All Forum Posts by: Aaron H.

You'll get opinions all over the map on this (run a search on the forums, you'll see an LLC discussion every couple days). Many will tell you that an umbrella policy is an adequate amount of liability protection, and the LLC isn't really necessary. I'm inclined to lean that direction unless you're dealing with way more than 4 properties.

Ultimately, it's down to your own level of risk tolerance and comfort level.

If you do decide you need an LLC, my research has led me to believe that Wyoming is a pretty clear winner in terms of cost, simplicity, reporting requirements, investor friendliness and state laws. Nevada is also frequently mentioned, though some recent tax changes made it a lot more expensive. Ultimately, though, the differences between states sound marginal. The time spent comparing the differences will probably cost you more than the amount you'd save. In your shoes, I'd probably go with the cheaper option in Missouri.

If you do any business stuff on the side outside your W2, make sure you're getting your max deductions - home office, phone, travel per diem, etc.

One of the biggest I used to overlook was mileage on business use of my personal vehicle. It can be substantial, especially if you drive a car that costs you less to operate than the standard IRS rate.

If owner of a property went into foreclosure and left a good tenant, re-screen if necessary and be happy you inherited a good tenant.

If tenant is the one in foreclosure, they're unlikely to afford the rent if they already couldn't afford the mortgage. Evict.

There's lots of ways to help people in need (including in real estate) without throwing money down a hole.

Lots of factors. Depends on who's selling it. On the MLS, or at auction? Can you get inside? Some foreclosures are in great shape, someone just bought above their means or got unlucky. Others are dumps.

Sometimes you have to buy in cash at auction and get a bank loan afterwards. If it's a standard sale, the loan side is no different.

Any investment entails a measure of risk. All you can do is research the specific deal enough to mitigate the level.

Fix the credit and have a solid reserve fund first. Doesn't mean you have to be 100% out of debt, but investing before you have a solid handle on your own financial situation is asking for trouble.

Read every book at the library on real estate, read the forums, ask questions. Free, and will put you in a good spot down the line.

Like others have said, it's a "red flag" but not necessarily a disqualifier. I've offered to pay 6-12 months in advance before just to simplify my life (though I was usually turned down). I used to travel 30+ weeks/year, and when I had landlords who didn't have a way for me to easily pay online, it was a lot more convenient for me to write one check than worry about remembering to pay by the 1st of the month when I probably wasn't going to be around, much less have a stamp on me.

Screen the applicant in depth, but if my prior landlords had taken a pass on me just because of the offer, they would have skipped what most of them called their ideal tenant. You don't put a lot of wear and tear on a rental when you're basically never there.

I would probably turn down their offer to pre-pay even if they had a good reason - but just because they offered doesn't mean they're a drug dealer.

If it has a shot of working anywhere, it's probably the greater Portland area. Way more interest in tiny houses than most places in the country. Like others have said, the trickiest part is dealing with zoning and various regulations.

There's at least one Tiny House development in Portland that does pretty well as STR's. Lets you take advantage of the novelty factor for guests without long-term tenants getting stir crazy.

I know a few people that are very active in the Tiny House space (movement? scene? whatever...) in Portland and would probably know all the ins and outs of what it would take to be successful at it, and could at least point you in the right direction. PM me if you want me to put you in touch with them.

@Thomas S. Thanks for the advice. By "rural" I should clarify that it's a small town (10K population or so, community college, etc.), not one of the many specks on the map with 3 houses and a general store we have all over Western CO. But, yes - definitely a lower income area. The PM I've been working with manages a large number of rentals and assures me the tenant quality is much higher than I would expect, but it's made me a little nervous about investing in the market, for sure.

After months of learning from BP (thank you all by the way, this place is amazing), am working on my first deal and would appreciate any advice:

2/1 in rural Colorado, on the MLS. Pretty much fully rehabbed and rent ready. Older furnace will need to be replaced at some point, so setting aside cash for that as a rehab budget, just in case.

79K Purchase (final offer from the seller, listed for 84K, I tried for 70K and went back and forth)

7K Rehab

3K Closing Costs

All cash purchase at 89K total. Planning to immediately refi with a portfolio lender at 75% of the purchase price, which would leave me with 30K in the deal.

ARV 90-95K (depending on the furnace replacement).

Monthly rent: $900, $950 if I'm lucky.

Monthly expenses (10% vacancy, 10% PM, 10% repairs, maintenance, capex, taxes, insurance) are right around $350/m. Utilities are all paid by the tenant.

After financing, mortgage payment is around $350/m

Monthly cash flow: $200-250/m. COC Return 8.5-10%. PM says maybe 50-50 odds for that extra $50/m in rent.

Pros: Pretty close to the 1% rule, don't have to worry about rehab, even 8.5% COC sounds better than an index fund

Cons: Not much room for value add, won't be able to BRRR and get my 30K back out since the ARV isn't high enough, local market isn't appreciating much

Would love some bottom line advice - I'm right on the fence between thinking anything in the vicinity of 1% is better than most of what I've seen locally and pretty good for my first deal, and thinking I should hold out for a deal with more value add so I can end up with less cash in the deal.