All Forum Posts by: Jerry W.

@Suzanne B. there is a lot going on and the laws of the state you reside in will control.  I cannot tell what state you are so these are generalizations.  First a judgement recorded in the county normally acts as a lien on all property in the county.  Once the lien is attached transferring title will not remove it and will probably make it worse.  It varies from state to state but if a lawyer drafted the Quitclaim deed it should have said tenants by the entireties as the form of ownership.  I would consider it malpractice to not make a deed to a husband and wife as tenants by the entireties.  What this means is that unless both of you owe the debt they cannot attach the property under normal conditions.  In my state that would not be a breach of of the mortgage.  Some states recognize tenants by the entireties but limit the dollar amount that is exempt.  Have your attorney look at it.  Banks normally have a clause that allows them to attach all accounts you have with them in case of default, some even for anticipated default at their discretion.  That does not mean that the bank might not be acting in good faith and could possibly be liable for that.  I would check into the ownership by the tenants by the entireties as soon as possible. 

@Sophie Grizzle, I am looking, and making offers, but have not had luck in buying this year.  I am mostly buy and hold and I need cash flow for that.  I have picked up a small property or two that are not fit for renting and I am simply cleaning them up and reselling to someone who will fix them up for homebuyers.  At this point I am willing to buy a property that will even break even and count on a little appreciation, but between interest rates and high prices I am swinging but not hitting yet.

Jordan,

There are several costs that are common to almost all rentals.  The first standard cost is real estate taxes and insurance.  Those vary a lot from state to state, price point of property, neighborhood, etc.  Lets say an average of $80 per month for insurance and $80 per month for taxes.  Then it depends on the property, but I figure 10% of rent for standard repair of items, and 5% for capital expense catagories, like replacing a roof, water heater, etc.  Then I figure 12.5% for vacancy.  So if rent is $1,000 per month, then repairs I estimate per month at 100$ per month, capital expenditures are $50 per month.  I calculate now that my costs are about $435 per month not counting m y mortgage payment.  On a $100K loan on a 20 year basis, at 5% interest my payment is $659.96 plus my $435 expenses comes out at $1094 per month total costs.  So you are losing money if you buy it.  If your mortgage payment was $500 per month you would have at least a tiny bit of cash flow.  It is just a quick way for me to check to see if it is likely to pencil out.

@Jordan Rodriguez, welcome to BP.  I think using your current house to start the experience in investing is a great idea.  It might not be the most profitable as it was not bought to cash flow like a rental house would be, especially since it was new construction.  Still if your rent is at least as much as your mortgage payment it will help.  Normally your costs about 35% of your rent plus vacancy.  Ideally I like to have only 50 to 60% of the rent to cover the mortgage payment.  Go Pokes!

@Jake Chenoweth, thanks for replying.  You have a lot of moxy to start off with an 8 unit.  I really like single family houses myself, but it is more maintenance per unit.  Well you have to pick what interests you.  Let me know if you decide to jump in.  I have moved more into vacation rentals myself.  I had just one for several years, but last year I added 3.  They are slow in the winter, but are finally picking up some speed.  Hopefully they do well this summer.

@Sean Wilson, thank you for taking the time to post this. I constantly get messages and advertisements from VACASA. They had a few listings locally in my tiny town and they went very poorly. I saw they had some banned dates from cancelling and a review or 2 of not having cleaned the unit. I am trying to move my STR business forward and just getting to the stage that I need to buy a property management software and pricing software and even an automatic keyless entry system. @Lyndsey Garza, if you have any suggestions I would appreciate it.  I began experimenting with STRs back in 2016 and didn't even make expenses, but through trial and error I now have 5 and they are doing well and have a house two bought that I plan to fix up as time and money allows.

@Jake Chenoweth, you have a job, live off that income and save up your profit.  Use the profit to propel you faster on investing.  Read Rich Dad Poor Dad.  If you are familiar with the term snowball as it refers to increasing somethings size dramatically, when you roll a snowball to create a snowman the longer you roll it thew faster it grows, but only if you keep reinvesting.  You have to buy your first one for any of this to work however.  I agree your state is not a good one to get started in as it heavily tenant friendly, and hostile to owner property rights, but others succeed there.  Now interest rates have risen to 3 times what they were 2 years ago.  Quit cheering from the sidelines and start playing the game.

@Jake Chenoweth, time for an update Bud.  Have you began your investing career yet?  I am anxious to see if you jumped in and if you did how it is going.  Tag me and tell your story for the past 2 years.

@Paige Nowaczyk, I went to the VRMA in Las Vegas in October.  It is geared to larger operators, but I did learn a lot of useful information.  I met a lot of other smaller operators.  I liked having a lot individual classes and topics.  You might try it for general information, then look for someone running a specific training on it that has regular meetings throughout the year and mastermind groups.  The followup can be as important as the first wave of learning.

@Hariharan Elavarasan, welcome to BP bud. First off most things you do have trade offs. If you buy a new car you pay less but don't usually get a new car warranty and lots of miles. The same is true for using LLCs and investing. Using LLCs does provide greater liability protection if done properly, but costs more. You will probably pay a higher interest rate in getting a loan under a new LLC. You will probably have to pay more down payment and will still have to personally guaranty the loan. That being said LLCs and other entities usually provide greater protection. (Trusts do not provide any liability protection). Most LLCs are relatively cheap to set up, you can get it done for about $200 in Wyoming, or you can go to Anderson Business Advisors and will do it for about $8,000. If you want anonymity you can do a few more things, but if you run it yourself that will not hold up to a lawsuit unless you pretty much divest yourself of participating in it.

I would always have a separate account for your business. It is necessary if you use an LLC but just plain good sense even if you own it in your personal name. Your accountant will thank if they do not have to look at every check written or deposit made to see what income and expenses are. A single member LLC can be added to your own tax return under one of the schedules, D I think, without a separate return. Unless married multiple member LLCs have to file their own tax return. You do not have to get an EIN if you are a single member LLC as you use your own social security number for taxes, or even a bank account. You must get an EIN if you are an unrelated multimember LLC.

Even if you form an LLC you need to run it correctly, don't comingle money, keep reasonably decent records, put the LLC as the landlord, etc. Use common sense, get decent insurance and take care of your property. As you gain in wealth you will start to have assets worth protecting, you can spend more on protection. It took me years to show a meager profit when I started and we did all of the work ourselves. Now 30 years later I am probably too lax about it, but have 3 separate companies I use for rentals but have left 3 single family rentals in my personal name for reasons too long to explain. Most of my personal assets are owned with my wife as Tenants by the Entireties, but my rentals are only owned by me for greater liability protection. Even if they could pierce the corporate veil my personal house and a few other businesses items are protected that way.

There is a lot of litigious people out there and unfortunately some shyster attorneys who use threats and intimidation to get money from folks like landlords who have not done anything wrong but had someone get hurt on their property.  Insurance will cover most of those.  The plain matter is that if you don't own much they have no reason to go the extra step to sue you personally.  Once you gain some wealth you can afford to get better protection.

Nothing will protect you from doing bad things like driving drunk in a company car and hurting and killing someone, or ignoring safety codes and killing folks with carbon monoxide poisoning from a furnace, or burning the house down from ignoring fire codes, but running your business correctly, buying insurance, and using an LLC properly will provide massive amounts of protection from liability. Nothing will provide absolute protection from shyster lawyers sometimes, but that is rare. I love seeing those guys get beat, but they usually extort some money from people just to get it over with.

Hope this helps.