All Forum Posts by: Juan Pablo Murillo

The biggest pain point for both in-state and out-of-state (investing in MI from WA since 2018) investing has been the same: property management. I started self managing. Now I have a PM.

The money you save by self-managing is often paid back in time and effort, and being a landlord isn't always a part-time job. This is especially true when you don't have systems in place—and there's a limit to what you can automate when you have a full-time job that isn’t property management.

For me, the decision to invest out of state has always been a purely numbers-driven one. I focus on key metrics such as: rent-to-price ratio, price point, mid-to-large metro area population. There are other things to look for such as tenant laws, property taxes, population growth. In an ideal world, you'd find a market that checks every box, including favorable tenant laws, low property taxes, and strong population growth. In reality, you find a minimum threshold for each, and you go for it.

@Carlos Quiros

Electronic payments such as Zelle or Paypal should do, if you have a small number of properties. Alternatively, you can use rent collection platforms as Benjamin mentioned above.

That said, I would advise against self managing long distance properties. Everything goes well until it doesn't. I'm speaking from experience. 

Not a Tennessee investor, but I have a handful of rentals in the Midwest, so I can speak to the general out-of-state setup.

You've hit on one of the biggest reasons most investors don't buy a rental property directly with an LLC. I also purchase my rentals using conventional financing under my own name. From there, I transfer ownership of the property to my LLC. This is typically done with a quitclaim deed.

You're right about the financing: lenders see conventional loans as less risky, so they offer better rates and terms. When you get a loan in the LLC's name, you have to get commercial or business financing, which almost always comes with a higher interest rate and a larger down payment. Lenders also prefer to see a proven track record for the LLC before they lend to it.

In my opinion, it makes the most sense to transition to an LLC for purchases once you have cash to buy a property outright or are using owner financing. That, or you've maxed out your conventional loans and can't get any more under your name.

Welcome to BP! It’s great that you're here and asking questions—that's the first step.

You've got a huge leg up on most people just by having handyman skills. That's a built-in advantage that can save you a lot of money when you buy a property that needs some work. I personally invest mostly out of state because I'm able to find better numbers and more landlord-friendly laws, so I have to hire out all the work you can do yourself.

As for the difference between Canadian and US real estate, you're right, most of the content you'll find online is US-focused. While the general concepts of real estate investing are the same, the US offers a major advantage with the 30-year fixed-rate mortgage. It's not uncommon to see Canadians investing in American real estate, but not so much the other way around.

I'd give you two pieces of advice:

- Know when to pull back and think like an investor. Use your handyman skills to your advantage, but don't get so involved in the day-to-day of property management that you stop thinking about your portfolio. We're all in this to grow our net worth and make the journey as passive as it can be, not to be busy doing repairs and answering calls in the middle of the night.

- Back your decisions with data. It's easy to get emotionally involved at the beginning, but a solid plan is based on numbers, not on feelings.

Best of luck!

I would still analyze the opportunities, even if I want to pay the investment early. Think about it, if you had the cash to purchase a rental in full and you had two properties in front of you, wouldn't you compare them based on the metrics that matter most to you?

The same is happening here, you should adjust your deal analysis to your specific scenario. That said, if you're set on paying them off early, why not start buying one property at a time, and why not pay for them out right and use the snowball approach with the cashflow + W2 income?

That's a fantastic position to be in. Most investors would love to be holding a property with a 3% rate in a market like Denver.

My advice comes down to this: a 3% mortgage rate is an asset you can't replace. Today's rates are around 6-7% for a 30-year loan, which makes a cash-flowing property in a major metro area like Denver an incredibly rare find. Based on my data analysis, cash flow can be extremely difficult to achieve in Denver at today's prices and rates, making your situation quite desirable.

If you want to be an investor, my personal advice is to keep it. Here's how I'd approach it:

1. Focus on the PM search: Spend your time and effort on vetting and interviewing property managers now. That's the key to making a successful out-of-state investment work.
2. Create a detailed property document: While you're still living there, document everything. Take photos of the electrical panel, water heater, and all appliance serial numbers. Note the paint colors, flooring types, and where the main water shut-off is. Having this document will be super valuable for both your memory and your PM.

If, on the other hand, you know you don't want to be a real estate investor, you could sell now. Just be aware of the tax implications. You won't pay capital gains tax on the first $250k (if single) or $500k (if married) of profit, as long as you've lived in the house for at least two of the last five years. I'm not a CPA, so definitely talk to a professional about your specific tax situation.

From my own experience with out-of-state rentals, I would personally keep it. I actually prefer to have properties I don't see regularly—it forces me to view them as a pure business and investment, with no emotional attachment. Best of luck!

@Jeff G.

Sorry to hear you lost your job. The tech industry never fully bounced back since the layoffs started in 2023. 

You’re right that a flip is a different beast from a long-term hold. As a fellow investor with a few long-term rentals in Michigan, I can tell you that my analysis for those was focused on rent-to-price ratios and appreciation. But for a flip, the game changes entirely.

As a general rule for flips, you'll want to buy low and focus on cosmetic work you know you can do quickly and within budget—things like drywall, paint, and basic kitchen/bathroom upgrades. You definitely want to avoid getting into big issues like foundations, plumbing, or roofs, especially since you’re working remotely.

When it comes to the numbers, here’s how I’d approach it: I'd focus on what the market is doing right now and over the past 12 months. The best way to make data-driven decisions for a flip is to track these metrics in the specific cities you’re looking at:

• Median Sale Price: Look at the median price over the past five years to see the trend, and the year-over-year change to understand recent growth.
• Days on Market: How fast are homes selling? This is critical for a flip. Track the median DOM for sold homes over the last year, but pay close attention to the last 30 days to get a feel for the current pace.
• Supply & Demand: Compare the number of homes currently listed with the number of homes that have sold recently. This is a quick way to gauge the health of the market.

And of course, talk to local realtors. They’re a huge asset. For a bonus, ask them for data from their own agencies to back up what they're seeing on the ground. At the end of the day, you'll be using one of them, and they should want your business.

Hope this helps.

@Samuel Ksiazkieicz

Who did you end up going with? I have landlord policies on my MI rentals with State Auto Insurance. But now that Liberty Mutual has acquired State Auto, the policies have increased by more than 100%, and I'm in the market for a new insurance provider.

Context: My three business partners and I want to run a residential assisted living facility business. We want to acquire a property, remodel it and open a RALF business in South Florida. We want company A to own the real estate and company B to run the RALF business. Company B pays rent to Company A. 

What business structure to choose for each company? We're thinking to choose LLC for both. Any benefits to choosing S-corp for either of those? Comments appreciated.

If you're in this line of business in Florida, I would like to connect with you. 

Hi @Justice Jacobs

I do have specific questions. 

1) How do you structure the company? I was thinking about having one LLC for the company owning the real estate and one LLC for the company running the business. Some context: I have a business partner I invest in SFRs with. For the assisted living facility, we plan to add one more partner. So we'd create new LLCs. Any thoughts? I'm interested in how others structure their ALFs.

2) I'm thinking of going with an SBA 504 loan to acquire the property and do the remodeling. Can anyone share their experience on this?

3) Are you relying on placement agencies for getting the initial clients? At what point do you start marketing? What are the main marketing channels you use?

4) This is not a question. Just a point. I want to network with those investors who work on the business and not in the business. I'm interested in running the business without being involved in the daily operations of the facility after the first year. Don't get me wrong, acquiring the property, doing the remodeling, setting up the business, getting the staff and clients will be work, and I'm willing to do some/oversee the rest. My point is I'm not interested in having a second job.

Currently doing analysis on identifying top zip codes for the facility based on criteria like age distribution, median income, education levels, % of home ownership.

Thanks