RE Business Reorg: Thoughts & Comments

[Nicholas Caesar]

In the summer of 2019 a partner and I will be investing into and fully managing a family RE business that has been in operation for about 20 years.  Some facts about the business are below: 

Equity: $2.1M in 19 Single Family Homes rented annually (17 in an S-Corp & 2 in a LLC)

Net Revenue per year: $260K @ about 12% Vacancy 

NOI: 90-100K

Debt/Equity Ratio: 6.3%

We will be investing around $105K to help fund new MFH acquisitions. Our intent is to increase the revenue to a point where we can create an internally owned PM LLC that will sustainably manage all properties in the portfolio so we can continue to grow with a decreased labor burden. As the D/E Ratio is very low, we hope to finance several of the acquisitions by leveraging our $2M in cumulative equity over the next 2-3 years. Once the PM company is created we will retain all equity in the Corp & LLC's and continue to add LLC's, thus separating all equity from operations & mitigating risk. Any thoughts on the following:

-  ability to secure financing through a business line of credit based off of the corporations equity? 

-  the structure of having an internally owned PM company to execute all Operations related functions? 

-  the 'healthyness' of the current business metrics; we seem to think it is a gold mine waiting for expansion?