All Forum Posts by: Jeff Rabinowitz

@Mark Paskach, welcome to BP. No, you do not need to set up an LLC in order to run a rental property. There are potential advantages but only if you use the LLC correctly and many people do not use them correctly. It is simpler not to use LLCs. A brief conversation with an attorney and an accountant may lead you to the correct path for you.

I have purchased from wholesalers and I will continue to do so as long as they bring me properties I can use. My biggest pet peeves are those, usually newbies, who blast out deals before they are under contract and those who do not know basic information about the property. If it isn't under contract it isn't a deal. You are asking me to spend time evaluating a deal that will probably never happen. If you cannot answer my questions about the property and do not get back to me with the answers quickly you have also wasted my time. If I am in a charitable mood and you have done some things correctly I will not block your e-mails the first time you do this. Do it a second time and I will never look at your "deals" again.

@Jessica Valentini, welcome to BP. Take some time to fill out your profile. That will help people give you more specific answers. Here in Michigan it is quite common for a title agency to hold the funds from a private loan in escrow until closing. That is the way I fund almost all of my deals. If there is ever a question regarding the funding of the deal there will be an easy to follow paper trail if a title agency is used.

The last couple deals I participated in were funded through my wife's Solo 401k. They were easy to initiate (only needed a mortgage, a note and a trip to the bank to send a wire) and to finalize (received a check via snail mail and sent a discharge of mortgage). Tonight I will be doing paperwork for a deal funded out of my SD IRA. The custodian's paperwork is an additional step. It is not difficult to complete; however, this deal is time sensitive so I will be on the phone with Equity Trust in the morning to make sure they interpret their paperwork correctly. (I have only done around 3 dozen deals through this account. I do know how to fill out the forms but the processing seems almost arbitrary at times.) I do not look forward to that call in the least.

If you have the ability to open a Solo 401k, it is a much easier account to manage. 

If you open the blog post and scroll to the bottom you should see a button or a box that allows you to subscribe to the blog. It is similar to the "follow topic" button at the bottom of this post.

The chances are extremely small that a bank will move quickly enough to be useful when an offer has already been submitted. Banks often take 30 days or more to deny an application.

@Justin C., this may be a small claim and your profile shows you are looking to build a rental portfolio in the near future. Insurance is a large expense. When you acquire 1/2 dozen, or more, properties you can begin to get some discounts when you purchase all of your insurance through one agent and increase deductibles but it is very much worth the effort to keep the premiums low. Making a small claim may raise your premium for your residence. Worse, it may raise the premium for all your properties. $100 annually for 10 properties is $1,000. Worse still, if you experience another loss in the near future and make another claim your insurance company may drop your coverage. There are not always a lot of choices when you seek companies to insure a rental portfolio. It may not be prudent to make this claim.

@Will M., welcome to BP. You haven't filled out your profile--it is always easier to tailor an answer when people know more about you. The short answer is: YES. You can definitely add $1K per month to your income by buying rental properties, especially if you have 6 months and access to funding.

@Dan Sieg, welcome to BP. The lawyer is being prudent and protecting the seller. If you do not provide the POF you will have no contract to assign. Have you already identified your buyer? If so, they may be willing to provide a POF letter to secure the deal. If not, do you know any private individuals who have the funds needed? They may be able to act as a private lender and provide the POF. (You may need to offer some compensation to convince them to release their bank records.) Another possibility could be a hard money lender. Again, they may want some compensation to provide the letter. Best wishes.

Money, knowledge and time. It takes all three to do a deal but they do not all have to come from you. You do have to contribute something. It seems from your post that the component you may have is time. Use it to read everything you can (gain knowledge) and learn your market. Use it to network (gain access to mentors and money). However, be warned. If you are looking for a handout (in terms of money, knowledge, or time) everyone will know it and you will find a tough path. Nobody has time for that. Approach this with dedication and with a willingness to give back and you may be surprised how far you can go.