All Forum Posts by: Chris F.

Everyone mentions LLCs as the best way to go, but I'm wondering does it ever make sense to go Corporations- S,C or whatever, versus remaining an LLC?

Or is that a question only a lawyer can answer?

What is really needed is the input of an actually lawyer on this, but I'll take a stab (I'm not a lawyer)

An LLC offers the same type of veil status as corporations, with the same taxation as a partnership. BUT LLC's have limited precedents relating to LLCs and those in existence are limited, so I'd say that going to court won't always be a black and white issue.

Someone else was talking about the liability you incur as an employee, which is to say that as an "agent" of your own company, the company is liable for any torts you incur as an agent of the company

Translation- you run someone over backing out of the driveway of one of your properties, and they can sue the company, as you are acting on the company's behalf. And they can also sue you directly.

Also if you run someone over at your uncle's house because you're drunk, they can sue you and attach your LLC assets.

what an LLC DOES protect you from is if a hurricane wipes out your property and you're underinsured- they can take your LLC assets, but not your personal assets.

Again, I'm not a lawyer, but hopefully this helps

So no one is willing to post actual figures? It's easy to say "whatever amount puts you into your first deal." So why don't I take the first step and throw a number out there, since no one else will.

How about $25K liquid cash?

I'll break it down:

Assumptions are a buy and hold $75K property w/ 20 percent down NOO 7.5 30 year. (just a number but it's a realistic one)

P/I =525
rent =1150 (50% rule + 100 profit)

Therefore, to secure a loan (not hard money, considering buy and hold strategy)

So capital required is:

$15K downpayment
6 months @1050 reserves (monthly expenses minus profit margin)
3700 for closing costs, any minor repairs,etc

I know this doens't encompass every scenario, but for someone getting started, I think it's someone realistic. Yes you can get a money partner, or do seller finance or any other number of tricks, but is someone doing thier first deal going to be comfortable doing these things on thier own? somehow I doubt it.

If I'm way off, please correct me, but that's how it seems to me.

I've read lots of talk about how to get startered, and ways of generating cash (wholesaling, birddoging, etc) but no one ever talks about what it takes to get started.

I realze it can depend on you first deal, but let's say I wanted teo skip step one and just start buying properties outright. What's a good figure to have luquid in order to buy your first property and convince the bank you can be taken seriously? Or to put it another way, how much did you (or your "friend" cough) start out with?

Just loooking for a number.

It really comes down to the numbers and how much of your own money you're willing to sink into her... Suggesting the roommate is one alternative, but this banks on the assumption that she'll try and accomplish the locating of a roomate- in the meantime your expenses continue to climb-so then you're out another month's rent + eviction costs+ cost of time lost finding a new tenant AFTER you've given her a "chance". It's simply about minimizing your exposure, IMHO. But that's just my take, and based one what I've read here. Kick her out now and you loose maybe a months rent + eviction costs + finding a new tenant. Let her slide and you gamble that she'll not cost you more money.

Bad things happen to good people, but if she's a good tenant she'll pay his half- if not, evict her. If she's itching to be evicted, she won't the next time she goes to rent and gets denied.

Does that sound cold? I don't know, but I guess I'm too cheap to be kind =)

Think of it another way. If you default on your mortgage, the bank will not "let you slide" no matter what your sob story or how good your credit is. There is charity and there is good business sense. the two are not compatible.

I'll also caveat this post by saying I'm not a landlord, but based one what I've heard and read, this is what most if not every landlord on here will tell you. If I'm wrong, someone tell me so

The lease, like any contractual obligation, is a joint agreement- If one doesn't pay the other one is stil resposible. Since the wife is still living in the residence it's her obligation to pay. Contact the woman and tell her she is responsibile for the other half of the rent, and if she doesn't pay, issue a 3 day notice.

Sounds harsh, but you're not a marriage counselor. Don't get caught up in someone else's relationship issues- as I'm sure everyone else wil repeat, it's a business- treat it that way.

I thought the texas markets were relatively stable. that's unfortunate

If you don't disqualify them appropriately you could be subject to discrimation lawsuits or housing authority visits. So disqualifying them after doing the credit/background checks is the only way to CYOA. I would go through the motions if only to insulate yourself.

Anyone in the Austin market? how's it looking down there ?

The indivual cities are more interesting than the composite:

CNN: Home prices fall at record pace

The southwesth has been hit hard- Phoenix, Vegas, and LA are tanking.

Which still leaves home prices in LA at +/- 350K, so it's probably still early in the drop.