of individuals out there are necessitated to rent simply because of bad credit choices.

In my particular area, people with good, established credit are typically purchasing homes and so the other camp of people are those who have less than stellar credit and are renting based solely upon the fact they cannot buy a home based upon their credit.

It becomes a difficult decision at that point requiring further investigation. One potential tenant I had with an absolutely terrible credit score as a result of Bank of America illegal foreclosing on her, another tenant had made some pretty bad automotive purchases in the past that resulted in them getting repossessed for failure to pay; however, she had never ever once missed a payment on her mortgage and just needed a place to live in the interim after selling a house.

Rarely, where I live, do you ever find the absolute perfect tenant. Perfect "tenants" just don't exist very often because those are often the same people who are just buying a house instead around here. Just some things to consider. Obviously, if credit score scares you and you think you have a good chance finding someone else, why bother and just deny the app - otherwise, if you think the person is otherwise a good candidate, perhaps you'll need to ask some more questions. The one good thing I tend to see around here is that a lot of people tend to rack up some pretty high credit card debt, buy fancy cars that end up getting repossessed, etc, but at the end of the day they often understand that they and their kids need a place to live and so typically the concept of getting evicted is far more scary than having collections call because you didn't make payments on the 60" TV.

Despite a previous post in which I was encouraged to avoid renting to an out of state tenant, I have one potential tenant who is seeking a two year lease and works for international contractor that moves him from location to location on basically 2 year periods.

He's already submitted an application, I've verified employment, his income is substantial at $120,000 gross, his record clean, he and GF are in their 50s and my Facebook snooping has shown no issues either. The only issue is that in 2 years, his company may or may not relocate him to fill a need elsewhere in the country.

He's wanting to sign a lease so he can keep his hotel stay to a minimum and have a place lined up. I've already disclosed any thing I feel could be construed ad a negative aspect of my property and many pictures and he was pleased with my honesty and thought the property would be good for at least a year or two.

How do I progress? Do I send a blank lease in the mail for him to send back signed? Do I sign it first and then mail it or send it blank.

Do I request fees (security deposit and first months rent) in the mail when he sends the lease back? Or do I send a lease in the mail, get it signed, and then expect fees when they arrive and if fees aren't received on move in date the contract is void?

Or do I request fees in mail, then send the lease for signing...assuming they don't think I'm scamming them.

Thanks guys.

Hey guys,

This is concerning my very first rental property, which is located in Iowa about 5 minutes from where I live. There is plenty of local interest, but I've also got an individual who lives in Oregon that is interested, as they plan on moving closer to family.

Obviously, people who move from out of state are in just as much need for housing as someone moving across town, but I'm wondering how to approach this individual. Should I just straight up consider not going with them based upon the fact that they are half the U.S. away as that presents some certain challenges in areas of screening them.

They want to send the first month's rent and deposit by mail and have a place lined up before getting to Iowa. Seems reasonable enough, but what does BiggerPockets think?

Personally, I wouldn't risk losing what seems like a long term, good deal by attempting to squeeze in one more month of profits. Best goo probably not get too greedy in this instance. Losing one months rent is a small price to pay to give the long term tenants a smooth move in.