All Forum Posts by: Brian Smith

So let me start with the back story and present situation... I own 4 long term rentals, and 1 short term rental out of state. I'm in the process of closing on a second out of state short term rental, and I self manage everything. I have my 4 long term rentals transferred into an llc, and all expenses run through a business checking account - other than the "due on sale" clause issue (since the mortgages on 3 of them are in my personal name) everything is fine with the current set up. Now to the higher end vacation rentals. I've been advised NOT to transfer those to an LLC, because it doesn't REALLY provide any asset protection, and it could cause 1031 exchange issues upon sale. Since everything is self managed I feel they are "active" investments and the income should qualify for the new 20% QBI tax deduction, so here's the real question: Can/should I run all expenses/income through a new LLC so it qualifies as a "real" business, and if so would I then be on the hook for self employment taxes, effectively nullifying the QBI deduction?

I've never spent much time on accounting practices, and I'm learning the hard way that these details matter! So with 4 long term (local) rentals, and 2 short term (long distance) rentals - how would you set up the business(es) for the simplest and most effective accounting? 

I noticed the QBI deduction only applies to LLC, s-Corps, etc so I'm wondering if it's worth it to operate through an LLC even if i have no intention of transferring said properties into the business.

Thanks in advance!
 

I'm in the process of shifting my investment purposes to a long term goal. I started with the question "how do i want retirement to look?" MY answer is pretty simple. I live in Louisiana where it's hot, and muggy, and flat. Rentals cash flow well here, I have 4 (soon to be 3), but they don't APPRECIATE. So my new plan. Find areas that cash flow and that are GROWING. I'm selling off my smaller, cheaper properties for more expensive short term rentals in better markets. The end goal is to have a few houses in the mountains and in different geographies that I can float around in retirement. All paid for and providing a retirement one day. With higher value properties it takes less time to manage for a greater ROI per property (same concept as multi-families). @Abel Curiel already nailed it... Start with the end in mind and do that. 

Great job! I have a couple of questions - Did you reface the kitchen cabinets and have a custom build inserted where the refrigerator once sat or are those all new cabinets? And did you paint the existing bathroom tiles? 

you are in a perfect market to start with a rental you can afford, be patient, and refinance your cash right back out. No need to over leverage or rush things - keep some reserves and wait for GREAT deals. I'm guessing at your market, but if it's anything like ours a 35,000 house can get you a decent house in an okay neighborhood? If that's the case then you can make it work. 7k down and 3k in closing costs. $650 a month rent should clear close to $200 a month. A 50-55k appraisal will let you get most of your cash right back out and still hold on to $150 a month cash flow... and you've got 10k to do it again. If you'll keep all of your rent profits and add to your snowball every chance you can then you can gather some great momentum a few years into this deal.

@Landon Cobb there is a local REIA meeting at Zocolo's in Shreveport (behind Outback) tomorrow, February 16 @ 6PM. Come hang out and meet some of the great investors in the area. It's a great place to exchange ideas and phone numbers. You can also reach out to @Dustin Bowen and @Michael Faulk they are both great resources!  

That looks great! Two questions:  Are those brand new cabinets in the kitchen or new doors only? And what is the brand/name of tile in the bathroom?

I'll second what @Darren Budahn said. In theory if the numbers are good you should approach the 45% DTI ratio without ever reaching it. IF you're buying properties at the right price the rents from one unit should support the income side of the ratio and fund each venture moving forward. You may have to stay smaller in scale for a while before you pursue trump tower, but momentum is a beautiful thing in this game! Good luck and congrats on your first property. Sounds like adding another unit is a good long term move, but you may have to decide between another property OR adding a unit in the near term. Personally I'd lean towards getting your next property at the right price and add that next unit at a later date. Good luck!

Please don't listen to this guy. I have researched every topic from vinyl plank flooring, to foreclosure bidding, to how to be a landlord, and researching direct mail campaigns now. The options for success are unlimited in these forums and this is THE most user friendly website with some of the most helpful people I've ever stumbled across. Y'all do an amazing job of keeping things organized and intuitive. Keep it up BP! 

@Claire Trammell & @Jeff Rappaport thanks for the replies. I'll try to update this post as often as I can and hopefully it ends with a few deals! I try to answer each call live or call back in minutes... no serious sellers yet, but I'm just now getting comfortable talking to leads so hopefully the conversions will come. I'm excited to see where this goes and thanks again for the replies!

I've just started my first direct mail campaign to find rental and flip prospects, but the results so far have not been great. I'm targetting 3 zip codes with 4+ year owners, 30%+ equity, <140K purchase price. First mailers went out 7/9 (540 total), second set 7/23 (180 total), and latest set was 7/30 (180 total. The entire list is about 1,500 pieces so I've broken it into 8 waves and I'll continue each week until I get to the end of the list. The marketing piece for this first wave is a typed business letter mail merged with owner name and address. Hand stamped and mailed local with a local return address. 

The problem is my response rate is terrible so far. 12 calls from the first mailing and 3 from the second, none so far from the 3rd. I've budgeted to hit each owner 6 times over the next 8-10 months, and I'm in the process of creating a website (a few callers have told me they looked into my company and couldn't find any information).  I'm considering a small facebook ad to create some brand awareness. I keep reading that consistency is key so I'm going to stick with it and see the whole campaign through, but no lie it's tough! Any pointers moving for would be greatly appreciated! Also, does anyone have suggestions for which types of mailers I should send next? and if internet marketing would be better spent with google ppc/adwords or facebook? I'm budgeting $500 to mail pieces and $500 to internet marketing each month. Should I allocate the budget differently? 

Thanks in advance for any help!