All Forum Posts by: Wayne Kerr

 Ok - couple of things: 

I would first pick a strategy - LTR, STR, Flip etc. You need to narrow down EXACTLY one strategy that you want to do first. No problem with inexperience, but make it easy on yourself and simplify for the first one until you understand what you're doing. You can do analysis all day but NOTHING compares to real life experience and actually buying a property. LTR is going to be the simplest, least risky and most straight forward. A flip is more advanced as far as funding and what you DON'T know (rehab costs, holding costs, contractors, contacts for the work you need done etc). STR is going to be more expensive (generally) and more risky due to the cost. You also have regulations, different lending terms (vacation home or investment ptoperty?) etc.

As far as exit strategies you really have 2: hold or sell

Do you have a spreadsheet you use to run numbers? Can you make your own? This would ensure you understand the numbers and what effects what

Rehab costs you will learn on time, whatever you come up with now...double it and add 5-10k. That will be pretty accurate until you understand the costs and do more of these

I'm sensing some "analysis paralysis" as well. You're a real estate investor. Run your numbers (have a good realtor that can double check you, if you want - I personally don't cause I find my numbers are generally more conservative and accurate and I actually care more), be confident in them and make an offer. That's really all there is to get started. 

Once you get started - see what you did well, what needs to change, educate and move forward

I made one before I first started - couple reasons, CAN limit liability if you do things correctly, CAN close under an LLC so the rentals don't go on your personal credit, CAN open credit cards under LLC, CAN deduct taxes from the LLC (but not W2) if you're what the government defines as a "high earner" (which this is really just a socialized government system and discrimination based on income), it also helps me to compartmentalize my personal assets vs my business assets to where I can grow a business separately from everything else. You MAY be able to do some of this stuff w/o an LLC (not sure) but I know you can do these things WITH one

Is it necessary - like @Nathan Gesnersaid, probably not. And look at his experience - vast experience and not issue with people not having one. But he has one also - might be a good idea to follow his lead and set one up - I don't think it will hurt you besides a little extra cost. 

@Alex Wise

Dollar cost averaging. Same thing I do with index funds. I bought, am buying and will continue to buy regardless of market conditions.

Real Estate is the same. You have some greedy sellers right now though, so don't fall for that trap. You're here to start with a base hit, understand what you're doing, then make only great deals.

If it's not a great deal, then I'm out. I'm not one to buy a market prices then turn it into a rental with mediocre returns.

@Christian Requejo

Let me get this straight...you want to use other people's money, be in charge, and not partner with them. Makes sense

How about starting with something small and learning and growing so you know what you're doing first

Several good responses in this thread - We do the same, the units are rented as is and the repair does not fall under a safety or health hazard so we cannot repair it as this time. 

I have a few small MF units that operate on 100A ~550sqft

My 1600 sq ft house has 200A, replaced from 100A when I bought it (home built in 1975)

I'd imagine 150A is fine, especially if it's new, you just won't have a lot of leftover for additional. Fine for a rental, personal house I'd want more 

Roll with it if/when you find out you need more

Well there's a lot of different methods, off the top of my head:

- Sheriffs Sale - go to your local sherff's site and look for sheriffs sales

- HUD - check for homes in your area on HUD

- Foreclosure sites - Auction.com. foreclosure.com etc - I believe you need a realtor to represent you

- Contact the realtors in your area that are constantly listing foreclosure houses - I see foreclosures in my area, and I see the same 3 realtors always posting them. I emailed the guy to try to get first access 

Then HOW to actually buy:

- May be able to do conventional financing depending on the condition or MAY need cash or a HML if you don't have cash readily available. Also may be able to find a commercial lender that will lend to you based on the ARV. We have a local one that will lend up to 85% ARV, essentially funding part of the rehab (if not all) for you.

- Also be prepared to connect the utilities - this means you'll need an inspection to the major systems - gas, electrical, plumbing etc. Most foreclosures have had the meters removed, the power line cut etc. This makes the actual pre-buying home inspection hard to do. Assume 75% of anything water/gas related will be leaking and assume about 5k in electrical work at the minimum 

This depends on a few things - for passive real estate investing if you want to take deductions from your personal W2 it's going to depend on 1) REP (real estate professional status) - ie: need to work 750 hours plus on RE and work 51% of your work time on RE AND 2) Your income (they subtract the amount you're allowed to deduct based on your W2 income - they subtract 1$ of your deduction allowance for every $2 you make over 100k at your W2 job...so once you get to 150K you can't deduct anything from your personal W2 job, you can only pass it on to later years, deduct when you sell etc (the maximum allowable deduction is 25k). This is for long term passive real estate investing - not flips, STRs etc

Part of the reason I got into RE was the tax benefits (I already pay 40-50k in only FICA taxes a year) so I figured out that the government effed me again pretty quickly. Now that has to do with your W2 income, you can always deduct ordinary and necessary expenses from your LLC income

So in sum, the government will find a way to eff you again and discriminate against you based on your income. 

Seems like a lose lose - best bet to me is to take the lesser of the two "loses" - if that makes sense

Leave them all a negative review, eat it, don't use them again, give them a bad reputation, and move on - that'd be my plan at least 

We do $250 + $25/month

Some people don't allow pets, some do relatively close to that number