All Forum Posts by: Garrett Ellison

@Nathan McBride congrats, man!! Love to see the progress!  I'm still working on my first flip with an equity partner/family friend, that I hope to reinvest the profits for buy-and-hold like this.

Financed with a commercial loan (80% of purchase price, 20-yr am at 5.5% on a 5-year lock), but the kicker is that the bank let me apply the seller credits toward the down payment

MIND BLOWN!  I have a new negotiating tool.

Oh, and to help out with cashflow while making repairs, the bank hooked me up with 6 months of interest only financing as a nice surprise at closing - it definitely pays to develop relationships

Which bank is this, if you don't mind me asking?

Thanks and congrats again!

Garrett

I disagree with @Thomas S. about LLC's complicating your taxes. I think it actually simplifies your taxes, and creates a clear wall/bucket for your rental income/taxes. As others have said, an LLC won't necessarily protect you 100%, but it can provide some legal protection and provide a simple layer of anonymity.

As far as suit protection, call your current insurance provider(s) and ask about an umbrella policy for converting your primary residence to a rental.

Congrats! That's exciting. I'm not a legal/financial/accounting expert, so please consult your professionals, if you'd like official advice. However, I'd recommend doing a separate LLC per property. Yes, I'd also recommend deeding the property to the LLC.

I'm secretly hoping to run into the same issue, by the way!  Haha.  My current home could be a great rental.

@Sherman Dunn I agree. Don’t worry about guessing future markets. Cash Flow is king, and will help to ensure a stable investment.

I like condos more than the average investor, but I agree with one major criticism: it's really easy for developers to swoop in build more and more condos, as opposed to SFH, where there are only so many, and you own the land underneath the property. SFHs appreciate at a much much faster rate than condos for this reason.

But again, it’s not an appreciation game- it’s a cash flow game!

I think there’s still a market with condos near LSU. The new development certainly saturated the market, but it’s considered Class “A” and is pretty pricey.

I’ve analyzed a few condos around LSU that cash flowed positive, but not quite as much as I require to pull the trigger. I usually throw out the condos near Brightside and Tigerland, though, as those areas are going to attract the rowdiest of students. 

 Hot take.  Although, @Brandon Turner often says it's a numbers game. What you said it absolutely correct, just play around with the numbers until it cash flows and ROIs where you like it. I do believe, however, that you're incorrect by saying "most people don't even calculate cashflow properly." Deferred maint and CapEx are a common expense line item on CF analysis spreadsheets/calcs.

It depends on what your goals are.  For me, I'd like to get to FIRE as fast and as safely as possible, so cash flow is very important - if not most important.

@Robert Leonard thank you for your based reply. To Kevin- there are MANY parts of Baton Rouge and South LA that have never flooded.

As far as natural disasters go, you’ll be hard pressed to find an area in the US that isn’t affected by SOME kind of natural disaster every now and then (hurricanes, flooding, tornados, forest fires, earthquakes, blizzards, dust storms, etc).

Like @Craig Boutte said- be wary of “newly renovated” homes for low prices. It’s possible they flooded in the great flood of 2016. Check out the flood maps on LSU’s Ag site.

 Good point.  Seems like it's legally a gray-area.  I've also read about "booze exchanges" where there's a "take a bottle, leave a bottle" policy.  That makes it more ok, I think, because you're not directly "selling" alcohol.

 That's a great idea!  Could work with beer/whisky too.  Just remember to take an inventory between guests!  Haha.