All Forum Posts by: Jonathan Johnson

@Joshua Hollandsworth, the same type of loans can be used to buy 2-4 unit apartments. It wouldn't be against the rules to rent out a portion of the home. I'm currently buying a 4 unit apartment that was a SFH turned into an apartment using the VA-loan (very similar to FHA-loan, but for vets).

Congrats @Jared Saunders, very inspirational and motivating.

If I may, how do you estimate rehab and repairs for properties you are looking to purchase?

Hello BP,

I'm almost to closing on a 4-unit home that we will be house hacking for a bit. I have a question about LLC's. Though the debate on if they are needed (vs insurance) is long and unresolved, I would like to start an LLC for real estate.

My questions:
1) I've heard on a recent podcast of someone buying a property and having the title agency use two titles - one in buyers name - one in the buyers LLC name. This was to protect the identity of the buyer. I'm not sure if he was going to just refinance into the LLC or what. Anyone know about this?

2) There really isn't any great property management companies in my area so I want to start one. Initially, it'll just be my 4-unit and a single family home I own. Should my LLC own any properties or should it just manage?

Thanks!

I remember feeling so honored to have @Jay Hinrichs comment on one of my questions. He his truly a valuable source of knowledge and very gracious with the math and truths he knows in real estate.

@Mindy Jensen Thanks, you do good work at BP!

Check out the FHA loan, they classify 1-4 units as residential and oftentime you only need to put down 3-5% downpayment. Find a property that the income - expenses (utilities, taxes, insurance, ect) - repair savings (5-10% of income) = positive cashflow. You could possibly have to live in one if it's a government loan, but only for a year. In the case you move out before the year I don't think anything happens, you just should "plan" on doing that.

Everyone who loves free online rent collection:

Cozy.co is getting beefed up to be able to do Multi-family. Multiple units from one property,  billed separately, shown coming from one address.

I'm not associated with Cozy except that I love using them. Free got me sold on it. Tenants apply through the website and get a background and credit check at their expense (Free for landlord). You can market on their site with pictures, I think it has lease templates, profiles for tenants, and an easy one-time charge option for things like pet fees or utilities.

As far as free software for online rent collection, I think this site is the best. I would love for someone to prove me wrong because if there's something better for free it must be pretty good.

@Jeff B. Sorry, to the seller. They are all on salary with the seller being the employer.

@Brian Adams The current management is in-house. 

Not an easy question, don't mean to be mean.

There are 4, maybe 5, people doing a poor job of what 2 people could do great.
100-unit apartment, 30% vacant due only to management and poor marketing, the building is great. They only use a sign out front to market. There were 4 or 5 units in need of repair and when I went to go see them I was expecting holes, mildew, dead cats, fire damage... saw dirty carpet, dirty appliances, minor drywall repairs, and a need for a fresh coat of paint. $3k-5k per "damaged" room.

The managers I talked to both literally said, "I hate people." "People are idiots." "They asked me to fix this and I said no. HAhaha." --> This was not one of the ridiculous requests tenants can make sometimes. Also, he admitted to illegally installing a plastic access hatch to get to the pipes (they need to be metal legally), which lets me on to the type of work ethic he has.

If I hire a property management company at 10% of rental income, I'll save about $70k a year in expenses and make $200k more if they can rent out another 20 units (I figure 10 units will always be vacant due to natural rent cycles).

So, do I ask the sellers to let them go on the day of closing? Or do I do that? There are a LOT of tools in the office, as well as a nice TV for the security cameras and the computer. Not sure how I try to limit the risk of them taking off with EVERYTHING.

I've also not had experience with firing people, but I could read up on that before doing it.