All Forum Posts by: Jerry W.

Chris F. I have over 10 properties, that includes a very small outdated apartment building. I do the rental on most of them but I have a professional manager do the apartment building due to the constant dremands it has, they also do 2 houses for me. I try to have at least 1 year leases initially on each house to reduce needing to rerent, and the touch up you need to do inbetween renters. I had 1 renter rent for over 10 years who kept the place spotless, those are allmost no work. I have a handyman who worked weekends and evenings for me fixing small stuff, painting, fixing leaky pipes etc. He quit his day job and now has his own handyman business and works with most of the local realtors. He handles most of the maintenance and upgrades for me now. Without him I would be lost. He lays carpet, fixes furnaces, sinks, paints, even pours concrete. (He also carries his own insurance)He averages about 16K to 18K a year from me. In order to keep him happy I have a standing deal, if business gets slow for him he calls me and I immediately give him a list of upgrades to do for me. When you get to where you have someone like that treat them as nice as you possibly can.

Tony G, you got some good advice from Kirk R., I would at least buy your duplex (or more) before you quit, because otherwise you are at least 1 year out, maybe 2 on getting a loan to do that. Make sure you get a good cash flow, because if you quit your job it needs to be able to stand alone. Do what it takes then to make your life livable, whether it is getting a new job, or quitting. Try to make quitting a last resort. Maybe you can buy a place with 2 houses, one that you can rent now, and one that needs fixed up. Keep in mind that both buy and hold and fix and flip require money to fund them and a job is the way to fund them. Good luck!

Chris F. I put 22% of my salary into an investment account. I spend the rest on various things, including 2 properties that do not produce income,( horse corrals and 35 acres outside of town for ag/recreation use). When those are paid off in 2 years I plan to spend more on my current residence. A fair bit of my disposable income has gone into fixing up my residence, after I pay off my horse corrals and ag land, I plan to build a new house and sell my primary residence to fiance it.

Arjun K. There are many reasons to have an LLC or a Subchapter S entity hold your real estate. I use a subchapter S, but LLCs are very good too especially if more than 1 person is involved. There are some tax reasons that you might want an entity as it might keep you from paying self employment tax, but I am not qualified to give you info on that and it depends on what type of real estate you are doing . You really should talk to a good accountant to get the best information for your situation. As to having multiple properties in 1 company there are many options. I have chosen to put all my rentals into 1 LLC even though I know a series LLC would provide more protection. First I do my own book keeping and do not want to try to seperate each company, second I keep an umbrella policy that would cost a lot more to have 10 umbrella policies, and last since I do most of my own work I am probably liable personally if its a suit over something I worked on personally so I am relying on insurance to save me. If I were to have high liability issues with a lot of value I would set up different companies. Finally what ever entity you choose you NEED to keep your corporate formalities, meetings, minutes, seperation of money, etc. Hope this helps.

Javier Molina First, thank you for serving. I am not an expert, but I have over 10 rentals that I have accumulated over the last 20 years. First California as a rule has very expensive real estate as compared to rental prices. You will probably never hit the 2% rule, I have only hit it once and it was a very low end property. However, you can buy and make money investing in real estate with not having the 2% rule but it still must have a decent cashflow. I have on at least two occassions bought property that brought in income of less than 1% return per month but would normally advise against it. I bought them at no money down and they only needed minimal work to get them ready to rent. I had renters for each before I closed, and overall they were otherwise top end properties.(I also have enough salary to cover payments if they become empty) I would reccomend you holdout for something at the very least that produces income over 1%(after taxes and insurance) of purchase price per month. If you cannot do this you may have to either buy a house that needs repairs and fix it up, or even consider buying away from where you currently live if thats possible. I think you should stick with your idea of getting a nicer upper end property as my experience shows they rent easier,get better tennants and overall require less work than lower end properties. Any chance you will be get transferred to Texas, the East Coast, the Midwest? All of those are pretty good markets at the moment. No offense intended but California laws stink for landlords, it is a dam hard state to start real estate in. That being said if you really want to start and cannot reasonably do it elsewhere then go to plan B where you look at houses and markets constantly until you find a deal that at least meets the 1% rule. Make it nice enough you would live in it, and enough cash flow to build up a cushion for the 3 months you cannot rent it or new furnace or air conditioning, or new roof, etc. I have found that if you look constantly eventually you will find a deal. In your case maybe someone else got transferred and is willing to sell you their house for whats left to avoid realtor fees and save the 6 months on the market. Be careful, get good advice, hire professionals as needed, title insurance, insurance, etc. Have all of your paperwork in order before offering, and save now for a down payment. Feel free to contact me personally if you wish. (Over half of the men in my family have been in the military) I will be glad to advise if I can. Good Luck and don't quit trying. Thank you again for serving.

Christopher L. all state laws can vary, but usually an eviction is used to kick out a tenant, and lower courts handle it. An ejectment action usually is where ownership of land is in question, and the court must declare who is the owner. Only a higher court can do this, the higher the court the more crowded its docket. A year seems a long time but your lawyer is the best person to explain the particulars to you. Good luck.

Tim G. Thanks for the updates, it has been fun watching the story unfold. While real estate is about money, its also about people. Your case is win/win. You get income property, they get a nicer neighborhood. Keep up the good work!

I have thought about the posts in this thread and here is my take on financing vs cash. When I bought my first house it was a trailer house. I actually got it for money I was owed from someone. It was a fairly good deal because my income had dropped a lot and I was going to college. No financing. I borrowed to buy the land and trailer I bought next, when I moved to a town with a university to further my education. I financed the land at 10% and the trailer at 18%. I would have had to rent if I had not financed. Times were very tight but we managed to make the payments. When I graduated from college I was making less than before college because the economy had died. Houses were cheap but I was broke. I again bought, but this time a house, and rented my old trailer for just enough to cover its payments.(I was a horrible absentee landlord and the place got trashed) When I finally sold the trailer and land I paid off my house, instead of buying a rental. Paying off debt was my main priority, because there was a real danger of even a small setback causing me to be unable to make my monthly payments. Borrowing to buy real estate investment property would have been the wrong thing to do during that time. I was too inexperienced, too poor, and lacked a plan. Eventually I learned what house prices were and a realtor and I both saw a house for sale very cheap and together we were able to buy and fiance it, where neither of us could do it seperately. My personal income finally began growing and between the two of us we eventually accumulated a dozen properties over the next 20 years, and every one had to be financed. I like having all my debts paid, and I loved Dave Ramseys approach because it had ideas that made sense, but I would have only been able to buy 2 or 3 houses if I didnt borrow. Risk in investing IS like risk in driving a car, it is allways there, but if you don't drive you won't get anywhere. You have to learn how to drive safely, you have to have a safe car, you don't begin driving on the interstate at 85mph in rush hour traffic your first week or you will wreck. You learn to drive safely with a mentor. you will eventually have a wreck, but if you wear your seatbelt, buy a car with airbags, and were driving safely enough to avoid serious injury you survive it and learn more. I know some folks who never learned to drive and their life is very limited because of it. You cannot promise them they would never wreck, but without some risk they lose some of the quality of life we enjoy. Teen drivers think they know everything about driving, so mentors have to temper their enthusiasm to safe levels, if they do not develope dicipline they will crash, but hopefully live to learn. Not all do and sometimes its not their fault when the wreck happens. Unless you were given great wealth, it takes some debt to truly go anywhere in real estate investing. Be smart, study the market, analyse cash flow, buy below market, have a cash reserve, buy insurance, be frugal with your fiances, and have a mentor with experience. Drive at the level you feel safe at. There is allways risk but overcome as much as you can. Use dicipline and keep focused to get to your goal.

Robert Setliff are you in the military? I saw the camo and haircut and thought you would be. If so thank you for serving. I have a brother serving in Columbia who I will be going to see this month. I am talking to him about buying a rental. How is the rental business there? I have heard second hand that taxes on rentals are huge. Have you figured those into your costs? I understand the rates on home owned and rented are very different.

Nancy Capron I dont mean to be negative, as it could be a slow market, but it could be your agent. I have a few small apartments, and a house or two I rented through a realtor, and I noticed that my apartments were not renting as fast as they used to, I got to looking and they had taken over managing another apartment complex about double the size of mine. I went and priced the new apartments and they were like 50$ a month under mine, I talked with the realtor and lowered mine to ten bucks below the level of the new complex and they went back to renting. I also talked with the realtor a bit about how we could cut everyones profits by trying to underbid each other all summer.