All Forum Posts by: Brian G.

@Dhanush Kondoth, feel free to reach out to me if you do end up stuck and looking for more ideas. I am half owner of a handful of properties in Dayton (South Park) and my business partner lives in Columbus, so we have some of the same issues you face. He just had to go in last weekend to check on a tenant that had gone dark, which is certainly a travel hassle. We've been doing this for over 4 years, so we feel like we've kinda sifted through the bad ones (there were plenty of them) and we've found some good people, but you never know what happens going forward.

Anyway, most of our tenants are pretty handy and we're fortunate enough to not receive minor calls, but we still have a group of people that handle whatever pops up; both tenants and non-tenants. We have one of our other tenants show vacant units and pay her for doing so, another will handle carpentry fixes for an hourly rate, then we have a very reasonable lawn service that goes out weekly (on contract) and bills monthly, and we have professionals that we trust to handle the bigger stuff like plumbing and HVAC. So, if you do end up wanting to piece-meal it out, I can pass along a few names that have worked for us. They're in no way connected to us and I can't vouch for them 100%, but they've done well thus far and we continue to use them. 

@Dhanush Kondoth, my wife has managed properties for a very large REIT for nearly a decade and they do something similar with their assets for both supers and employees. The lead super gets a free apartment and also paid a salary. The lease is month to month and the "discount" given of full rent is conditional of employment. If they are no longer employed by the company, their rent reverts to full market value within 5 days and they'll owe full rent. This would likely address what @Michael Le was warning against, although he does have a very good point about making sure your maintenance guy and you are on the same page when it comes to expectations.

It gets more complicated, too, as they're technically only allowed to receive 20% (or 30%, I honestly can't remember off the top of my head and she's not available to verify right now) of a discount tax-free. Anything over that is, technically, supposed to be included as salary and taxes. Anyway, check with a CPA to be sure, if you go that route.

YMMV depending on the state, depending on their employment laws and what you can write in the leases, so maybe cruise some Ohio forums. It sounds like @Ian Tudor has a pretty good setup. 

@Angie Taggart, it's not really necessary to put your properties in an LLC if you're doing relatively inexpensive single-family homes with conventional financing. As others in the thread have stated, conventional financing requires the property in your personal name and usually don't care if you then put it over into an LLC, but they could by the terms of the mortgage (they just choose not to) and, if they do, it could be messy. 

LLCs can be costly to form and maintain, depending on your state (I have no idea of IL's requirements). If you have multiple members, you'll have a much higher bill from your CPA come tax time to file the LLC's docs.

So, most of the LLC push is if you're doing larger properties with multiple members. If you're just looking for liability protection, you can always purchase an Umbrella Policy from your insurance company.

One perk of an LLC is that you can open lines of credit (mainly credit cards, to start) in the LLC's name (backed by your SSN, though) and have them not show up on your credit reports and calculated in your DTI. If you screw up and default, they'll end up hitting your credit, but they won't if you pay everything properly.

@Renny F. and @Andrew Campbell, I am in a similar boat to you. We've got a handful of pretty solid SFRs that have appreciated nicely through rehabbing and area appreciation, as well as flowing well, but we would like to move into larger properties and we're torn between keeping these assets or liquidating them to focus solely on larger properties. 

The other posters have hit it on the head about figuring out your risk tolerance and the comfort in having free and clear properties over leveraging everything to jump into a riskier endeavor. You're in a really safe position right now and levering up to a large property might put a lot more stress on you, if the market falters, where your current portfolio should be able to weather the storm better. Secondly, would keeping the SFRs take too much of your time up with managing a larger property and perhaps burn you out? I think @Beka Shea hit it on the head: are you just looking to add doors/income streams and you're okay with the extra work, or would you like to focus more on economies of scale in a larger property?

Good luck!

Thanks for the offer(s) and info, @Steven Leigh and @Robert Ellis. While we've thought about shifting to Columbus (he lives there and I'm in NYC, so it's easier for us to keep an eye on Columbus over Dayton), we're pretty out on accumulating anymore yards, at the moment. We're looking to go to MFRs, focusing more on value-add (not just value-hope of gentrification/continued increasing values, however) and the rental numbers making sense. We're not in contract with any agency, but we do have a friend/agent that's been keeping an eye out for us and knows what we're looking for.

@Sean Dawson, your view on T-wood is pretty good, but just be very careful. It can be very hit or miss and you want to make sure you're not just chasing unpaid rents. Like @Darrin Carey offered, feel free to reach out with any questions. My partner and I own a handful of houses in South Park that we've been pretty pleased with and it's hard to deny the numbers in Dayton, if you know the area and make sure you buy right.

@Steven Leigh, I'd be curious to hear about the duplex you've got. My business partner lives in Columbus and has been pushing us to shift there, so always interested to hear about potentials. 

@Paul Amegatcher, I'd actually be curious to hear more about how your list works and how you vet who you're mailing out to. You mentioned above that you use tax-delinquent, but I'd be interested in other things that stand out for you, if you're willing to discuss them further

I actually say that because, randomly, I have received a couple of your mailers (3-4, I think, so far for one of the addresses in particular, and 1-2 for another couple addresses) for my properties in Dayton and always wondered how I popped up on the list. I fit under the "absentee" category, as I don't live near the properties, and there's certainly value and equity in the houses from what I bought them for, but they definitely aren't tax delinquent. 

Anyway, just a small random crossing of worlds and figured I'd reach out. 

An undergrad in Entrepreneurship and Small Business Management from Florida State and a Master's in Real Estate from Baruch College (City University of New York). During my MS, I interned with a pretty large ($3B+ in assets) real estate investment company in the mortgage brokerage department.

Another adviser checking in, and what @Dave Younts and @Paul Allen (and most of the other posters on this thread) have said is spot on. There are many variables of your personal situation and future goals that come into play when figuring out "how much of x should I have," but one thing that's pretty universal is that diversification is always a positive. I understand that "going with what you know" is the most comfortable thing for you and, as many have already said, I wouldn't dive into trying to pick stocks and get crazy, since it's something you're not experienced in.

But, having investments in the markets and maximizing retirement account tax benefits could be a big positive. Roth IRAs have great tax advantages for saving for your later life, saving for kids' college, or passing wealth on to heirs (they won't pay taxes on withdrawals from these accounts); if you have a 401k option with an employer match it's important to not leave that money on the table; and you can shield yourself from heavy declines in the real estate market if there is another bust. As Paul said, Vanguard Funds/ETFs (Schwab is making a huge push to offer these, too) that are broad-market investments with low fees could be a great way to go. 

@Jason Malyon, I guess I didn't pay enough attention to your location. A lot of this I'm not sure will apply, as I have no idea the market in SA and my advice probably is much less valid. Haha. 

Just be careful what you ask your broker and realize that he/she probably gets paid more to sell you crappier products that might benefit the company more than you. 

A 401k (and other similar things) basically are regular investment accounts that are called retirement accounts in the US and have some special tax treatment (either now or upon withdrawal). They're at the whim of the markets and not guaranteed at all. Annuities from companies (usually called "pensions" or "defined benefit" funds) are usually guaranteed, but they have been largely killed off by companies and diminished by governments to push the responsibility onto the individual over the company. Personally, I think this is a tragedy and has made retirements worse for a large portion of Americans, but that's a political debate and isn't worth going into here.

Anyway, just be careful in your search for your investment options and be cautions that a person selling you the investment might not have your best interests at heart because they could be getting paid more to sell you junk.