All Forum Posts by: Dan Beaulieu

Cash flow will be close to 0 for a few years, but there are still 3 other ways that you're building wealth through keeping it! Cash flow is a funny game. One big repair and 3 years worth of cash flow can be totally erased. But your tax benefits, Debt pay down, and appreciation will still be there :)

The most important thing to consider would be that if you're using your HELOC for down payment / renovation costs and holding costs, then the refinance MUST get you all of your cash back to pay the HELOC back to 0. So, you have to stick to your numbers and make sure you have a solid 70% of ARV deal :)

From the eyes of a lender: Rural is tough because there will be a lot less comps, less contractors, less buyers, potential well and septic problems, and also any acreage can skew the land / improvements ratio for getting the correct valuation. A TON of newer investors contact me with "deals" where the numbers look amazing but they were able to get it because they had a lot less competition for it...which should tell you everything. But, if you still must do the deal, private money is the way to go on those, and only a local would really understand the area and the market. 

 Real Talk. All of my hair has fallen out. 

BRRRR is such a powerful wealth builder. I've flipped a lot of houses and done a lot of BRRRR deals...always regretted every flip I sold. You can BRRRR in any market condition...you just have to be sure you're buying right right now, and you will most likely leave more cash tied up in the deal than we used to see...but still beats the heck out of putting 20% down and then paying for the whole rehab out of pocket!

Base it on your purchase price + rehab cost. 

Don't worry about creating an LLC starting out. I have one client that has 37 properties owned in her personal name. I personally have several LLCs owning a lot of different rentals at this point, but still own some in my personal name just because I wanted to get the max number of conventional mortgages before having to go to DSCR loans and commercial notes. The terms on conventional are just a lot more favorable, so always go that route first.

Hazard insurance policies normally come with 1M liability coverage.

Single Member LLCs normally offer very little protection anyways. So good insurance and even Umbrella insurance is your friend here. 

Most loans for rental property loans made to a business entity will still need a personal guarantee anyways. Even when you scale up and establish great credit for your business. I'm currently under contract on a 100+ unit apartment complex and the lender still needs a personal guarantee.

Many hard money lenders and all commercial lenders will need to make the loan to a business entity. Conventional loans, if you qualify based on your debt to income ratio, will be made to you personally. 

KEY TAKEAWAY FROM THIS RANT: 

The type of financing you want to get should dictate whether you own the property in your personal name or an LLC. This is a Great tidbit I stole from Brandon Turner about 300 podcast episodes ago.

Trampoline at an Airbnb is ripe for a lawsuit. Have you considered taking this out? If not, hopefully your insurance is solid and will cover this. Definitely something to look into if you haven't. 

@Michele Granata Simple stuff here, try not to overthink it! Here are some (hopefully) helpful tidbits that I wish I knew starting out as a new landlord: 

1. Read "Landlording on Autopilot" by Mike Butler

2. Read BT's "The Book On Rental Property Investing" - Dives deeper into security deposit management etc. 

3. Set up 2 new bank accounts. one is for holding security deposits (and nothing else) and another one that your rents will go into and mortgage payments get drafted out of. Keep cash reserves in here set aside for repairs. Bare Minimum 5K but 10K would be more comfortable. 

4. Check out free property management software. I personally use "Avail" but I do the paid version so that I can amend the standard leases that they write up. Avail will allow tenants to autopay rent, will collect security deposits and send them to your separate account, esign leases, email about late payments and lease renewal reminders. 

5. Tenants must make at least 3x rent and have min 600 CR. The single best thing you can do when selecting a potential tenant is drop into their current residence (or zoom call if out of state) and see how they are treating their current residence. If zoom, just asked them to show you around. The right tenant for you will gladly give you a tour, and the wrong one would push back. 

implement the practices in those books and you'll be just fine. :)