All Forum Posts by: Paul Choate

Thanks everyone who came and those who tried!

We had our biggest turnout yet for the Oklahoma City BP meet up. The final count was 9 or 10 (I forgot to count). I had to leave early for a hearing so I missed the end. I believe everyone had a good time and met a lot of new people working in real estate.

I will be putting up next month's meeting today. It will be July the 28th (4th Tuesday). Same place unless someone wants to suggest another.

If you have not already, please send me a colleague request so I can make sure to send you these notices. 

I want to make sure those who attend are benefiting from these meetings. Please post your thoughts or ideas for making this event worthwhile for you. Also, if you do not intend to attend in the future, I would appreciate a note privately or publicly letting me know why. 

I personally enjoy finding out what other real life investors are working on and what their experiences are. However, if there is a desire for a different structure or other ideas I am happy to help facilitate the inclusion of these ideas if possible.

Thanks again. Hope to see you next month!

I like the idea of a failure category or at least changing the name from "Real Estate Success Stories" to "Real Estate Success and/or Failure Stories". It could also be called "My Experience in Real Estate". That is why I come here - to see what people are actually doing and specifically how it worked out for them. There are plenty of other places to get the fluff.

http://www.biggerpockets.com/forums/521/topics/204...

I just put up the notice for next weeks meeting. Hope to see you there!

Sorry for the late notice (again!) 

When: 6/23/2015 at 12 pm. 4th Tuesday of the month.

Where: Casa De Los Milagros Mexican Restaurant and Cantina, 5111 N. Classen Blvd., OKC, 73118.

Everyone is welcome. The only cost is your lunch if you chose to eat.

This is a networking event. We are having lunch and sharing our current projects, successes and struggles. There is no speaker or expectation of participation on anyone's part. Please come and listen or ask questions. We have had some very good discussions about the local market and activities of the local investing community.

I am personally going to report on my experience with the tax sale this month. I have a hearing at 1 so I will try to get there a bit early. I have to leave about 15 min before 1 pm. 

Please let me know if you have any questions. Please let me know if you are coming so I can have a rough head count. Please come anyway if your schedule opens up and you did not tell me!

Keywords- Oklahoma City, Norman, Midwest City, Yukon, Edmond, Mustang

@Rhett Tullis

@Faye Herl

@JJ Gritts

@Deborah Burian

Please pass the word!

OK attorney here. I am am often required to apologize for the actions and words of other attorneys. Sorry for your experience. As previous posters have said, there is a wide variation in quality and competence among attorneys. I have found there is value in the collected wisdom here on Bp. It is a great starting point. 

The big issue is you do need a licensed opinion when it comes to specifics which may vary in different jurisdictions. When it comes to selection an attorney, it might be helpful to know that the majority of bar complaints come from attorneys in practice more than 20 years followed by attorneys in practice less than 5 years. Not saying you shouldn't hire someone young or old. Just know there is little oversight when attorneys are starting out or winding down. Next, general practice attorneys have a hard time keeping up with all of the requirements of every possible situation. I started out trying to do everything and it was a disservice to my clients. I have since focused on one area of law. I feel I provide a higher level of expertise for a lower price. 

Referrals are good, but you should ask the attorney what percentage of their practice is related to the specific type of law you are dealing with. Also, verify with the individual who referred they what they did for them. 

And last but not least, some people are jerks or incompetent. You just need to move on if what they are saying doesn't square with what you know and they are not willing to explain why. 

My first unit was a house I built with my wife. It was easier to get started that way for me. However, I have rented after I owned 10+ units. I had a unique situation (big family) and I did not want to redirect my investing dollars into my personal residence just yet. We needed to move and there was nothing on the market we liked. Lucky for me, my wife was on board. I only stayed in the rental for about 18 months but it allowed me to add about 5 units during that time. Additionally, since I was not forcing a purchase, I was able to buy a great deal in a Fannie Mae foreclosure as an owner occupant. That is my experience.

Here are my responses to (my interpretation of) your points-

1. One loan- not sure what you mean by this. I have multiple loans of different types. That is the way I am able to grow. Your first home loan will probably be pretty easy if it is for owner occupants.

2. Maintenance- If you are going to be a buy and hold investor or fix and flip, you will need to develop the skills and resources to make this statement untrue.  My tenants pay me more than it costs to maintain their property. You should always be your best tenant. I don't think this is a good reason.

3. Investing now for later- This is where renting helped me. I had an opportunity to move to a property that would have killed my ability to invest if I was buying it. Instead, I was able to live in a much nicer place because there is a limit to the rental market that does not seem to apply to owner occupied homes. My wife and I are making the conscious choice to delay purchasing the home we want until our real estate has grown enough to support it. 

I bought a home through them last year. I thought it was a very easy process. They did not drag anything out and they have very tight deadlines. You are more likely to cause delays then they are. In my experience, when a home hits the Homepath website, it has been through everything they need to do to just sell it. I have also bought through www.auction.com and another REO. Fannie Mae was the easiest. I did buy the Fannie Mae home as a personal residence so that may have made a difference.

You have to have a Realtor to bid. We just used one from the website. Good luck!

@Rich Lathrop

I have an older brother who practices civil litigation in OKC. That is probably him. It is a small world!

I am a lawyer and I recommend LLCs.

Here are the arguments against them as I understand:'

1. They don't work for asset protection-

I met with a home builder yesterday to discuss filing bankruptcy. He has an LLC. He had 7 or 8 lawsuits over the past few years. Here is the mental calculation I have to go through- first, who is being sued? If it is the LLC, I can completely ignore it. That got rid of all of them except one between him and a business partner. They work. They end lawsuits. They are expensive to fight against.

Can they be defeated? Yes. Everything can be done wrong if you try hard enough. Someone's poor management skills are not an argument against them. That is a reason to do a good job, which is a different argument.

2. They are expensive or difficult to manage- 

The OP said it best. If you are not willing to learn how business is done or can't afford it, maybe you should reconsider what you are doing. You should be able to set up your LLC for a few hundred dollars and the yearly fees are less than $100 in every state I know of. ($25 in Oklahoma.) Find out what the actual costs are. You will probably be pleasantly surprised.

3. My attorney said I don't need one-

There are some bad attorneys out there and they give bad advice. Talk to three attorneys who actually litigate civil cases and see what they say. Here is one for free- I am a licensed attorney in the state of Oklahoma. I primarily practice under the federal bankruptcy code. I spend all day dealing with individuals who had financial problems in life. Legal entities should be properly used by anyone operating a business.

4. Person X doesn't use them and he/she is fine-

Yeah for you! Seriously, that means you have personally figured out how to do things right and nothing very bad has ever happened to you. That is awesome for you. That is even statistically correct for the majority of individuals out there. When I was in Law School, my wills and trust professor started our class out by saying she did not have a will. Sounds stupid right? Well here is the deal. Our laws are set up to do what most of us want. In the case of the will, my professor understood that the law would do what she wanted anyway because she was the norm. Most of us don't have life shattering problems in our real estate businesses and if you ignore me, you will probably be fine too. Your individual experiences are one data point. That is a very small data set. The people who had real problems are probably not on a website touting their experiences to the world.

5. I can't get a loan/ buy a house in an LLC-

I have two houses that are not in my LLCs. One is my first home which I have a mortgage on and I turned into a rental. It was how I started out and why I got that loan. House hacking indicates you are finding a loophole in the system to get started. It is not how you should base your business structure. My second one was my first fixer and I was too lazy to get my business structured correctly. It has been a problem ever since. Set up your structure for what you want to be and you will grow into it. Don't waste time and money or become paralyzed by it. It should be a very small part of the process along the way. 

6. I don't need it because I have insurance and I don't do anything wrong-

This is an extension of #4. Be fully insured. Do a great job running your properties. LLC's are not substitutes for these things. They are an additional layer. Every lawsuit involves two people who think they are right and every time one of them is wrong.

Newbies- don't become focused on LLCs or paralyzed into inaction. LLCs are a good idea when you can afford them and are ready. Talk to your attorney and accountant about when that point will be for you. If you are trying to house hack, you probably can't use them. House hacking is using the benefits of being a home owner to start your real estate business. If you are otherwise established in life and have a pool of money to invest, start out right.

There are no absolutes in this discussion.

Most debtors do not list bad checks in a bankruptcy since they are generally for things like utilities, gas, food etc. As a general rule, I tell my clients the bankruptcy will not cover them. We have a program where they can be "picked up" at the DA's office by paying the fees and costs before it becomes a more formal charge. It is probable someone like a utility would not get noticed (sent a letter) in the bankruptcy, have an automated system for handling them and therefore their actions to collect would not violate the stay.  

That is not the case for the OP. OP knows about the bankruptcy. OP will probably have legal counsel. If the debtor wanted to make an issue of landlord actively contacting the DA after filing and notice, it would be very easy for a judge to slap punitive damages for a willful violation of the stay. Most debtors don't have the money to pursue it. Doesn't mean it can't happen, just that it's generally not worth anyone's time.