All Forum Posts by: Philip Johnson

I believe there are little black ants coming out of this hole under the window sill. Should I just spray some ant repellent up there and seal it with caulk? Sorry for the sideways image. I can't seem to get it right side up.

I'm looking at a multi-family property in Providence, RI that is listed as "a legal 2 unit plus additional studio apartment" on the top floor.  Sounds like the studio has its own bathroom.  Plan would be to rent out both 2BR units, and I would use the studio when I'm in town every other week for work. 
Assuming AirBnB doesn't get outlawed in Providence, would I be able to rent out the studio on AirBNB for the days I'm not using it, even though it says legal 2 unit? 

I am looking to buy my first rental.  My question is the financing.  I am a realtor in business for 7 years.  6 of those years were part time real estate.  I went full time about 10 months ago.  I was making around $100,000 per year from my full time job and averaged around $40,000 per year from real estate.  Now I am real estate only and in 2019...year to date I have made around $80,000.

Is there a company that will finance a rental for me?  Since I have gone full time and don't have a W2.  I know I need 2 years self employment taxes to prove, but since I have been in real estate 7 years, can they use my past full time income to help qualify?  Your responses are highly appreciated!

 I think home schooling is a growing niche. They can group up and meet together for PE days I think now and do other social activities like old schools. The test scores I think are substantially higher on average and home schoolers frequently win in competition far more than their represented capita. The individual learning pace is likely superior to 30 kids being all taught at basically the same pace. There are studies that show homeschoolers also outperform their regular school peers in college and in professional careers as well. If both parents have degrees, homeschool kids average in the 90th percentile for example. For some it is a better fit even for a 12 year old, yes. 

The reason for this post is because I often read other investors post about looking for a property in an area where they have good schools. We did that. We bought a home in Burbank, California, a very expensive suburb of LA, because the school system was rated really high compared to the other schools in nearby cities. But after a year of my wife checking our kids out of school early to take them to acting auditions, she got fed up with the annoyance of the school system (not to mention the socialistic and extreme liberal political climate of the schools in LA). So she pulled them out of school and started to homeschool them. So it really didn’t matter as much whether we lived by a good school or not at that point and we could have purchased a cheaper property that was bigger and nicer for a lot less by going just a little farther outside of Burbank.

I am starting to see a lot of alternative schooling options now-a-days, especially in Arizona where I also live and invest. Here are some alternative schooling options. You can:

• Go to your neighborhood school
• Get an exception to go to another school outside of your area (this happens all the time by the way)
• Go to a charter school
• Go to a Montessori school
• Go to a private school
• Go to an academy 
• Do online school
• Do home school
• Do a mix of online and home school
• Do a co-op school

And I’m sure there are others I’m not familiar with. So if in your listing for the property you are renting or selling you state the excellent alternative schools in the area, does it really matter which school district you buy in if the boundaries are a lot less ridged than they used to be?

What are your thoughts?

 Hey Philip,

I didn't have the time to read through previous comments, so I apologize in advance if people have already covered these topics!

For the issue with wanting an additional line of protection from hiring other people to work on your properties I would recommend starting an LLC to function as an operating company. You can pay the individuals through the LLC, and should there be issues that insurance doesn't cover then the liability falls first on the operating company LLC. I know many investors who use operating companies to collect rent, pay bills, cover property management and hire contractors. You only keep enough liquid assets in the company to cover the expenses, but should there be any legal action against the LLC, it wont be a big hit to you personally as you are only risking the assets that are in it rather than the entire asset/property.

As for the issues with protecting the assets/properties themselves I would recommend looking into the use of land trusts, as explained in this article. Transferring a property directly into an LLC can trigger the Due-on--Sales Clause; however, placing the property into a land trust that is assigned to an LLC is protected by the St Germain Act. In the end the structure looks like this: property > land trust > LLC. As an added benefit, you can also remove your name from public record for that property as described in this article.

Just some thoughts! Let me know if you have any more questions on either of these strategies. I use them and know many other investors who use them successfully - these strategies just opens up more possibilities.

This isn't legal advice, just my opinion as a real estate investor.

@Philip Johnson could you 1099 them and buy your own workers comp insurance? I dont know if that is an option, but I might be something you can do

You're trying to save money and have no risk.... that's not possible. You either have to hire people that are covered by their own insurance, or take the risk of not doing that.

I have to agree with @Matt M. on this one. Hiring licensed contractors (even a Class C license in Virginia which is "handyman") provides you the most protection. As another licensed contractor, I'd love to tell you how many messes I clean up in houses from fly by night hammer swingers. It's great money for me but sad for the home owners. If you're worried about the cost of labor, it would seem to me like you need to adjust your numbers to compensate instead of trying to save money on the back end. Not to mention a contractor will most likely provide a better quality product which will yield a higher ARV.

 You should include a savings clause to prevent that from occurring.

$150 may feel like a lot, and it is understandable if you only have a couple doors and are a small investor. I own 20 SFH rentals and my risk exposure of a lease issue is higher than most. 10 years ago, I was in a similar situation using buy-by-night websites for a lease contract. After being in eviction court and watching a judge shred a lease similar to mine due to unreasonable fee language, I knew I didn't want to be in that position and decided to take my business the next level.