All Forum Posts by: Account Closed

Good luck. Do your own due diligence and crunch your own numbers.  Don't rely on info from others. 

I think it's smart to buy alone and add partners later for the reasons you stated. 

Question 1: LLCs have members not partners. How ever you do it - partnership or LLC - you need formal agreements.

Question 2: Consult with your CPA. Also, tax matters are often set forth in the LLC or partnership agreements.

Question 3: Consult with your attorney about structuring your agreements and have your members/partners consult with their own attorneys/CPAs.

If they specifically requested it, do it and pay for it to make them feel warm and fuzzy.  In 14 years, I've never had anyone ask. 

Consult with an attorney about PA landlord-tenant law.  It sounds like you can give notice to vacate now. Don't ever accept any partial rent.  The 60-day notice likely only applies if payments are not delinquent. 

Always have rent due on the first of the month with no grace period. There are legal reasons for doing so. Once again, never accept partial rent payments. 

Evictions are generally civil matters, not criminal matters involving the police.

Get the deadbeat out as fast as possible. 

How many units are in these buildings ?  That determines residential or commercial financing.  Kind of also sounds like you're trying to bite off more than you can chew for your first deal. Buy one property first and see how it goes.

Exhaustion is an insurance concept. If you set up a LLC as I stated earlier and your insurance coverage was exhausted - assume you have $500K in primary coverage and $1M in umbrella (excess) coverage and your tenant got a judgment in court against the LLC for more than $1.5M - it won't hurt you personally. The insurance company would pay out $1.5M - the limits of your coverage. Only the assets of the LLC would be available to pay the judgment. But your personal assets are safe. This is why the use of a LLC is so important.

Set up a LLC and transfer title to the property to the LLC to avoid personal liability. Conduct all business in the name of the LLC. Secure insurance coverage in the name of the LLC.

I have $500K in primary liability coverage on each property plus an umbrella policy of $1M covering all properties. Umbrella coverage kicks in if and when you exceed primary liability coverage. Bumping coverage up to higher dollar levels is inexpensive. Umbrella coverage is cheap because it's rarely needed but it helps you sleep at night. 

Rent paid around 75% of the mortgage. But don't forget all your other expenses - taxes, insurance, utilities, landscaping, municipal rental license, HOA fees, reserve for repairs/improvements.

Taxes may be included in the mortgage payment. Don't confuse mortgage insurance (which insures the bank from loan default and will be included in your payment) with homeowner's insurance. Rental license and HOA fees may or may not apply.

Yes - Red flags here.  You can make an offer but it must include language that the purchase is contingent upon satisfactory interior and exterior inspection. You also should closely review the terms of the lease because you're bound by those terms if you buy it. Also review the tenant rental applications. You need to know who's living in your house. 

I would strongly advise that you seek the advice of an experienced real estate attorney to structure the contract and the assignment and also review the lease. 

For my first property I bought a two-family and lived in one unit.  It might be difficult to get your roommate, presumably a friend, to pay for most of the mortgage.  That could really strain the friendship.

If you're going to live in it, you'd qualify for owner-occupied financing. When I did it, I got FHA financing and had to live there for a year. Price range depends on your income. Educate yourself about debt-to-income ratio and talk to a lender about its DTI and down payment requirements.