All Forum Posts by: Khaled El Dorry

Good day BP - how have most of you gone about legally protecting your assets from lawsuits and liabilities? My research lead me to trusts/LLC combos in Nevada as the "standard" way but before I plunge in I would like to get some feedback.

My situation is 7 doors all financed with standard 30 year fixed loans and I’m less than 3 years into all loans. Plan is to keep them and pay them off or 1031 exchange them up at some point. That part is TBD.

Thank you

@Deryck C. If you are still growing save the cash and reinvest it. The moment you stop accumulating properties and have hit “your number” then I would look at payoffs. So for example if you own 5 properties and want to get to 20 I would put that cash to buying more properties until you hit the 20 then start aggressively paying off your lowest loan and take the cash out of that and do the next one. That’s my plan at least.

There are others who say keep the leverage and go bigger which is not a bad strategy either but it’s not for me. I want to pay them off and live off the cash flow and get rid of the debt. So just like everything in RE what do you want to do?

@Dona D. Another option is offer a multi year lease so the expectations are set. I personally refinanced this year and was able to drop each mortgage around $150/door and chose to keep rent flat because of COVID and kept 2/3 tenants from going elsewhere. Sometimes it’s ok not to raise rent unless you have a reason to (tax or insurance hike, PM fees going up, etc..). But as multiple people said you don’t have to explain it either when you decide to raise rent.

@Andrew Brown I also have a demanding W2 job that I enjoy and I get about the same returns 7-10% with turnkey and I’m completely happy. If I were a full time investor I would be pushing for higher returns but quite frankly my alternatives are either put more money in the stock market or keep cash in the bank which just loses value overtime. Once I pay my properties off I will be able to generate $900-$1000 per door and that’s assuming no rent rise whatsoever which is quite conservative. My advise is to do what’s best for you and what you’re comfortable with. There is no right or wrong answer and all depends on what you can stomach risk wise.

I don’t depend on appreciation as that is gambling for me and happy with the lower returns because that works for me. Having said that I just refinanced all my properties and they have all appreciated quite nicely that I can almost make my money 2X over if I wanted to sell.

Really great discussion here. Fun reading the dialogue. Dr @Axel Meierhoefer and I have been exchanging emails about some TK providers and he's definitely a wealth of knowledge. I have also had a solid experience with TK so far. I bought 3 SFH's and closing on a duplex in 2-3 weeks. So far I have about $12k in reserves all generated from excess rental cash and I just refinanced the three homes which will generate roughly $500 extra per month. From an appreciation standpoint since I just refinanced my appraisals came in with roughly $250K in equity in all 3 SFH. I do 25% down payment and finance the rest. All in Florida and I bought them all brand new.

I realize the returns are not as good as BRRR or house hack but I do have a very demanding job and I take the lower return as my time is tied up in a job I enjoy which also generates income for me to buy more properties with.

@Michael Glist Michael - thank you for the feedback. Do you have a lender or two you recommend who I can talk to? Thank you

I will also add they are all single family and duplexes so not a 10 unit and a 26 unit multi family

I’m evaluating a cluster of properties (10 units for one deal) and 26 units for the other. I already have 6 mortgages and starting to run into the 10 mortgages cap limit with traditional lenders. Is commercial loan the only way forward here? Would appreciate some advise from the more advanced investors here. Thank you

@Supada L. Was the repair made a surprise or something you knew coming in and thought it could be delayed? Also if you bought it last summer means you haven’t even owned it a year. Had I given up on my first rental property I would have sold it in 6 months too because

I was $3K in the hole because of a bad tenant situation. Now I own 3 properties (closing on 2

More in a month) and have $10K in extra cash flow and it’s adding up in a good way. If you can not afford or foresee crazy expenses that you should have known about in your due diligence by all means get out quickly.

However if you believe in your due diligence and think you can withstand this initial (and unfortunate) hit then I would hold my ground and let it play out a bit longer. All depends on where you’re at not all of us “experts” tell you here.

Happy to talk on the side to take a look at your numbers too.

Just my 2c.

I made an excel version of this to run numbers real quick and found to be absolutely gold. I can pull it up on my phone and I can analyze a deal real quick. Happy to share if you are interested.