All Forum Posts by: Jerry W.

@Howard Jow, what @Steve Vaughan is suggesting is that if you use your personal names you can low interest 30 year loans with fixed rates. When you are a corporate entity you can often only get 20 year loans and 5 year adjustable rate mortgages. The idea is to lock in the low rates. Using an LLC does help on your potential liability, but you usually pay a lot more interest and have higher mortgage payments.

I second getting getting a lot of money out now to buy the next one.  I like being conservative, but when you are starting out growth is hard to come by.  It will be easier to make the mortgage payments out of your own pockets if something horribly unforseen happens.  When you start getting a lot more units you may have to be more careful at least I was.  I knew I could make 2 extra payments b y scrimping.  Now the rental income is 4 times my monthly salary, so I use a lot less leverage and work to keep cash flow high.  It is all about lifestyle.  If having your primary home paid off makes you sleep better at night then definitely pay it off.  What is acceptable risk for some is not acceptable to others.  You have to tailor your investing to your own personality.  Best of luck.

OK, both sides have taken jabs, lets get back to something productive.  @Jonathan Vese, I do vacation rentals and use both VRBO and AIR BnB.  I actually get close to 70% of my rental bookings from AIR BnB.  That being said I get more fraud attempts under VRBO listings, and most of my long term stays from VRBO.  I would definitely use both sites if I were to list.  I only have 2 going at the moment, but hope to have my third within a month, and hopefully 2 more before summer.  I have another that will require a lot of work and might not be ready until late this year.  I am going to have to step up my game as the 2 I have take a fair bit of time.  I don't seem to be able to find folks who think about filling up the salt and pepper shakers, or replacing drinking glasses that get broken or disappear.  Historically getting cleaners and folks to shovel snow has also been a challenge.  If I add the next 4 I have planned I will have to find more cleaners hehe.  Those are good problems to have bud.  It means you are getting lots of bookings.  You might set your systems up early to avoid being in my spot.  My first attempt at using the combined calendar for both sites about 5 years ago was a disaster, but I understand it is pretty reliable now.  That is my next challenge.

@Daniel Carrillo, Welcome to BP. I invest in central WY. Most of my rentals are in HOT Springs, County, Fremont County, and Washakie County, although I wouldn't mind expanding more if I could find a deal. I also have a few vacation rentals. Give me a shout if you come through. I used to go to the local REIA in Cheyenne but it has been several years as my schedule that took me to Cheyenne several times a year changed. I have several projects keeping me pretty busy locally at the moment.

@Ash Hanna, welcome to BP.  First anyone who says they didn't have fears in changing direction or stating something new is lying.  We are always more comfortable in something familiar than something we know little or nothing about.  For my part fear of the unknow was in part how unknown it was.  The more I learned the less scary it was, but it never went away.

For me the biggest way to deal with it was just one step at a time.  Figure out the next step and do it.  If you constantly think about the big picture it seems more scary.  example, instead of trying to imagine the challenge of being a commission only real estate agent in a big office start with getting education on how to pass the license test.  Think about making the time to attend a class on the test, or read a book on the test.  Next plan the time to take the test.  Then plan on where to apply for a job at it, etc.  Now you still need to look at the big picture, have some planning on where you are going and how to get there.  Still focus mostly on each step.

My first property was bought from a guy who just wanted the tax lien to go away.  I talked with another guy who knew about it.  I researched how you paid off a tax lien, he looked at getting a loan, we both worked on it when we got it bought and next worked on renting it.  I was horrible.  I didn't know about looking at yearly land taxes, cost of insurance, figuring possible rent, leaving room for vacancies, setting aside for maintenance and repair or cap ex costs, but we still made money.  Real estate can be forgiving sometime.

Another way to help with the fear is to get a partner or mentor.  It is not as scary with someone to help and encourage you.  Having a mentor to answer questions and explain things can be really helpful.

Finally the last hurdle is letting yourself believe you can do it.  That was one of the hardest for me.  That is where just doing the next step helped me.  I just concentrated on the next step and thought, I can do that part.  When that got done I did the same with my next step.  I knew where I wanted to go, but often thought it was above me.  Still I made it.  A farm boy who stacked hay and broke horses for people became a lawyer, and a pretty decent one.  No one in my family had ever graduated from college and many , like my dad even graduated from high school.  You can do it, but it requires having faith in yourself and just always doing the next step.

A little final advice though.  Getting to your goal will not fix relationships with friends or family.  We all get 24 hours every day.  You either choose to make those work or you don't.  You will have to choose what you can afford to give up and what you will not give up.  You must however give up something.  I gave up watching T.V. and things like that.  It can mean giving up social media, or Net Flix, etc.  Decide now.  Don't give up family, especially wife or kids.  Some prices are too high.  Find a way to make it work.

Good luck, you can do it.

I suspect that you won't get a multifamily loan for single family residence even with an ADU on it.  I kind of like the 3 different LLCs, but getting low interest 30 years loans may be tough as neither FANNIE MAE or FREDDIE MAC usually fund those.  I would ask your banker about what they will or will not fund and any difference in loan rates before you set it all up.  At least compare the costs of with versus without the LLCs.

OK,
I didn't get to see the video, but let me weigh in.  Yes I am an attorney, and was a prosecutor for much of my career.  First off an LLC or even a corporation is considered to be a person under the law.  Otherwise they could not transact business or enter into contracts.  Next forming a legal entity does not allow you to violate laws.  Legal entities can be fined just like people, their property can be forfeited by the courts as well.  While you cannot imprison a legal entity, once you start breaking laws knowingly as a legal entity it is possible to charge the owners or operators of a company personally for their actions.  You think the officers at ENRON didn't do jail time?  Do you really think selling drugs, doing money laundering, etc. will shield the people who are procuring them to be done?  There is also a federal law called RICCO, my recollection is it means Racketeering Influenced Corrupt corporate organizations.  It allows direct lawsuits against corporations for doing illegal acts and triples the damages that are available.  As to not telling folks that you are using AIR BnB and saying they are clients, do you really think they can't look at AIR BnB or VRBO sites?  It takes 5 minutes to get the information.  Who is going to be the host?  The host picture would be fun to use as an exhibit.  The money must go to a bank account somewhere.  A simple subpeona would get you who the owner is.  Think you can get past that?  after 911 the Patriot Act tightened up using IDs to get bank accounts.  It would be extremely easy to prove these violations and the people operating them would be lucky to not end up in jail for conspiracy.  Odds are high that the property could be forfeited or at least tied up for years.  Think the mortgage company didn't get a personal guaranty from someone to get the loan?
I could go on with this for a long time, short story you get caught, get fines, maybe jail.  The good news is whoever followed her advice and got caught could sue her for the misleading information in the video.  It is possible she could be charged with accessory before the fact, but that would be a little tougher, but not impossible.

@Benjamin Dougherty, I have both types of rentals, STR and LTR. I would allow the tenant to do a STR if it was my house providing that they can show that they have decent knowledge or expertise in it. You screen tenants anyway do screening to make sure they know how to do it. As to special insurance, I made one call to my local agent and got STR insurance on my unit. There is a $1 million policy from AIR BnB, but don't rely on it. The tenants would be responsible for ALL repairs. Good hosts keep things in excellent shape, bad hosts don't last long. I wouldn't think a garage house would attract the party crowd folks worry about most. I have never had a really horrible tenant, and can only recall 2 I would not rent to again out of 3 years. My area may be different from yours however as I am pretty rural here. Make sure you add a clause to the lease that specifically addresses the STR aspect if you allow it. You may be able to get more rent by doing it and it will probably be kept in great shape.

@Tim Sharkey, I have both STR and LTR in my portfolio. STR is a lot more work, but does make me a lot more money. I also rent my STRs out to traveling nurses during the off season, which is winter here. It is like a lot of other things in life, more work for more money. I have found that you need to make your STR a lot nicer than a normal rental house. Like was aid earlier you can live or die by your reviews. We are a little bit of a destination spot, but we get as much traffic traveling through to Yellowstone Park as as local visitors.

@Steve Ehrman, when the pandemic hit and they shut things down I offered several tenants the option to do odd jobs for me for up to their rent amount.  Some took advantage of it some did not.  They did cleaning, painting, yardwork, and other things I needed help with.  I never had one that needed to work past 2 months.  They either got new jobs or paid somehow.  I had 2 that declined and did not pay.  They eventually got kicked out.

@Lisa Loesel, I have short term rentals and I try to get tenants for at least 3 of my slowest months of January through March. I make less per month than STR rates, but I often drop to 5 to 10 nights rented during these months compared to renting 29 out of 30 days during the summer. Traveling nurses are my main mid term renters. Not all areas are able have good occupancy year round. It doesn't mean the model doesn't work there.