All Forum Posts by: Watson Smith

Yes, Steve. Put them in a LLC or S corp. You NEVER hold rental property in your name. Obviously have insurance on each property and then buy an umbrella policy.

I incorporated mine. You need an umbrella policy. Mine is up to 2 million and cost like $250 a year I think. A lot of people set up LLC's or Inc.'s per property. I want to say it cost 100 bucks to set up the Inc. and 50 a year to maintain it. Not to expensive I guess. You don't need an attorney to set up either for you.

A few years ago I rented a sander and did my own floors. Never again. I was 24 at the time and it still almost killed me. I probably spend 400 bucks on sand paper, 250 on poly and 1500 on my personal labor. Not to mention my sanity. I have a guy now that I use for around $1.30 a foot to sand and stain. It looks great but they do scratch.

For carpet I use home depot. I've shopped everywhere and unlike many things in their store the carpet is priced right. For about $10-$12 a square yard you get the carpet, 8lb pad and installed. The carpet comes with a lifetime warranty against stains and 10 year wear warranty. If the tenant stains the carpet they come out and clean them for you. If they can't clean it they replace it. I've seen it with my own eyes. That's why I use them for carpet. For $8-9 a square yard you can get non-FHA grade carpet that will wear out in 2 years with a 5 year warranty. I rather pay a little more now knowing it will last twice as long.

If the house has hardwood floors I wouldn't keeping them but by no means do I install new ones for a rental property.

In the bathrooms I use tile for flooring due to it being a wet area and tile is pretty cheap also. Kitchens I throw down laminate that doesn't have to be glued.

There is some good advice here. I like the area your looking at. I live in Atlanta so its not a bad drive. Keep your job and use this as extra income. Or look at it as someone else is paying for your vacation property. Until you have enough properties and savings don't ever think about quieting your job. To much could go wrong there.

Luc M. ever thought about the Atlanta market? Its pretty hot right now for investment property but you can get your hands on a nice SFR for long term hold that will yield you a nice gain.

Thanks for all the replies.

@ Donna - I wish I could add that in my contract. This house would be bought at an auction. They have their own contract and you either take it that way or leave it.

I found that the bank has started the eviction process. The individuals who own this house also own 3 others. This house was not listed for homestead exemption like one of their others. I'm assuming its a rental for them. I'm probably just going to knock on the door and talk with them. Find out if they are renters and if they know the house is being sold. Maybe get a copy of their lease. This house would be a rental for me so maybe see if the would be interested in sticking around.

I do real estate on the side. I have a full time job but still manage my (7) properties. I have near 6 months reserves for all of them. My properties are also distributed around my city and not all in one spot. They all pay for themselves very easily and I try to net $500 from each per month. I also don't have a dime of my money in any of the properties... I rather use the banks ;)

You need to form a company to put your properties in. LLC is okay but I prefer Incorporated. You reduce your liability by doing this. You could form a company for each property you have so in case something happened they couldn't come after your other rentals as well. Regardless you need to get them out of your name. Another good idea is to carry an umbrella policy up to 2 million or so. Its like $250 a year and well worth it. People will sue for anything these days.

I started when I got out of college like you. Get a 30 yr fixed. FHA normally has a higher interest rate than conventional. Might be hard for you to get a loan to buy an investment property. You might want to consider having someone put up the cash and then go pull out a cash out re-fi on the house. Take that money and pay them back. They normally only loan you 75-80% of the value of the home so take that into considerations if you choose that. Best of luck.

Bought many rentals but never one that was still occupied. I like the house and location. I can't do an inspection so I would be buying it blind. If I could work a deal with the bank for the price I want this was my plan for the occupant:

Inform them about the transfer of ownership.

Then give them the option:

1. Pay rent to me
2. Buy it back from me as I would finance them the loan
3. They would have to leave

I want input from people who have done this before. What was your experience and what did you do?

Thanks!

Bought 3 more rentals and will be rehabbing them in this 100+ degree weather. Trying to close the deal on 2 more but the bank and I are disagreeing on the price...