All Forum Posts by: Alan G.

I recently acquired a mixed use property. The retail stores / offices have recently been vacated. The spaces are not in terrible shape but absolutely need work. The question is do you wait until I have an interested tenant? I’m thinking most would be need to be customized anyway. Or, do I clean everything up including flooring and paint before I start to show?

@Bruce Lynn well written response.

@Jonathan Lane

Bruce gave a great reply. However, here is my take. If you are doing a cash offer it’s really none of there business where the money is coming from. What IS there business is that you can close so more important there are NO financing contingencies in the offer.

That being said you are going to have to prove that you have the money ready to go. Every seller may require some different type of proof. Whether a bank statement actually showing the money or some type of proof of funds letter. If you are using private money get a letter from them.

Also, if the seller is unsure, offer to make your EMD non refundable if unable to close due to financing. This is a great trick but you better be sure about your financing since you will have a lot of risk.

@Pedro Bartolomei I wouldn’t look at it as individual properties I would look at it in terms of total assets. If you are buying 100k houses you may want to put 10 into a single llc. However, if you are buying a 1,000,000 building you would probably want to use its own entity. Just personal preference and what your risk tolerance is. I can tell you from personal experience that you will have to weigh the amount of additional work and risk tolerance.

Again personally I put in about 1.5 mil of assets into each LLC. Once it fills to that number I open another.

@Jeff Piscioniere your absolute best bet would be a small local community bank or a local credit union. Not only will they be more flexible you will find much better rates. However, each one will have different guidelines. Go into every branch or at least call and don’t get discouraged. I visited no less than 15 banks and credit unions before I found a great partner that does all of my deals now.

That being said, all of my buys now are cash and once fixed and rented we do portfolio loans and refinance our cash back out. Our lender def likes me doing 500k portfolio loans rather than 50k normal loans. But they did it for me in the beginning.

If low balance loans is what you are looking for just start Monday by picking up the phone and calling everyone. I guarantee you will find a good fit.

@Alex Get

This is how we handle late fees. If the full rent is not received by the 5th it’s an additional 5 percent on the TOTAL rent. We don’t care if you are $5.00 short, we still collect the full 5 percent. So will we accept a partial payment and then the balance? Yes, however they last payment must include the late fee.

Sometimes we will waive a late fee for a long time tenant that has never been late. This is just a business decision you have to make, however, to the person that had been late 3 times in the first 10 months we would not waive.

I have a heart and I am not a bad guy, however I do need to run a business and by the way, my bank doesn’t care the reason my mortgage payment is late, they will always charge additional fee.

@Nathan Hughes

Nathan, I currently use a handyman and he bills me an hourly rate plus materials. Each invoice he sends shows it. For me there has to be some trust involved since he does not do remodels but just small work. I send him a punch list of items for a particular address (we have lots of section 8 rentals) and he goes out. There is really no way for him to give me an estimate first since all jobs are different. Honestly I don’t want that anyway. I don’t want him going back a 2nd time after waiting for approval for a $150.00 job. I want him to go once, fix it, and bill me.

At the end of the week he sends me all of his invoices and he gets paid the following week. It’s that simple.

However, I’ve started to use him more on odd items in my renovation projects. If he needs money up front for materials I would certainly do it, however he hasn’t asked yet. If he can’t afford to purchase 500 or $1,000.00 in materials on a credit card up front he’s running his business way to tight.

I frequently get bills from him ranging from 50.00 for a minor fix to $1500 for more major items. Our relationship is important to me and over the year or so he’s been working for us we kind of know what things should cost.

Hope this helps

@Russell Cazeault

Don’t go by the number of properties in each llc, go by the total assets owned. For example, if you are buying apartment buildings for 1mm or more than absolutely put each building into its own, however, if you buy 70k single family homes you may want to put 10 or 15 into each.

No need to put a 70k house into its own.

Just my opinion.

@Derrick E. Great way to do it as my company will do the same. It’s easy for everyone to say you shouldn’t do it this way but the reality with the types of tenants you and I deal with it totally works.

Great post

@Maugno M. The IRS can hold you responsible for paying the tax owed if you don’t issue 1099s. They can also demand that you withhold the tax for them! With all new contractors I always get a W-9 before I pay them. Once you’ve paid there is no guarantee they will give it to you.

You must issue to individuals and LLCS that you’ve paid more than $600.00 for the year.

Check with your accountant as to the best way to handle this.