All Forum Posts by: Jessica B.

Thanks for responding. Let me see if I can answer a few of your questions. 

The property in question is 1000s of miles away from where I live. It's a few blocks from where I grew up. I have little interest in moving back to Ohio to self manage. I have a team in Ohio that does the hands on "stuff." My aunt is the main point person for the rentals and we have 2 employees.  I only spoke about one property because each property is incredibly different. Total there are about residential 20 units, of which I own about half. This particular property has those issues I outlined that might lead me to selling it and replacing it with an easier property. It's general condition is fair, it's structurally sound, but does show normal wear. I would say that properties valued at 50,000 in the area are a nicer than this one (newer cabinets, better layout.) The neighborhood is average for rust-belt-Ohio, stable, rough around the edges, pretty safe. Average rents in the area is about 400-500 per unit, so I would say that yes, we could be getting more rental income. Our average rent is 500-600, so this is our lowest flyer. Yes, I can invest money into the place, and I do.

Here's the situation. I've inherited a group of rentals in Ohio. My goal is to take this group of rentals and make them profitable. Currently, they are just breaking even on a good day because I have also inherited 2 full time employees and a few high maintenance properties. 

One rental in particular has a few issues. Mostly it's that the taxes are high, the rent is low and the upper unit has high turn over. The lower unit has been rented for over a decade to the same person. I've sent the lower unit a notice that rent will be raised at the end of the summer and she said that she could pay the higher amount. The upper unit is being worked to be ready for yet another new tenant. 

Here the are the numbers prior to the rent increase: $450/month total in rent, $15,000 purchase price back in the 90's. Last year expenses were $3,365 (1,000 were taxes) and gross income was $3,350 (not including labor.) 

My real estate agent wants to list it at $12,000, zillow has it appraised at $51,000. I think his number is low but I could be wrong. So do I keep renting this sucker trying to get the rents up closer to 600/month? Or do I sell and get an easier property to manage? Your thoughts?

A few years back I tested the real estate investment waters; since my father had enjoyed doing the same as a side business. I had all of his experience and support in doing this. Plus, I had the help of his seasoned team (friends and employees.) So, 2 years ago I bought a single and a double to add to the mix of properties already being managed. I've been very hands off being in a different state and things have gone well.

Unfortunately, this past year my father (and best friend) passed away. I find myself with more than I know how to deal with, but I'm trying and learning. I have so many questions, I hope that I'm moving in the right direction. Advice is welcome. 

- I have an LLC, a trusted lawyer, a great family, a loyal handyman team, an aunt managing the properties and a sister in the same boat. There are no mortgages, and everything should cash flow.

- I want to continue to employ our reliable handyman team (30 yrs with my father), but the repairs on the rentals won't be enough to keep them busy. Which means we need to grow the portfolio, flip houses or employ them for less hours. The other option is to partner with a property management service (also family friends), who might be willing to employ the same handymen. 

- If we decide to grow, I want to make a separate business to to the employing, fixing and flipping. Then for the other LLC's to buy the properties from this entity. Will this work?

- I want to give this experiment 3 years to work out. I think it will. 

Thoughts?

Check out the Sheriff's website. There should be a link to both the sheriff sales (for the foreclosed properties) and the one who are up just for delinquent taxes. Also make friends with the county clerk and you can find out if there are liens on the property. 

Is it a tax sale? Those a are a bit different than sheriff sales. If it's a tax sale, it makes more sense that the house would be occupied. 

I did inform him of my properties. I just looked through my last years filings. Maybe the issue is that I need a better CPA. He put the properties in the wrong state. So instead of putting them in OH they are listed in OR. I never even thought to ask last year why I wasn't mailing anything to ohio. I thought it was because there was no profit.

I did report on the rentals on my taxes they just didn't show any profit. I will talk to my CPA, thanks.

I'm still pretty new to land-lording. In my current situation I've invested in a few rentals in Ohio. I, however, live in another state. I would like to do things right and at the same time not create more work than necessary. So currently, my wonderful aunt fixes up and manages the properties for me. In exchange she should get half the profit. So far majority of the rents have gone right back into the properties. This year, however, we've made some money. Here are my questions. When I go to pay my taxes do I just claim my half as income? We do not have any legal docs explaining this arrangement, everything is in my name except for our bank account, is that okay? If I explain this to my CPA will it be something he can work with? If I put the properties into my llc does this help matters? Do I pay ohio income taxes? Thanks for any advice.

Check out the properties beforehand. Have a max amount you will bid up to. Just watch the first time to see how things go. Some properties being bid on by banks will return at a lower price.

Consider your worse case senarios. What happens if a property needs something big: new water line or septic? What if your houses drop in value and you find yourself underwater? If you're over-leveraged and all your money is being "put to work" where will these new funds come from? If you know you can handle random unfortunate events than you're probably good. If not I would recommend playing more safely.