All Forum Posts by: Todd Bayer

Where are these 17 units located?

I have always been told to never start a LLC or an S-Corp. I have always been told that a C-Corp is the best way to go. You should establish it as a "Lease, Loan and Management" company to establish credit. Create other C-Corps in whichever state you want to purchase real estate. Your main C-Corp (hopefully a Delaware or Nevada C-Corp) -- your Lease, Loan and Management Company -- will lend money to your other C-Corps. Your main C-Corp is actually lending out money from LOCs it has established over the years (without a personal guarantee -- after 2 years of incorporation and established credit with 4 or more D&B reporting companies plus a Paydex score of 80+). The "other" C-Corps will be paying back a loan to your main C-Corp for the money borrowed while the main C-Corp is also lending out any positive cashflow minus its own loan payments for the LOCs. Keep in mind that if your other C-Corps are paying back a debt, that money is not counted as income on your taxes. If your main C-Corp is lending out all of its money, what is there to tax at the end of the year? Just a side note about LLCs and S-Corps -- you are attached at the hip with them. In fact, you even file your taxes with them. If you ever get sued, your personal assets get put at risk. If a C-Corp ever gets sued, it's officer's personal assets are in no danger because they are simply employees of a corporation. C-Corps have to file their taxes on March 15th, not April 15th. If you want a pretty good book about getting corporate credit, check out "Unlimited Business Financing Without a Personal Guarantee" by Trent Lee and Chad Lee. There has also been some pretty good advice on this thread as well. Good luck with everything!

I've given this some thought over the weekend and am in the process of trying to find hard money. I've also re-thought the idea of taking on a cash partner. Fortunately, I have a family friend who is a well known real estate attorney who could probably help me set up a partnership between me and anyone interested. My only problem is that I wouldn't know the first place to start my search for cash partners. Who has enough cash on hand that isn't already doing something smart with it? I think convincing someone of the opportunity in front of us is the easy part. The hard part is definitely finding someone with that amount of liquid cash or that has some kind of LOC. Does anyone here have any ideas? Does anyone here know of anyone interested in getting into Southern California real estate investing?

All my properties cash flow and we're talking a handful. I'd like to get to the 10's and 100's mark, but I don't have enough cash on hand to get there as quick as I may like.

How willing are the banks of these dilapidated REOs to do a sub2? Are you having luck with that in AZ?

Well, that's it. I've officially put all my money into properties, refinanced it out, bought more property and so on. I'm left with not enough to buy another one unless it is turnkey. I don't want turnkey properties though because they're not really much of an investment when you consider how much I can get a piece of junk for and how much I would spend to fix it up (far less than buying something that's turnkey). Without taking on cash partners, what are my options to get more junkers? Some may say hard money, but the interest rates for that are ridiculous; not to mention the large payment I have to make up front. Some may say go to a bank and get a business loan based on my assets. Only problem is that they're all financed to at least 75% LTV, so I don't think a bank would want to get involved with such a little margin. How could someone that's in my situation (who just wants to buy and hold and maybe (just maybe) do a flip or two) get financing or get more properties? I feel like I'm blowing the biggest opportunity of my lifetime and I'm sitting here looking at my local MLS with over 1000 potential investment properties but I have no way I can immediately think of to get any of them. Any suggestions?

My I/O loan is for 10 years. After that I don't want to know what will happen to the payment! My office is a short-term thing. I'll just sell it in 5 years or so. As for utilities, the only one that will be more expensive is water/sewer. We have a lawn now, and it has to be watered. So, we'll add roughly $100 extra a month for that. You know what, we could even add another $200 just for fun. At the end of the day, it's still cheaper and instead of throwing money out the door each month on rent, I'm owning my office which may not have any equity from paying down principle but will gain equity as the market turns back up again a few years down the road. All in all, even if I broke even, this is still a much better deal then renting when you consider that I'll be selling at some point down the road.

What I did on my last deal was found a house that had been listed for 250+ days, then had my Realtor send in a low-ball offer after confirming with the LA that they hadn't had any offers in a while. The LA had told us to "just send in an offer." So, for a house listed at $120,000 we saw it fit to send in a beautiful all-cash offer at $90,000. The bank was so excited to see an offer come in that they countered back at $105,000. It was $5,000 more than I wanted to pay for it, but I figured "what the hell." Now it's my office. This may not be 60 cents on the dollar but consider for a moment that the house was originally listed for $299,000 on day 1. I guess you could say that I got the house for 35 cents on the dollar. REOs are the only place where these deals are possible right now. My rent at my old office used to be $1,140, now I have a mortgage of $741. I'm saving $399 a month and since my loan is interest only I can still write off the entire payment as a business expense. If I were to rent this place out though, I'd probably only get about $1,000/month in rent, so this may not be the best example. It makes a great office though!

I wanted to go to the H&M auction so badly, but unfortunately, due to my lender taking a little longer than promised, I wasn't able to go. I suppose having the worst bronchitis of my life didn't help either. I waited since November '07 until now only to miss it. I agree with Stephen above, H&M seems to be the best auctioneer out this way -- if only they'll start with the absolutes.