All Forum Posts by: David Wolber

@Tanisha Haughton I can't answer your questions unfortunately.  After 4 years of business and 5 LLCs i was just asked for my DUNS number yesterday for a lease application for a copier of all things!  I literally didn't even know what it was! 

I wanted to tell you that when you go to buy your first property in the name of the LLC it will be more expensive for one (assuming financed and not cash buy). Buying it in an LLC makes it commercial financing and most of those loan docs are individually drafted vice using a basic Fannie Mae or Freddie Mac form. Also, don't be surprised when they will ask you to personally guarantee the loan regardless of the business credit. My bank requires you to be grantor if you own 20% or more of the asset. Which means doing a personal financial statement and all that fun stuff. Trust me, it gets more and more fun with every new property. Regardless if you own them in different LLCs.

-Dave

@Sarah Anne So we collect no fee while it's vacant since our fee is based on collected rent.  So we are still doing everything required to manage your asset with less income.  That should be incentive enough for any PM that operates this way.  Also, if you want to create some consequences for an extended vacant unit then you will find the PM and your interests misaligned again.  Now the PM is under the gun to get it rented or face even more consequences other than not getting paid.  Guess what you will end up with for a tenant?  Any tenant that's willing to sign.  Nothing lowers standards like punishment and deadlines.  

We even go a step further to ensure our interests align and have a progressive leasing schedule.  We charge very little to place tenants, but increase re-leasing fee if that tenant stays year after year up to a point.  We're not fully compensated really until about year 5.  This way the property owner and I want the same thing, long term happy tenants.

@Alexander Reda that sounds like more of a buyer/broker agreement situation over a PM agreement.  Perhaps they don't separate these aspects within their company?  You should be able to get information that is basic for your market.  Anything else on top of that would make sense that they would want to enter into an agreement so they're compensated for their time.  You are right though, it seems a bit odd they won't do anything for you without a signed agreement. 

I'm not sure if it's a rule but we always reserve 3-10% of monthly income for both maintenance and Capex. This is not including lawn and snow removal. We do that based on the individual property. Some might be a bit rough and need more saved as we are expecting more things to break or need a new roof sooner or others we will drop them super low because we might have bought it and did a total gut reno and don't expect a lot of maintenance issues in the near future.

hi @Heather U.

Alright, breeeeatheeee... :) So i started the opposite and owned multis before SFH for investments but now own both. The thing about larger mutlis is you will have a common or "house" electric meter which you won't have (usually) with a SFH. Water / taxes / insurance / basically everything is that many times more expensive. So don't panic when you see utilities costs with a lot of numbers on them. You now will own that many more toilets, appliances ect...but i'm sure you get that. There is also that many more ways to SAVE money as well when you start looking at putting in efficient toilets and low flow shower heads ect...

as far as financing, 4 or less units is considered residential so it'll have all the same options as you would as a SFH. Even owner occupied house hacking. Unless you are buying in an LLC. Once you get to 5 and over than it's a commercial deal and everything is more expensive and down payments are min 20%. But the short answer to your questions is yes, yes you can still get a conventional loan with 20% down if you buy it in your name.

When it comes to calculations it's all a percentage of rental income right? So since your rental income is higher, so will your reserves and expected expenses. What ever you use for a CapEx percentage for a SFH, should pretty well hold true for a multi. With some variations such as a SFH may have the same size roof as a up/down two family.

Sorry, i'm really just rambling.... haha

I hope that helped a little.  Let me know if you have any other specific questions, I will be happy to answer.

-Dave

hi @Charlie Magnan !  Welcome to BP. Norwich has a Landlord meeting at Dime bank once a month and @Mat O'Grady heads up a BP investors meeting he coordinates once a month.  That's a great place to meet local investors.  As far as contractors, what type are you looking for?  I can help you with a list and I know Mat and the group created a vetted list of trusted folks for contractors in the area that would be a great start as well.

What are your goals? Why kinda of REI do you want to do?

@Willie Flint @Tina McDonald Hey there!

So, with the properties that still have a mortgage, MOST banks will want you to refinance into the LLCs name.  You could combine this action with say a cash out refi.

For properties that are 100% owned, a simple filing of a quitclaim deed with the town will transfer ownership.

Or that's more or less how it works here in CT.

Good luck.

@Jason Schwerin That's exactly how I started my PM company. I created MOXIE Management, LLC to be the company that managed all my properties, this way i could hide the fact that I was the owner. Although many have figured it out...

I then grew it once I had the Realtors license and could manage other properties as this is required in my state.  Well technically a Broker's license like you mentioned, however I found a broker that allows me to run with no interference. 

I think it does help stream line the finances because now MOXIE holds the SDs, not me.  MOXIE collects the rent and distributes the owner's payments, not me. It allowed us to create a great system at the start so when we add properties to our personal or management portfolio all the rental stuff goes through MOXIE's systems and is a clean turnover.  

I would VERY HIGHLY RECOMMEND to NEVER own anything in your management company LLC. As it is the most exposed of the businesses, it's the first to be blamed and called out in a lawsuit. We own very little assets in the companies' name for that reason. We'd be a very small target for a lawyer. If we do then we give them the little cash that's in the account and that's all they get really.

-Dave

I focus on SECT and as @William Conrad indicated, EB is creating quite the stir around here.  The multi-market is becoming very competitive in the Groton area (if you can even find something to buy!), but I'd say New London / Norwich has a good amount of rolling inventory.  However the rental class is pretty different between those two areas.

I've been looking at a lot of commercial properties as well in Groton, and right now there is a good amount of inventory and that inventory has been around a while.  It doesn't seem to be moving.  Groton City is really pushing the revitalization of the
Poquonock bridge area where there is a few things on the market.  Maybe not yet, but i'd say in 10 years that's gonna be a great place to own a property.  

As an investor and small business owner I find having a business card still gives off a good vibe.  When I talk up my business and bust out a card for potential clients, most people are impressed.  However, most people either take a pic of it or add it to the phone and discard the card, but the impression still holds.