All Forum Posts by: AJ Leman

Hi Joyce,

Here are a few things to consider. If you buy as an individual, your mortgage rate/terms will most likely be better. If you buy as an LLC, you will probably get a commercial loan with terms not as good. However, the LLC provides more protection for you in the case of legal issues and, in my experience, it is easier to get a commercial loan as there is less regulation. I've also heard of folks just going the individual route and making sure they have really good insurance.

I think it depends on your goals - how many rentals do you want own? At first we bought as individuals, but at some point, as things got more complicated, an LLC just made more sense.  That's my take! Best of luck!

AJ

Hi Daniel, 

Hope you are staying warm tonight!

I think your planning sounds pretty good.  I agree with @Jason Bergan that the forms and books are great but things can be different as well.  

I should probably be a bit more goal oriented, but I tend to take what comes my way.  Some of our properties are more cash flow plays, while others are more appreciation.  For example, in the Iowa City area, things are pricey, but usually appreciate nicely.  In some smaller surrounding towns you can get better cash flow deals, but the appreciation is not as great.  I manage some properties and hire out some others.  I still work a full time job, so there is that as well.

My two cents: be patient for a good deal, but also flexible considering location, appreciation and cash flow potential. Not sure all that helps, but its been a decent strategy for us.

Greetings Wes! 

Your situation sounds alot like mine.  I tried to sell my apartment back in 2011.  No one wanted it for the price I was asking, so I rented it out.  Fast forward to today - my wife and I and our partners now own 36 units.  I never planned on being a landlord (I'm a high school teacher) and most folks told me not to do it, but it turned out to be fun, challenging, and profitable!  Now I realize that it is going to be a big part of my life.

So here is one opinion:  If your finances allow, rent your current apartment out.  Let it cash flow for a while.  Who knows where it will take you? Perhaps you will find that you actually like being an investor/landlord! Maybe you will buy more units?  You could wait for the market to drop to buy a new rental, but timing a market is difficult and easy to lose sleep over.

The market will eventually dip, but if you are cash flowing, then as you say, you are still making money, so no big deal.  The market will eventually come back up.  Remember that you can also refinance and pull some equity out if needed, or perhaps finance another rental based on the equity in your current apartment.

These are just my thoughts.  Good luck writing your own story.  I don't think you can go wrong!

Hello Fellow Iowan!  

Hopefully you are warm today :)

Welcome to BP.  As previous posters have noted, this is a great place.  Lots of good info, advice, and encouragement.

We mostly invest in Iowa City, Coralville, Riverside, and Washington.  Cedar Rapids seems like a good market as well!  Good luck!

Hi Andrew, welcome to BP.  Sounds like you are well on your way - without even having started yet!  

I think for your life stage and experience the house hack or BRRRR strategy could be a great thing.

It also sounds like you are an intelligent guy given your experience and education.  Perhaps you could think about your goals over the next 5, 10, 15 years?  For example, maybe you house hack a house, but then you use that capital and the cash from your job to find deals and have others do the work?

One lesson I have learned from BP is where to put my time.  I could do flips and rehabs myself and make more money per deal.  However, I think my time is better spent thinking about my business and looking for the next investment.  

Not sure if that makes sense, but that's my take. I'm sure you are well read in the REI category, but there is so much good stuff out there. Best of luck!

I guess it depends on what you want to do with the rental.  Do you plan on holding it for a while?  Are you looking for a certain dollar amount per door (i.e. $100/door)? Maybe you like the location?  Depends on your goals.

Remember that ARV is still important for rentals because you can refinance them and pull out equity tax free.

Only thing I would say is pay attention to location and class of property (A, B, C, etc.) We own some C class (bordering on D) and they have much higher CapEx and repair costs. Tenants are hard on them, the neighborhoods are rough, rents are more delinquent, and turnover is higher. We also have some A/B units in different areas and those typically cost us much less in CapEx, repairs, and turnover. Just a thought! Good luck @Mariela Rodriguez!!

Well, based on those numbers, I'd say it looks pretty good!

Your numbers look correct. The deal doesn't look that great...even at the half the price. You'll probably have minimal CapEx and repair costs if you fix things up after you buy it, but its still a good idea to account for those.

If you are looking for $100/door, I would pass. You could refinance and pull equity out if the ARV is really going to be 120k, but then your cash flow would be non existent.

Good luck!

Hey @Steve Y., welcome to BP!

CR is not a bad place to start.  Plus the surrounding towns are also decent areas to invest! Best of luck!!