All Forum Posts by: Mitch Dowler

Tom what you are referring to is the ability for the losses to offset your earned income. You can always deduct your expenses and losses for actively managed rental property against the rental property earnings so you end up with more income and no additional taxes.

Establish written screening criteria and even place it in your ad. This will help keep the felons, sex offenders, and those with poor credit from responding. If the tenant is borderline to meeting your criteria charge a higher security deposit and document the reason. You can also insist on renter's insurance and have your LLC or yourself listed as the additional insures.

I do not allow smoking in my units all, it greatly increases the cost to turn them and remove the foul odors and yellowed walls.

Do beware of any discounts as an employment discount is definitely discriminatory. My screening criteria for credit, criminal record, and sex offender status also helps weed out illegal aliens. I had a property trashed by illegals in Texas when the property management did not do their job.

Equity stripping refers to maintaining a mortgage on the property or the rare equity loan. If they follow the money they will end up with debt owned by a bank or investor. Charging orders are just a tool on top of other tools. There are no additional returns to file with an LLC because they are pass-through. It only take me a few minutes to complete the annual meeting minutes for an entity every year. Insurance should always be present but if there is a lot of available equity it can be taken to cover anything the insurance does not cover. I do not use charging orders myself but my insurance, LLCs, maintaining the corporate veil and mortgages provide ample protection.

I don't understand an investment strategy of having all properties paid off. That strategy will greatly slow your ability to acquire more properties and increase your passive income. If you were to take a 75% LTV mortgage on your three properties and invest those funds into six or seven more income properties your passive income will increase tremendously. If your present properties do not have strong positive cash flow with a 75% mortgage then those properties don't make sense as investments.

Now let's move on to the next good reason to leverage those properties. Let's say your three properties are presently worth $100,000 each and they appreciate 3% this year. That would earn you $9,000 in additional equity, not bad!

Now let's say you leveraged those three properties and now you have a total of ten. If those ten appreciate 3% then you have earned $30,000 in equity! Wait, we're not finished yet. Now you take that additional $30,000 in equity and make a down payment on property number 11. The year after that if the 3% appreciation rate continues you will have another $33,900 in equity!

Now you are growing your real estate empire, increasing your cash, increasing your equity AND the leverage reduces the target for all those lawsuit risks that made you look at umbrella insurance.

Rock ON!

So now that you are worth several millions, how to protect your empire?

Umbrella insurance is expensive, and I'm not just talking about the cost of the actual umbrella insurance policy. The companies that sell them require no or very low deductibles on all your other policies which raises ALL your premiums significantly. Umbrella policies also only cover the gap left after your other policies pay out. If an event happens that is not covered by your other policies then the umbrella policy will not pay either.

A better answer is the insurance you have and other asset protection strategies. Your business activities that incur liability should be held in protective entities such LLC's for real estate investments. Properly maintain the corporate veil for each of them. Do not allow excessive equity in any one property or business. Use equity stripping and reinvest elsewhere. Another technique some find controversial is charging orders between entities. Not too much value should be held in any entity and always use good business practices. Attorneys will not want to go after you if there is not enough to be gained or if the risk for them and effort too great.

Don't be the low hanging fruit.

I wouldn't make any investing decisions based on this criteria alone. Tools like this would several criteria to search with based on the investors goals.

I went through the whole Nouveaue Riche thing in 2007. I did get some good education out of the program but at a tremendous financial cost. The coaching program was lame and the coach was barely a step ahead of myself. I am a big fan of networking, reading, podcast and education. Most of these are free or low cost. For education and seminars you pay for I believe it is best to be laser focused instead of overly broad. With a broad educational program you will get a rehash of what you already know, have read, or can hear on podcasts. At this time I know that syndication is key for me to get to the next level so I will attend some quality syndication training focused only on this narrow topic.

To help Scott, I have inserted here the official information from va.gov.

http://www.benefits.va.gov/homeloans/documents/doc...

"6. When a veteran sells the property to someone who will assume the existing VA loan, is the veteran released automatically from personal liability for repayment of the loan?

No. If the loan was approved on or after March 1, 1988, the lender or VA must be notified and requested to approve the assumer and grant the veteran release from liability. If the loan was approved prior to March 1, 1988, the loan may be assumed without approval from VA or the lender. However, the veteran is strongly urged to request a release of liability from VA"

Even though this says the lender or VA may approve assumption by another Veteran. The lender holds the trump card and the Veteran must meet the lender's criteria. The Veteran's credit and income must still qualify. If the Veteran would not qualify for a VA loan from bank "A" then bank "A" will also not allow their VA loan to be assumed by the unqualified Veteran.

I would very much enjoy getting together with my Bigger Pockets friends!  I live near Tacoma and some networking to help me break out of routines and see opportunity that I may be missing.

 Leigh Ann,

After financing is completed and you close on the property you quit claim into the LLC. You don't need to worry about building credit for the LLC. It is best to have the LLC professionally created and the Operating Instructions are important.