All Forum Posts by: Tim Winter

Also, just saw this today : https://www.biggerpockets.com/...

@David M. you are correct sir, I never mentioned they give you legal protection. I was talking about redirection, in that there is no direct tie between your name and the property, except the transfer into it. This allows you to put some distance between yourself and the residents or anyone else seeking the owners. It is not meant for actual asset protection like other legal entities, but more focused on estate planning. If you are seeking to protect equity, other entity types can provide that protection. 

@Maria Vargas The first trust you setup with a new firm will range anywhere from $400-800. I've done several entities with the same firm and they then cut you a deal on the ones after the first. We put assets that we do not need to put into our LLC yet into the trust for estate planning purposes. We currently have our primary and several rentals in the one trust and the trust as beneficiary for some relatives assets. I used to live in Colorado and had a good person out there, but looks like they're no longer in business (possibly retired) so unfortunately no one that I can refer you to. Hope this helps!

@Dave Meyers What @Trystan Trenberth said. It's very difficult to say when and how you should declare the taxes for TPT, as everyones situation is different. If you have a license or are considered a "real estate professional" it gets even more complicated. 

Well worth the money to ask a professional to get all your bases covered, and make sure you are reporting everything properly (including reporting that it's a rental to the county!) 

As mentioned previously, you should convert your insurance policy as soon as possible to a landlord policy, even if you remain in the property. This will protect you against other issues like if the property becomes unrentable, to cover your expenses in those cases. 

After doing that, you should consult a tax consultant that understands rental properties. You should start declaring the rental income as soon as possible, and possibly amending your returns if you did not report them in previous years. This will give you a slight tax hit, but also allow you to claim expenses and also claim that income to offset debts and decrease the hit to your DTI.

Lastly, changing entity structure only makes sense once you have equity work going after. If you only have < $20k in equity, after litigation expenses, someone can only expect to try and claim around $15k which makes it not very likely someone will go after you. So is it worth the extra $1k expense upfront to protect yourself against unlikely litigation? For some people this extra expense helps them sleep at night, so it's really all relative to your risk tolerance and current portfolio. 

With that said, what about a trust? This is a great way to protect your portfolio, give you some good estate planning and add a little protection from having anything directly relating to yourself (if you properly name the trust to have little to do with yourself.. (ex, my living trust is one of our dogs names and a favorite word plus "Trust". Avoid the advise of putting your last name into the trust as this gives you no redirection protection.) Then after this, you can honestly say to any future tenants "well, I'll have to ask the investors" instead of responding like you are the owner and causing too much familiarity with new tenants. If you're in Arizona, I have a great estate planner that can set up simple to mind blowing fortresses of protection, and custom makes them to meet your needs. If not, I'm sure you can find similar people in your area if you ask around.

Best of luck, and hope the next investment goes just as well.

I would talk with a title company before anyone else first and run the title search and see what is possible. They can verify any outstanding liens, what state the title is in, etc. They can tell you the payoff needed to claim the property and the paperwork needed to accomplish this. 

If probate wasn't dont properly, they can advise on an attorney or document service to correct this. If they don't have any good references, your local REI probably has several people with good references.

It really depends on your DTI ratios and your experience. Most lenders start shutting down or pushing up their LTV once they start seeing risk flags go off.. credit score, DTI ratios, how comfortable they feel with your investment background, etc.

It's good to start developing a relationship with a local lender, as they'll be able to lower their restrictions the more business you do with them. I've known a few investors getting 15% LTV, but new investors the same banks says 25% no matter what. It all depends.

Best of luck, and good hunting!

It really depends on your DTI and the lenders stomach for risk. Big banks will cut you off at around 3-4 loans, smaller banks can stretch you out to the 10 loan limit, if your DTI stays within their risk parameters. But at one point after the crash, I couldn't even get a 2nd conventional loan even though I had a long track record of investing. It really all depends on your financial portfolio, income/debt scenario, and that banks investment parameters.

If you have a bank that's willing to work with you, keep using that bank until they tell you no. Then it's time to shop around. Smaller banks and local banks will have lower limits, and when you can't get even those banks to lend to you, it's time to turn to creative financing or portfolio loans. 

Best of luck, and good hunting!

Be very careful when doing a deal with blood relatives. You'll have to face them every Thanksgiving dinner, and it can be awkward if they feel you "screwed them" on a real estate deal. 

That being said, I did my first deal with my mother-in-law fronting our down payment as a marriage gift, which created some awkwardness when we wanted to change certain things with "her property", but in the end after we rehabbed it and paid her back with interest, it was a great feeling. 

I'm assuming you don't have a real estate license, so if not there is nothing special you need in the contract. If you are licensed, you have to disclose that in the contract, irregardless. 

Make sure its a win for everyone, and you shouldn't have any problems!

Tenants are always the best buyers! They already know they love living in the home, and you can make the best seller financed/lease option deals as they're very motivated if they like the place and don't want to move. You save the headache of having to prep it for selling, listing it, showings, dealing with tenant move out, etc.. and of course save on all the marketing costs. 

The downside is if you later decide or find out you can't sell for some reason and lose a good tenant. But that's a small risk if you've already made up your mind to pull the trigger. 

As mentioned before, the more notice you give, the better as well. If your tenants think they'll find something better out there, after they start looking they might think twice and take you up on your offer. I've had several lease options get signed that way. 

I think like others have mentioned, why in retirement would you want the stress of rental properties? I know for myself as retirement approaches I'm moving the portfolio towards financed or notes. 

Have you thought about doing a buy and rehab, and then selling them on lease option or seller financing? Eliminate the tenant factor, create steady income, and in the process show your kids how to do it as well? Then when they "take over" they know what to do when one of the units refis out so they can do it over again?