All Forum Posts by: Brian Bistolfo

Hi All,

My tenant lives in a nice 3/2 with her husband and daughter and wants to move her elderly mother into the third bedroom, as she's not satisfied with the care she's getting at another facility. Mom would go to off-site adult daycare from 8:00-2:00 on weekdays and would have a personal care professional come in in the morning for shower/getting dressed as well as after 2:00 for a few hours. Is there anything I need to stipulate in this situation, or some liability I should know about? Not very experienced here.

This property is in Texas.

I know that running a personal care home, even a small one where you don't need a license, has liability risk, but that's mostly associated with running the caregiver element properly, not the home itself.

Any advice or perspective is much appreciated!

-Brian

Thanks @Stanley Bronstein! It looks from the language like Fannie doesn't care how ownership is transferred...so warranty deed it is I suppose.

This would be on the exit when you go to sell? Or does title insurance come into play during the quit-claim process itself?

It changes things for the 50 threads each day that consist of debates about the due on sale clause if they transfer it into an LLC the day after closing, and all the new REI that have no significant assets to protect, but that want to protect their non-significant assets in an LLC. :)

@Chris Mason Sorry I've just contributed to that...thanks for nipping one in the bud anyway :)

@Chris Mason Fabulous caveats and thank you. I've noticed in asset-protection land that you need a lawyer you already trust, otherwise you're in "don't ask a barber if you need a haircut" territory.

@Chris Mason That sounds like a heck of a piece of information. So, I close in my own name but I can just turn right around and quit-claim it to my LLC without triggering a due-on-sale clause?

@Jason D., appreciate the input. I've heard rumors...

Hi Everybody,

Looking to hear from you seasoned investors on this one. I've picked up a number of properties on 30-year notes in my personal name, but as I scale up this starts to become a major liability issue. It sounds like your protection from getting sued if someone gets hurt on your property is basically nil if that property is under your personal name...and no, an umbrella policy will not save you from a motivated lawyer. And yet it's almost gospel around here that you should get "10 under your name and 10 under your spouse's name" before acquiescing to the crappier terms of private/portfolio loans!

The alternative seems to be to structure things "properly" in an LLC (or set of LLCs) from the beginning, and the LLC owns the properties. Oops, no more wealth-building fixed-rate mortgages for you! It sounds like the absolute best you can do these days on a SFH that's owned by an LLC or corporation is 6.5% interest / 25-year terms / ARM, which are much riskier in the long run for buy-and-hold investors.

So...is that it? Is it basically a stark choice between favorable Fannie/Freddie -type terms and actual asset protection? If you own 20 properties, presumably you're trying very hard to get your net worth up and keep it there, which isn't going to happen if you're getting sued every 10 years because you have so much exposure (20 properties = 20x the probability that something will go wrong).

If you can drum up owner financing that's great...maybe there are also some large commercial loans out there where you can refi your whole portfolio into something reasonable. Your thoughts much appreciated!

Just chiming in to say that a large group of the most active multifamily investors in Austin met up and discussed the article mentioned above: 

https://www.goodegginvestments.com/blog/buy-or-inv...

...and came away saying that, yes, it's useful to think about the buy-your-home vs. invest-the-same-amount-in-multifamily-syndication . You always want to analyze that tradeoff. But the scenarios and numbers on the multifamily side are grossly oversimplified and overly optimisic. If you are part of a GREAT apartment deal these days, you are probably looking at 6-9% yearly cashflow and an 80% total ROI after the property exits in 5-7 years. Doubling your money every 8-9 years. Very healthy.

Advertising to beginners that they're going to have their money invested in great deals 100% of the time, and that those deals are going to double your money in 5 years, brings a lot of unrealistic expectations to the multifamily space that end up funding bad deals and damaging the industry as a whole. So, caveat emptor.

Hi All,

I'm looking at deals in Petersburg, VA and was wondering what the investing climate looks like out there for SFR's. Any areas to avoid or major risks to know of? Most of the few threads covering this are fairly old.

I've previously invested in more diversified, larger cities. A lot of the Petersburg deals look good on paper but there's always a catch. I'm looking to avoid war zones and areas that don't have a great shot at improving over time.

Thanks for any insight!

-Brian

I self-manage a couple of high-end properties there. Very little time per month so I keep that 10% per month that would otherwise go to the PM. So they cash-flow quite nicely.