All Forum Posts by: Annette Clarabut

We use QuickBooks Online Plus for our clients. It is a robust and thorough accounting software that can be adapted beautifully for rentals and flips alike.

Annette

@Christian I Presant

Who structures the deal? I do

Who writes the contract? I do (my attorney).

Who keeps track of the payments? I do

Who gets ownership of the property? I do. I get the house at closing just like any financed purchase.

What protections does the seller get in case of a default? My attorney will create a fair and balanced contract. If I default, they will get their house back.

I control every step of the process. Not because I want to be a jerk. Not because I want to get away with anything shady, but because the seller doesn’t know what needs to happen and I need to be the one who ushers this deal to the closing table. I need to make the seller comfortable, answer their questions, provide all the information, and get them to the title company. After the deal is done, I take on the responsibility of servicing the loans. When I do it, I know it is done.

Since this is your first deal, I would highly recommend finding someone in your town who has experience, has a team, and can mentor you through the process. Owner financing is a good strategy when it is done right, but somebody at the table needs to know what to do.

Good luck on your deal!

Great post, @Wale Lawal!  I just want to add, for those unfamiliar with Houston, "Independence Heights" is very different from "the Heights".  Very different neighborhoods and very different after repair values.

All the Best,

You should speak to @Michael Plaks.  He has been doing tax accounting for RE investors in Houston for years, there is probably nothing he hasn't seen.  If you also need a real estate savvy bookkeeper who also understands LLCs and SDIRAs, there are those here on Bigger Pockets, too.

I use the American Title Company branch on 1400 Broadfield Road off 1-10 West near Katy. Also known as BMW Law. They have always taken very good care of me and my closings.  Highly recommend.

Tina,
There are two lenders in Houston I can recommend; Investor Loan Source and Jet Lending.  There are advantages to doing business locally.  One, both of these businesses are owned by real estate investors who understand the Houston market.  And two, working with locals increases your network.

Good luck on your deal!

Yes to what @Doug Smith said. I have been investing in real estate with a self-directed ROTH IRA for years. There are rules that you need to learn and follow, and some restrictions to what you can do, but it is a great way to increase your net worth.

Quest Trust Company in Houston has some online trainings that you may be interested in.

I can see two exit strategies. The investor’s circumstances and goals would determine which is the preferred one. They can either:

• *Sell the townhomes off one by one to end buyers - Slower process, but higher profit (sell at market value)
• *Sell the whole community to another investor - Quicker process, but lower profit (sell at a discount)
• *The other strategy is to never exit.

Congratulations on your first rental! This is a huge accomplishment and I hope it is a good house for you for years to come.

I am not an attorney, and this is not legal advice, but I agree with some of the other posters that you may not strictly need an LLC for your first rental. We get advised from the attorneys to protect ourselves with LLCs, and I am not an attorney, but there is a cost for that. It will complicate some things and make some things more expensive. I wonder if having a good insurance policy might be protection enough until your estate reaches a certain point? It is completely up to you and your risk comfort level.

If you do decide that you feel more comfortable with an LLC, go ahead and open it before you close on your property. It doesn't take long. I use myllc.com and they can do it in an afternoon. You can have all the information you need to open your bank account in one day.

The funds you use to pay the expenses are called owner’s contribution and there will absolutely be some that come out of your personal account before the business gets started. The simplest way is to log them on a spreadsheet with the date, amount and purpose of the expense. You’ll give this to your CPA after the end of the year along with the settlement statement from your closing.

There are some simple accounting software programs out there, some are even free. The more organized your books are from the beginning, the better, so use the free software as long as you can. Feel free to DM me if you have any questions about how to get the owner's contribution and the property onto your books.

TAR, the Texas Association of Realtors, has an excellent residential lease. It is fair, balanced, and comprehensive.  Unfortunately, they restrict the use of it to TAR members. An agent friend of mine hooked me up with it, so that is all I have used.    TREC forms and contracts are free to download and use, but I didn't think TREC had a residential lease.

Bigger Pockets has them for each state, so that may be an option for you.  Alternatively, there is always Rocket Lawyer and the like.  Good luck!