All Forum Posts by: Bill Bockwoldt

Does BiggerPockets do any verification or due diligence on advertisers on their content? I ask because I was an add in the recent newsletter for www.atminvesting.com offering a special for BP members. Does BP know anything about them? I can't find any information in the forums or elsewhere.

Would be great to know if BP is aware of/supports/endorsers any/all of their advertisers.

Thanks!

Bill

@Aaron Lietz

From your post it sounds like you are looking for a way to improve on your financial situation. Most mentors can charge you to tell you how "they" did it but that may not matter or be applicable at all for you. It all boils down to what you are willing to do to pursue what you want. You could become the best wholesaler in your area if you really, really wanted to - but it doesn't sound like you do. It is much easier for you to use your skills/experience doing what you are already doing - and making a nice living from it. It seems that many people think real estate is a "get rich quick" opportunity and the reality is that as with nearly all businesses, it is not. Working for yourself means you work longer, harder, and give up more along the way. So why do we do it? So we can control our own destiny.

From your description I think a different approach to consider is to do buy/hold rentals in lower-cost markets and build passive income over time. Eventually this will match/replace your current income, in addition to having a lot of equity and leverage. And you can definitely do this while working full time. There are turn-key companies out there that can take care of nearly everything for you - because you have more cash than time so you can find people to spend the time for you and pay them for it (also applies to syndication deals). In my opinion it is one of the easier ways to build wealth. If you aren't an expert in finding properties, wholesaling, rehabbing, BRRR'ing, managing, etc. then pay others to do it for you. You will benefit from the leverage that real estate investing offers.

And while everyone has their own opinion on mentors, I will share mine. Seek out the people you want to emulate. They may not be real estate professionals or professional mentors, what draws us to people is their success that we envision ourselves having. Find people you actually know who are having/have had the success you want for yourself. They are the best mentors because you will get to know them and by investing your time in them (demonstrating your commitment) they may invest their wisdom in you.

We hired a local architect who was referred to us and he drew up the plans (no feasibility study - but again we weren't adding any "new" space). We hired a GC out of the East Bay based on some reviews (found an ad in a local magazine initially). That turned out to be a bad idea. Most of the work was good but they grossly underestimated some materials and just tried to charge us for it - didn't even notify us or want to talk about it. I would not work with them again or refer them to anyone. The crew members did a good job, the issues were with the GC management & owner.

The architect worked with the city on the plans and any changes. That part all went very smooth and we continue to use that architect for other projects. We ensured that all permit requirements were met, and we built a unit we would live in so it went well beyond finishes necessary for a rental unit. Overall it was a great experience and we have been very happy with the unit and our tenants.

We live in Petaluma and converted our garage into an ADU (we included a bathroom, hallway, and bedroom from our home as well by just walling off the hallway leading to the garage). So now we have an attached 760 sq. ft. one bedroom/one full bath apartment with it's own separate laundry room and an outdoor storage shed. We added a driveway for the unit as well (separate from our driveway) along with a patio and gate/walkway for privacy. The permit fee in Petaluma used to be $64k for an ADU, then it dropped to $17k and we paid a $9k permit fee in late 2014 (I suspect lower because we did not add to the square footage of our home). All-in we spent about $120k (fixed some foundation/structural/plumbing/etc. stuff along the way) and we rent it for $2,200 per month. We also write off about 30% of our property taxes, water/garbage, gas, and insurance against the unit. It has been a fantastic outcome and our mortgage payment is now fully covered.

I look for SFH opportunities in the area with similar layouts and would gladly do the exact same thing again.

It seems like you are stepping over dollars to pick up pennies. If you are purchasing a 12-unit multifamily then why be concerned about an $800 LLC filing fee or hiring a CA attorney to make sure this is done right? The best bang for your buck is to get good legal advice, as in any business transaction. Do-it-yourself and anecdotal advice are not likely to serve you well in this case.

I own out-of-state properties that are not in LLCs but they are not material to my overall investment portfolio - it sounds like your case is different. I would strongly recommend working with a CA business/real-estate attorney and using an LLC and umbrella insurance. The best argument against an LLC is that if you think you need one to protect yourself, you should question whatever it is you are doing that could lead to being sued. And as others have said, good lawyers get around an LLC easily if you are not acting properly as the landlord/owner.

My strategy has been to focus on getting good tenants - that resolves 95% of all other issues with owning real estate (assuming your purchase diligence is good).

You can find lots of operating agreement examples online, and I bought one from Nolo.com for a business I set up. But again, why doesn't it make sense to spend $1,500 with an attorney to protect an investment worth many hundred times that amount?

I would hire an attorney in this situation. This looks like a high potential for "penny-wise, pound-foolish". You already seem to know this is going to be problematic. I prefer not to hire attorneys but when people receive correspondence from attorneys their behavior tends to be quite different. Lots of great suggestions on this thread, but why are you trying to deal with this if it is totally out of your element? Good luck.

I had to deal with this for out-of-state properties. I set up savings account at Wells Fargo so the tenants can deposit in person in the locations of my rental homes. I then transfer those to a main account. However, after setting up Cozy they have all moved to that. No banking information is exchanged (I don't know theirs and they don't know mine). Cozy debits their accounts every month (they can choose a date from 1st-5th that works for them) and Cozy transfers it to my account. I no longer need the savings accounts but keep them just in case. I pay no fees at Wells Fargo, and the Cozy service is free so it is very cost-effective. I highly recommend Cozy with one caveat, you can pay extra and get the money quickly, otherwise it can take 7-10 days to get the funds. Not an issue for me, but if you have cashflow timing issues that is something to consider.

Hi Dawn,

We live in Petaluma and have used Cesar Picon for a number of years to help with landscaping and maintenance. I will send you a connection request so I can PM you his contact information.

He is a great garderner/landscaper and is very reliable.

Good luck!

Bill

I used Quicken Loans on several rental properties and they go below $100k loan sizes. They charge extra, but they also had no issue going beyond the 5 mortgage limit imposed by many banks (some stop at 10, etc.). Try calling them and see what they say. Good luck.

Have you tried Quicken Loans? I have used them for some properties in the past and they lent below $70k (mine weren't that low but they said they do it). They also charge 1 to 1.5 points on the loan because it is smaller but the dollar amounts are smaller so that may work for you. I did 6 properties with one banker there and they had no issue with the typical 5-10 limit on mortgages either. Good luck!