All Forum Posts by: Timothy Murphy III

@Thomas McFarland

Welcome to BP.

@Nelson Leal

I've been happy with American Modern Insurance Group thus far. They were willing to offer dwelling coverage at estimated market value, instead of replacement cost. This was valuable to me because a lot of properties in NEOhio, especially those in more inexpensive neighborhoods, have a market value substantially lower than their replacement costs. The end benefit was dramatically more reasonable premiums.

@Nelson Leal

PM me if you have questions. If you have multiple partners, you really need the operating agreement as it's essentially your partnership agreement between the various owners. If the LLC is 100% owned by a single person, it's often best to skip on the operating agreement to keep costs down. When investor clients ask me to help them file an LLC, I typically charge for one hours worth of time, plus the $99 filing fee. Almost all the value to the investor comes from the consultation where we discuss what the LLC will and will not do for you and determine if it makes sense for you in your specific situation. The actual Articles of Organization themselves are rather easy to complete and many non-attorneys are able to handle the preparation and filing on their own.

Yeah, I live and invest in the midwest so I'm more prone to think in terms of the prices and opportunities available here. The strategies in expensive coastal markets need to be different.  PM me if you have questions about the Cleveland market and I'll be happy to answer.

@Phil T.

Plenty of investors go out of state if their local market isn't viable for them. Your local team you hire will make or break you. Do your research on your turnkey / PM companies as well as the market you're considering. Ideally you come to town and get a feel for the areas you'll be investing and the team you'll be working with. You won't be so much managing the investment properties as you will be managing the managers.

@Antoinette James Welcome to BP.

@Garlin Smith

Assuming my own market was too expensive(I see you're in California), and / or I wanted to be more hands off, I'd look into using it as a downpayment on a couple of turnkeys or potentially a small apartment building in markets that cash flow better.

If I wanted to be hands in and was located in a good cash flow market, I'd look for value add and rehab opportunities in my city. I'd target C or D caliber areas (though B caliber areas would also be fine if that's where your risk tolerance and personal preferences take you) and look to acquire the property with all cash or seller financing and get to free and clear as soon as possible. I'd then use the free and clear cash flowing properties as collateral to raise additional private money and lather / rinse / repeat the process. Essentially a BRRRR process.

@Craig Montesano

Depends on where in Cleveland Heights you're looking. Most of the city is suitable for investment for those looking for sold inner ring suburban rental properties. However, it's a large and very diverse city pockets that range all across the A - F letter grade spectrum. It's not as pronounced as if you were to go within City of Cleveland, but you really want to this particular city on a street by street basis.

@Rahul Bhatt

Congrats on the deal. Your assumptions seem reasonable: The area is most likely a B caliber area. The cap rate is a little lower than I'd like to see, but Lakewood is a popular investment area so it's harder to find deals at low prices.

I'd also include a contingency for review of rentrolls, leases, etc to make sure the financial documentation checks out.

@Ronaldo Carvalho

You can ask the listing agent for leases, rent rolls, etc. prior to submitting an offer, or you can write an offer contingent upon receipt and review of such documentation. I'd want to know the tenants are current on paying on time, because the benefit of having the unit already tenanted is actually a burden if the tenant is not performing. You'll have to honor the existing leases through the expiration of their term (as long as the tenant hasn't breached for non-payment, etc) but can raise rents, terminate leases, etc. at the expiration of the term.

I don't see much point in running background / eviction / credit / criminal checks on tenants that are already in the property. Whether the existing tenants would pass your qualifications or not doesn't really matter, they're already in possession of the units.