All Forum Posts by: Account Closed

Gift tax is owed by the giver not the recipient. So your Father in Law can give you as much money as he likes. Unless he is a US citizen or resident, he owes no taxes. However, mortgage companies may look at a large transfer like that suspiciously and you may have to season the funds for a couple of months.

You are doing a lot of work and taking a lot of risk for a 8% return. I dont agree that you should take whatever deal you get if its good for your local market. Maybe your local market is not suited for this kind of investment. Look for other kinds of investments or other markets.

Its aspirational but lacks any specifics. Where are the numbers? How much capital will you invest yourself? How much do you want others to invest? What will your cost of money be?

Example: I want to rehab 10 houses in my first year. At the most I would have 2 at a time. Total capital needed for that would be $140K. I have $30K of my own money to invest. I expect a profit of $15K per house. Etc....

A business plan is about numbers. Words are fine but the game is about money right?

I'm in the process right now of forming an LLC. Living in CA, which charges a ridiculous $800/year for each LLC, there is no way I can make a separate one for each home or anything like it. Regarding attorneys, my attorney would charge $800 for the whole thing, LLC docs, filing, Operating Agreement etc. I will use him instead of doing it myself because:

1. My time is valuable

2. This will be a 2-member LLC so the operating agreement is actually very important.

3. I like my lawyer (how many people ever say that?!) and I get a lot of his time for free for advice on many things. So throwing him paid work now and again keeps a good relationship.

If you have a single member LLC, the paperwork is a formality. With more than one member, the paperwork is a legal contract and I would rather make sure its done right.

Wow, where to start. I have a whole big list but the main questions are

1. How well do you know your team. By that I mean seller, property manager, inspector, realtor etc

2. How well do you know the city and neighborhood that you are buying in? Have you been there? Do you have a feel for the type of people who live there (i.e you tenant pool) etc.

I think those two are the most important due diligence items and they are not specific to the home. Once you do that, there are a whole list of other things I verify on each home. But if you havent done 1 and 2, the rest is useless.

Wait, you could get $2125/month rent on a 112K property and you think its overpriced? Thats almost meeting the 2% rule. Is there some large rehab cost you are not counting here?

Well, if you take that penny and put it into a long term buy and hold with 20% down you really now get 5 pennies saved! You cant access all 5 pennies until the mortgage is paid off but still not a bad deal!

What is the tenant pool in a rural area? On the face of it the numbers are very marginal and I wouldnt do it. Your cash flow after mortgage will not be $300 per month. Something is strange. If the houses around you are actually worth the amounts Zillow claims, the rents seem very very low. Also, it seems there is not much liquidity in that market so once you buy it you are really stuck with it. I think Rural markets are not good rental markets. Cities with a diverse employment base and more liquid housing markets are much better.

This post is probably one of the best advertisements for buying turnkey! Managing a major rehab from 8000 miles away is never a good idea. Even without the ripoff contractor too many things go wrong without proper supervision. I do know at least one UK investor that buys in Atlanta and does minor rehab but he comes to the US at least a couple of times a year and has a great team in place. He also has multiple properties so the travel cost is worth it. Also the lesson to be learned is don't buy real estate on a whim while in vacation. Your mindset on vacation is all about spending money not investing! You are far more likely to use poor judgement and overpay. Just look at the whole timeshare industry!

@Philip Cutting When I lend as a Private Lender, I take points up front that act as the minimum return. So I may take 4-5 points plus 10% per year for example. So even if I get the money back in one month, I get a min return that makes it worth my while. Then there is no need for a prepayment penalty.