All Forum Posts by: Justin B.

Not sure if I'm 100% correct on this and didn't read all the replies thus far to see if anyone pointed this out but the message is a little different.  I believe Grant's point was to save $100k to show that you can, not necessarily that you need to not invest until you have $100k.  His logic behind this is that many people just can't handle having money.  One of his tests to see if you have what it takes to invest successfully is that you are "able" to save that kind of money.  I certainly invested way before I had $100k in the bank and have been very successful thus far, but for most, people just can't handle having money.  They just have to spend it.  It's the whole "lottery winners going broke" scenario.  He says if you can't save that much, you probably don't have the aptitude to invest successfully.  I think the "number" of $100k is not as relevant as being able to determine whether or not you are one of those kind of people.

Disclaimer again, I'm going off an article I read a few weeks ago.  So it's not just cut and dry that you have to save $100k before jumping in.  It's more of a "can you do it" type thing.

40 more units

I have done this a few times through my LLC which holds all my properties. I haven't had any issues but you will be looking at a "business" type loan which is usually ammortized over ~20 years and the interest rate will be a little higher than conventional. Also, I'm sure you will have to personally guarantee it, but no that should not "pierce the veil" so to speak. It's very common and shouldn't affect you negatively. Just keep looking around to banks. Since you are only looking to finance around 60%, you shouldn't have a problem finding a bank to do it. Good Luck!

 Hey Steve,

I just read the first few replies but I'll say this.  If using a credit card is your ONLY option, then I think it is a bad idea.  If you can't get a loan and private lending has turned you down, there is probably a reason.  I would not recommend using a credit card.  But, if you're thinking about using a CC and you can pay it off the following month, etc, then it's not a horrible idea.

Just think about it this way.  If you're doing it for convenience, they will take it, and it doesn't cost you an arm and a leg in finance costs or advance fees, why not?  If you're doing it because it's the only way you can think of to get the funds, that's a very dangerous road.

Good luck!

Travis,
It doesn't sound like you got a bad deal or anything.  What you should stay away from is paying $500 for the weekend "seminar" that pitches the $5k seminar, that then pitches the $40k coaching program.  Paying $2,500 to get a friend to help you and generate the kind of results that he did is not like a lot of the stuff you hear on BP that people say stay away from.  People sometimes pay a lot more than $2,500 for lead generation.  The obvious point is that you paid for something you didn't know you didn't want to do.  Now you know wholesaling is not what you want to do.

I am in a very similar situation.  I have small kids, a full-time job, and not a lot of time.  Therefore I set my goals to buy houses and properties that didn't require any large renovations up front.  I actually bought a few turnkey properties that are doing well and the rest required maybe $1k-$2k to get them ready (some less).  That strategy has worked well and taken me to 18 units.  After unit #5, I was spending 5-10 hours at most per property I bought once I got the hang of it and knew exactly what to do.

Unfortunately, there is no secret sauce.  I put the word out that I wanted to buy property, I look online, and even used a realtor for a few.  It took 6 years to get to 18 units, but I'm here and probably will have 30+ before 2017 is over.  Hang in there and don't lose hope :).

There are tons of threads on this topic.  I personally take the stance of always raising the rent every year.  Most of the time it's very small.  However when you have 18 units, just $10/month all around is $180/month extra.  You may even ask yourself if it's worth doing it to a "good tenant".  However, I always ensure it's backed by the market.  If your rent is already over market and you raise it, you might lose the tenant.  But if the tenant starts looking and they can't find anything for less that's the same quality, they aren't going anywhere.  Moving is a painful and/or expensive process and no one is going to do it unless they feel they can save a decent amount of money each month.  An increase in the neighborhood of 3-5% (as long as your keeping pace with the market) is just something as an investor, you should do.

The other side is if they are pissed over a small increase and moved out, they already weren't happy and were probably thinking of moving out anyway and would have done so over something else very soon anyway.

And yes, there will be times when raising the rent causes a tenant to move, but in my history, with all the times I've raised rent, I can't recall a time a tenant has moved out because of it.  It's the law of averages.

The only thing I will say here that contradicts what I said above is whether or not you have a lot of units or not.  If this is your only unit, you may want to consider not raising it (unless you know you are below market, then I'd do it).  In my case, if someone moves out, it doesn't have much of an effect on what's flowing in, but if it was my only unit and the tenant never complained and paid on time and had been there a while, I say keep the solid cash flow coming in.

Business is business only goes so far.  If you talk to her and she's willing to move somewhere you will put her up (that you don't expect anything in return for), then go for it.  But I'd make sure she's on board with it first.

I'm not saying anything bad about anyone who has told you business is business, but I couldn't operate that way.  I've gone through a couple of evictions myself and it always sucks.  But I'll never put myself into a situation where it has to be a family member or even friends.  That's the only advice I have here.  Don't put yourself into a situation like that.  It's just unnecessary stress and there are plenty of deals that don't involve family.

Good luck!

This answer is VERY simple.  DO NOT BUY THAT HOUSE.  I have a rule that I will never rent to family or friends.  You're lucky in that you don't own the house.  When I saw the title of the post I thought my advice was going to be "You don't. Suck it up.  You should have never rented to her in the first place.

But you're lucky.  You're asking if you should buy a house she rents. NO!  Even if she was a perfect tenant, don't buy this house.  This would be one of the worst mistakes you can make.

With that being said, people buy houses for their parents all the time.  If you want to buy the house for her and never expect a dime, that's a different situtation.  The mistake would be expecting (or worse yet needing) money in return.

$2k is very common for SFR's. If you have contingencies for inspection or financing, etc, and you back out of the contract due to any of those clauses, it should be refundable. The non-refundable part is if you back out for other reasons. If he is saying it's non-refundable no matter what, then that's not normal (no one would agree to that). You may even be protected by local laws. Bottom line, if the contract says the purchase is contingent on something that doesn't come through, you should get your money back. Also, make sure that deposit is held in some kind of escrow to further protect yourself.

It really depends on the situation. There are people who will say LLC is all you need, others who say umbrella is all you need, others who say both, and others who say neither. I'll try and keep it general. The LLC does provide a level of protection, but it's not the end all be all. The LLC does other things besides protection as well depending on your situation. A single-member LLC and a multi-member LLC are also 2 different things (in most cases). Do some research there.

Also, if you are talking about an SFR and it's just you, an LLC is probably unnecessary. If there are multiple people involved or it's an MFR, I'd probably recommend an entity. LLC's are usually the entity of choice for real estate but it's not the end all be all and it's not right for every situation. There are other situations where another entity might work depending on your situation.

It's not really the answer you want to here I'm sure, but your approach really would be based on your personal situation.  Do some research, talk to a couple of experts and make a decision.  Don't over think it.