All Forum Posts by: Michael Seeker

@Ralph Torres - I believe this practice is a lot more common in large markets (NYC, SF, London, etc.) and the fee of 1st month's rent sounds correct as well.  It is likely not a scam as you should get a signed lease, first month's rent and a deposit before paying the realtor anything.

That being said, we've never had a realtor reach out to us on property in our markets and would not pay fees for one if they did reach out.  Our cost to least up a unit is significantly lower than 1 month rent and we do not have issues finding qualified tenants.

If you don't need the leads, then it's probably not worth it.  If you're having a hard time getting a unit rented then you may want to pay up upon successful execution of a lease.

@Gabrial Carter - you should look at a commercial mortgage for this purchase.  I've done bundled purchases in the past and as long as you're not looking to sell properties off individually this is not problematic.  If you do plan to sell selectively at some point, you should either aim to do so at the end of the term (typically 5 years) or see if the lender will write in payoff amounts by property into the loan.

You'll need to check with local investors/PM companies etc. to find who the good commercial lenders are and then start calling until you find one interested in the loan.

Hope this helps!

@Bryan Caprioli - I maintain one bank account for each entity and then a general business account. The general business account handles most transactions regardless of the entity that incurred the expense and also receives all rent. Around once a month, the accounts are balanced and if an entity is owed money it's transferred from the general business account. If the entity owes money (i.e. some CapEx that exceeded rent for the month) then it's transferred from the LLC account to the general business account.

I am an owner in each of the entities, however if I were managing for other owners I would not maintain separate bank accounts for them but would maintain detailed accounting and keep record of the net balance (positive or negative) for each owner at all times.

Hey Dillon, I've borrowed money many different ways at a variety of terms throughout my investing career to keep things moving forward.  I've taken out numerous unsecured and secured loans as high as 12% on a 1-year term.  I didn't enjoy paying that much, but it's what I needed to do at the time to get the deals done.  

While 8% for 5 years isn't amazing, it isn't bad for what you're trying to do with it and the fact that it's not tied to the real estate.  It sounds like you're using best case scenario on your rehab and rental income projections, but even if those numbers are off, you should be able to pay the loan off within 5 years.  Be careful investing in low-priced properties as there are a lot more risks involved with crime, bad debt, bad tenants, vacancy, etc.

You may want to look at tax considerations for LLC vs non-LLC. I believe in most cases you'd be looking at roughly a 20% savings by holding in an LLC. I'm no tax expert so don't take my word for it though

@Vanessa Allsup, you do not need separate metering for a conventional mortgage on a 4-plex.  I'd steer clear of whoever told you that

@Deangelo Mack - when I buy a property, I review the leases and draft up the estoppel.  After doing so, I send to the seller or seller's agent and get them to have all tenants sign it.  When tenant cannot be reached to sign, I have the seller sign in their place.  This way if the tenant comes back and argues a deposit or lease amount, you or the tenant has some recourse against the seller.

Hey @Mark Ainley - shoot me a PM and I can give you contact info for my uncle who has worked on historic homes in Elgin for 40+ years.

@Gary B. - I've used them for one commercial loan and the experience was okay.  They ended up giving me a better rate and longer amortization than anybody else but it was much more of a pain in the butt than working with local lenders I have relationships with already.  There were a lot of ticky tacky fees and extra headaches.  Overall, it was worth the hassle, but not by much.

@Christine Kankowski - we replace all air filters quarterly which allows us to check up on each unit and also helps prevent some costly HVAC calls.

We typically tell tenants that we're coming by to replace air filters and a quick walk through between Xam and Ypm on whatever day and ask if they have any time constraints that we can accommodate.  We're actually doing this today but are to the point where we'll start splitting the process out over a couple days.

You can do this personally or ask your PM company to do it (they'll charge a fee of course) but it's well worth it to catch minor issues before they become costly.