If you could go back what would you have had done before your first deal?

Question

Hello BP,

Before I get my first deal, what should already be in place? Should I already have a business name/entity established? Or is it the same difference to buy in my name since I will be assigning the contract anyway?

Should I go ahead and find a reputable GC?

Thanks

Erin

Elizabeth Colegrove · Answer

@David Moore that makes sense! The two largest issues is we use conventional financing so it make insurance and mortgages hard! So that's how llc make sense in your situation!

Guy Gimenez · Answer

I would not form an LLC before I had profits coming in unless, like in Texas, it's relatively inexpensive to form an LLC.

If you have substantial assets and you buy and sell in your own name for the first couple of homes, just make sure your sale contract is iron-clad (you will need an attorney to draft) and get a million dollar umbrella policy on your personal insurance. Just make sure your insurance agent can prove it covers lawsuits over a property that you don't reside in.

Elizabeth Colegrove · Answer

All of our contracts have been in our name! Based on our "unique" situation (as everyone is unique). It didn't make sense to the point I labled my article I wrote on the subject, how I crashed and burned with an llc. For us since we self managed and have mortgages, an llc opened us up to nothing but liability and future issues. Honestly I highly recommend if you are worried you talked to a real estate lawyer!

David Moore · Answer

@Erin Elam

I would have only sought SFR owned by banks or HUD.  I've learned from experience that indiviual sellers are way poorer at understanding the actual value of the property, whereas banks tend to price them in the right ballpark, at least in my area.  Banks have the necessary detachment.

Guy Gimenez · Answer

@Erin Elam

The one mistake I made was take too long to recognize that the ONLY thing I needed was a an active investor to partner with so I could jump start my business, expedite the learning process and make money much faster.

Elizabeth Colegrove · Answer

@David Moore

I haven't heard of land trusts. I have heard of trusts. My plan probably realistically when I quit work is to research them. I have heard that they will work best for our goals.

David Moore · Answer

@Elizabeth  Colegrove

Have you taken any classes on Land Trusts?  They could protect you.  I haven't gotten around to putting mine in land trusts yet.  I need to get my title company used to one first...I'll convert one of my rentals to a land trust sometime in the next couple years to cut their teeth on it.  It can offer you some level of cover.  I know it sounds incredibly difficult, and I would never go out and buy a book on it.  Go to a REIA and find out if they teach a course on it.  I had a good one day course on it.  Cost me about $99.00, and I plan to take it once more....just to get all the concepts.

David Moore · Answer

@Elizabeth  Colegrove

Yes, each in my LLC has a mortgage, but here is a caveat.  They are commercial lien mortgage.  But a mortgage nonetheless.  I have a portfolio lender.

Guy Gimenez · Answer

@Elizabeth Colegrove

Just curious...how does having a mortgage reduce liability on an investment?

Elizabeth Colegrove · Answer

@David Moore

Are you properties have a mortgage on them?

If you could go back what would you have had done before your first deal?

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