All Forum Posts by: Chris L.

Hi Stan,

I recommend that you start by screening and interviewing property management companies. Many would say start looking at houses. My philosophy is there are plenty of houses but not many competent and quality property management companies.

Your property management company is going to be your most important asset in this process.

Good Luck

Chris

Hi Anne,

I will try to make this simple.

Collected rent minus expenses (minus interest if you have a mortgage) equals cash.

Your cash is then offset by depreciation of the property.

You will be taxed on that portion regardless of whether you reinvest or spend that amount.

Hope that helps and this is a simplified example.

Have a great day.

Chris

Trevor,

There are still many great markets to invest for cash flow.

I happen to live in a great cash flow market so it has been simple for me to set up a portfolio of cash flowing homes.

A couple of thoughts: I have owned SFR's, duplexes, and 4-plexes: I prefer SFR's because there are no tenant to tenant issues and you generally have to sell to another investor when you own multi-units.

I recently sold a 4-plex in Indy that we completely rehabbed down to the studs to like new construction. It was in the historic district in what I would describe as a "Yuppy" area to use a term from the 80's. These were the worst tenants that I have ever had. They were needy and whiney. For instance, they asked for rent credit because they felt like they had to take off work if we were making their requested repairs. So, I am not convinced that there are less issues with higher end properties.

My number one lesson is that you need to find honest and competent property management first.

The next criteria that I use: Price of homes to rent ratios, property taxes, insurance rates, Landlord laws (do they favor the tenant or the owner), crime rates.

As far as leverage, you want to find a lender in the area that will do portfolio loans on multiple properties.

Good luck to you.

Chris

Hi Corey,

Welcome to BP. I live across the border in Ft Wayne. We are fortunate to live in great cash flow markets. I wish you the best. You are in the right place to learn information.

Good luck.

Chris

Hi Karen,

We have 3 vacation rentals in the Smokey Mountains.

We built one for a second home that someone else would be paying for. It did so well that we built 3 more. We finished the 4th one in the Summer of 07. Rental occupancy and rates plunged in the Fall of 07 and so did the values.

I got sucked in on the aggressive appreciation combined with the slightly positive cash flow. Once the economy turned down, those two benefits vanished. We have sold one and have the others for sale as well. Had we sold in the Summer of 07, we would have netted about 400K in profit. That 400K profit quickly disappeared and has turned into a 300K loss if we were able to sell all of them today.

Will had the right idea to buy low, lock in your profits and move on to something that will be more sustainable.

We should have stayed with our original plan to just have one vacation home in an area where we enjoyed going and then have the renters pay for the property.

I learned the lesson that when a market appreciates rapidly, it can depreciate just as quickly.

Good luck to you

Chris

Hi Krista,

I have found a local bank that will do portfolio loans here in Indiana. Most major banks will not do this but you will have to check with your local lenders to see which ones might be open to doing this type of loan.

Good luck.

Chris

Hi Kerry,

Welcome to BP nation.

This is the place to be.

Clay,

Completely agree with the other inputs that an LLC is for liability protection and not for protection if the deal goes south.

A properly structured and run LLC along with appropriate insurance should provide protection for assets not held in the LLC.

Chris

Hi Clay,

Setting up an Indiana LLC is simple. Google Indiana LLC setup and it will lead you right to the Secretary of State website.

$87 fee.

You then need an operating agreement and you are all set. No lawyers required.

Message me if you need any other help.

Chris

Hi Ru,

What are your goals? Are your living expenses covered and this is just play money? There are lot of options but until we know what you are trying to accomplish it is difficult to give you quality inputs.

There are many choices with real estate. Define your goals, then build a strategy to meet those goals.

Have a great weekend.

Chris