All Forum Posts by: Scott Schultz

my personal belief is the asset protection across state lines is over rated. until you get big and you are a target with many millions at risk your best action is good insurance, the out of state stuff is pretty complicated and expensive for a small investor, best practices, and good insurance should always be your first line of defense, then the LLC firewall, and last the out of state LLC, the out of state LLC does not offer added protection, just more hurdles for someone to jump to find you, setting up a Nevada or Wyoming LLC as the parent LLC forces someone that want to sue to also serve you in that state, and petition the court for who the owner of that LLC is. With only a few properties you will burn up your cash flow trying to protect from a very small percentage event. as long as you have good practices, dont co mingle funds, and have great insurance, and if you are worried an umbrella policy over all of it, your loss will be the value property if your firewalls are in place at max. Here is the other thing, What is your net worth? if you are sub $1,000,000 you are not much of a target, but if your worth is over $10,000,000 you have some deeper pockets, so you may be more of a target. dont over think it, just get going!

@Tim McKinnon LLC Formation in WI is quite simple, start here https://www.wdfi.org/apps/CorpFormation/

If you dont live in WI you will need a registered agent, and some municipalities regardless of the business entity will need a local contact for the property. 

you can get Commercial financing in your LLC name, thats generally not a problem, you sign a personal guarantee anyway. but the loan is usually 3,5 or 7 year term Ammed over or years.

Secondary Market Loans: FHA will require you to live in the property for year, some FNMA, FHLMC, VA, USDA, and WHEDA loans require residency as well. you can do secondary market "investor" loans they will require 20-25% down as well as reserves of 6 mo. payments and expenses in the bank and seasoned in addition to your down payment. they also look at your experience as a landlord.

Transferring to your LLC: It can trigger a Due on Sale, but in 99+% of cases it will not, as long as the lender keeps getting payments, I have never heard of a note being called due in this situation, many people use Sub2 as a way to finance investment properties, buying subject to existing financing and the transaction is arms length (to unrelated buyer) quit claims the deed and continues to make payments as if they were the seller (loan still in sellers name)

How to transfer: draft or have a title company Draft a Quit Claim Deed and record it in public records, that simple. 

*** what i described is Wisconsin Specific***

@Kyle Schlosser Thank you, but its really not that hard, its all about only buying great deals, that include good rent to value ratios and appreciation in the buy, it can be duplicated in many locations throughout the country, but most prevalent in the Midwest. 

@Kyle Schlosser None of mine are in C or D none of the towns i am in even have D areas, the key is small town, not major metro, i did a simple search in Louisville where you are, and there looks to be plenty of opportunities like i describe just on Realtor.com, I have to work a little harder than the MLS to find my deals, rents appear high as well. I live near a few of my properties but am about 3-4 hour drive from the bulk of my portfolio, I use good managers, and I dont even manage the close by properties, I use to live where the bulk of my properties are, but have since relocated.

@Kyle Schlosser Thats $750 gross rent, not positive cashflow, most of my 2 Beds are at $750/mo, and 3 beds at $800-850, and 4 beds at $900 plus pet rents (we love pets) my all in purchase and rehabs are usually $38-42K with an appraised value of $70-90K with rents listed above, now to be real I work for those deals and they are not every day deals, but at a $50K price point they are a little more common, even on MLS, but I'm not giving my secrets out, cuz if i do I wont be able to keep buying those, now if anyone wants to pay market for some of mine, everything is always for sale for the right price. I have management in place, and in most cases the big stuff is already done on them.

Is this an SFR?

Your Insurance seems low for $160K even if you have a $5K deductible like i do on mine, plan for $800-$1000 

Personally unless the property is worth $200K the day you close, I wouldnt touch that deal, if you want to spend $160K you can easily buy 2-3 SFRs or Duplexes that will throw off $2,250/mo or more, 3 - $50K 2 or 3 bedroom houses at $750+/mo each 

A couple things, I would work with the prospective 1031 Agent and your accountant to see exactly what to do, sometimes on small profit you are better off with the cash and pay the tax, than be forced into a marginal deal because of timelines. 

Central WI can be a great Cash Flow market, I have most of my stuff further North, but work with ABC Rental Management out of Wausau to manage my properties, if you need a great PM with good rates, check them out. 

I work with Titan Property Management in Oshkosh, they are managing one for me in Sheboygan, they have a couple other of my properties as well. Good job reasonable rates, they use Buildium platform, very transparent. the forum ere usually kicks out a link or direct referral contact, my contact is Bruce, DM me if you need more info. 

I would want to get a statement from the father and son stating anything left behind after closing may be disposed of, and has no value, preferably signed and notarized  

depends, is it a nicer newer place? I havent been up on Manty values lately but they had been depressed for a long time.   Your PM figure is low unless you have someone in the 5-6% range like you are showing. not a ton of cashflow, but not bad if you are gona live there.