All Forum Posts by: Daniel Sprague

Welcome Alex,

Hop in and make some mistakes!  The great thing about real estate is even with mistakes you can typically still cash flow. 

Good Luck

Welcome Feel free to reach out at anytime Thanks

I would make sure you are careful about not paying rent yourself right now. With a lower credit score your lender is going to want a rental history Most likely 12 months at a minimum of cancelled checks showing rent paid I wouldn't be surprised if your lender brings up payment shock (going from zero housing expense to a mortgage) when you go to apply

Hey BP Members,

I am sure this has been discussed here but i am relatively new to the site. 

I would like to start a discussion on the pros and cons of starting a property management company simply to handle my own inventory.  20 units all within 1 city.  All of them are held in various LLCs, and range from single family to fourplex.

Are there tax advantages compared to just having my tenants pay the LLC the property is in?

Do you just form the company as an LLC, or is there a better structure?

What advice do you have?

I guess my questions focus around advantages to just having the management company for my own properties, and not about growing a new profitable company that handles other peoples properties.

Thanks in advance for any of your thoughts.

Payment is $1,070/month with $213/month of that being for escrows

Kristine,

I agree

Student loan debt in general is going to guarantee a large population of renters for a long time. 

It is a double edged sword for students in terms of real estate when it comes to student loans. 

Their rent while they are in college is high becuase it is easy to get deferred student loans which makes it easy for landlords to raise rent (not to mention the cost of tuition). and then the they cant buy when they are done with college because they have a mortgage worth of student loan debt already working against their DTI.

Kind of Sad.

Vincent,

My knee jerk reaction is to agree with you, but when i get out in the street and look around it is just to good right now, and i feel as though as long as you buy correctly you will be good (obvious comment of the day).

When i sit and read and plan, i generally think do the opposite of the mob... Buy when the market is falling apart, and everyone is scared, and sell when everyone has money, and is buying like crazy.

As long as i stick to my formulas i just cant see the deals im buying right now losing.  My area may be much different than most however as we are a town that has rental licenses, most for only 2 unrelated people.

Good Luck

If you are looking to use the equity from the two current rentals, and do not want to sell them i would suggest a commercial loan where the bank simply puts a lien against the properties you already own, say for the $30,000.  Then use that as an equity down payment on a $100,000 or so duplex or triplex. 

I enjoy using these "equity grabs" for a couple of reasons: 

1. I have no plans of selling any of them my current rentals as they were all bought correctly, and they all cash flow sufficiently (i realize this can change quickly but my bank will work with me)

2. it allows me to do 100% financing on my deals which means i am maximizing leverage with OPM (other peoples money) therefore your ROI is technically infinate.

3. i do not have to pay interest on an equity grab, it is just a lien against the property.  Now, obviously you pay more in interest on the new property since you are not putting money down, but in my opinion this is a way to greatly accelerate your trajectory with real estate, if that is what you are looking to do.

This may not be what you are looking to do but it has worked for me so i thought i would share. 

Thanks and good luck

It is basic, but make sure you have a detailed personal financial statement filled out.

When i brought my PFS to my portfolio lender's first meeting, they were impressed i was prepared with it.  My credit score backed it up, and they havent said no to a deal since.

As long as you have good financials personally, you have the first part of the puzzle solved.  The next is bringing them a property that works.

I dont know many banks that wont lend to someone with a good PFS, good credit score, and a good property.

Good Luck.

If you want them to send you business and think of you in the future, a fun item is a one year card in the mail thanking them for there business.  Include a $1 scratch off lottery ticket and say "thanks for not gambling with your home purchase"

This will stick in their mind better than a simple thanks for your business card.

Congrats on the sale!