All Forum Posts by: Brian G.

Thanks @Franklin Romine but Im trying to avoid forming a LLC in CA. In my mind I would only put the out of state properties in the LLC and hold the CA properties in a trust. I could conduct my business for this LLC while out of CA. Additionally having the LLC as the beneficiary of several trusts could prevent me from having to register it as doing business in each state where I hold property as long as the LLC doesn't participate in the management of those properties--if I understand correctly.

Keep the ideas coming, Im happy to invest time learning about this or listen to advice that this is all too much work for nothing.

Ive been doing RE investing for about 3 years now and I have 4 SFR in 2 states. I plan on buying more this year. It is my goal this year to start to operate more professionally so I can continue to scale my business. Up to now I have been keeping my books in excel and all my properties are in my name with conforming financing. This has worked well, but I have two goals. 1) make sure Im operating in a way that protects me from liability 2) be as hands-off as possible

I have parsed through threads here on BP, read asset protection books, and talked to my accountant and various lawyers. It seems there is still no clear path for me. In my mind a great outcome would be a situation where I have an entity/entities holding and managing the properties. The day-to-day operations would be handled by local property managers, and monthly books kept by an hourly book keeper. That way I can focus on sourcing and acquiring new deals (and my day job). I can do some annual formalities for the entities and my accountant can file taxes from the books kept by the book keeper.

Unfortunately I haven't been unable to find anyone in my personal network who has been able to advise me to my satisfaction. I was able to get a referral to a RE attorney in Kentucky but their help was limited as they typically work with local investors on larger commercial deals.

I live in California and work at a tech company. I have taken on RE investing as a hobby and a way to invest windfall earnings. I have learned a lot being involved in the nitty gritty of buying foreclosures from out of state and getting them rented out. I own two houses in California (5 hours away from my home) and two in Indianapolis also. I am aware there are potentially better markets but I have worked hard to establish networks in both of these places. Unfortunately my network hasn't yielded much help in the way of entities or asset protection. Part of that might be because I don't know how to ask the right questions and Im shy asking around at my day job for that kind of referral.

Currently my best guess looks like holding title to the properties in individual revocable trusts and the beneficiary of the trusts can be an LLC. This seems to be the best compromise for cost/protection/complexity. I am aware of the LLC tax in CA. Its possible I would only hold the California properties in a trust and skip the LLC (but cant I change the beneficiary without any public filing?). The LLC would be formed in a state where taxes make sense and probably charging orders are the only creditor remedy, even though there is a chance other state's law could apply. I would conduct company business only while I am not in California. I travel often.

Am I on the right track? Can anyone offer suggested reading or a real life example of something similar to my situation? I feel like my situation is not complex or unique.

Did you ever manage to sell these as a package?

Thanks thats really insightful. I haven't followed up with them yet but if they care to respond to these comments I will post it here. 

Most likely I will continue to buy SFRs and save note investing for a later time.

I have been learning about buying mortgage notes and I came across this company "The Note Factory". They have a slick website and high-touch sales process and seem to promise 11.5%+ return on performing notes for properties in San Antonio including all taxes, insurance and servicing.

Do these claims seem reasonable? Does anyone have experience with them?

thenotefactory.com

I have used http://www.city-data.com/ for this in the past though not specifically for real estate investments. They claim to have good data, but some of what you are talking about might not be available more often than the 10 year census so make sure to check the data sources.

I started looking in Indy for one SFR to get my feet wet in a new market. I have two SFR in Stockton, CA and that market is now overvalued. In the middle of my search I heard that HomePath was doing 10% down with no MI on non owner ocs. My lender confirmed this and we are now in contract with these terms. As long as the inspections and underwriting go well I will be closing in a few weeks. The ROI and net cashflow are a bit lower than I would like but still better than what I'm getting in CA, I was also very conservative with closing and repair costs. I can still walk away only losing my $500 EMD so speak up if you see any issues!

Here are the numbers:

House A:

Built in 1990s 3/2.5 1600 Sq Ft. Nice street in a mixed area. Schools are mediocre. Similar smaller 3/2 across the street rented for $1199 in August. Minimial if any repair required.

Purchase price: $116,000

Down payment: $11,600 (10%)

Closing costs: $3000 ( projected )

Repairs: $1000 ( projected )

Rent: $1250/mo ( see note above )

Mortgage: 5.2% fixed 30yrs.

Insurance: $81/mo ( does this seem high to anyone familiar with Indy? )

Taxes: $247/mo (~30% higher than neighboring houses of similar size. Dont know why yet. Should I appeal the assessment? )

PITI: $900/mo

Expenses:

Vacancies (8.3%): $104/mo

Management (8%): $92/mo

Maintenance: $50/mo

HOA: $22/mo

Total expenses: $268/mo

Cash flow: $82

ROI: 6.2%

House B:

Built in 1980s 3/2 1800 Sq Ft. on 1+ acre lot. Nice area. Schools are mediocre. Rent comps are hard because not many in this neighborhood are rented. Sales comps are in the $150k-$180k range. Minimal if any repair required.

Purchase price: $134,000

Down payment: $13,400 (10%)

Closing costs: $3000 ( projected )

Repairs: $1000 ( projected )

Rent: $1300/mo

Mortgage: 5.2% fixed 30yrs.

Insurance: $83/mo ( does this seem high to anyone familiar with Indy? )

Taxes: $179/mo

PITI: $924/mo

Expenses:

Vacancies (8.3%): $108/mo

Management (8%):  $95/mo

Maintenance: $50/mo

Total expenses: $253/mo

Cash flow: 123

ROI: 8.4%

Thanks for your feedback!

Thanks @Sterling White  and @Ben G. . What neighborhoods in Indy would you avoid or reccomend. Generally Im trying to stay north of 95th, but there are some good deals directly east of broad ripple.

Hello everyone. Ive lived in Santa Barbara for about 6 years now but I'm temporarily living in San Jose for a few months. I work at a tech company in SB and bought two SFR in the last two years. Both are in Stockton, CA. My sister happens to be a realtor there so thats how it piqued my interest. Those houses are professionally managed and have positive cashflow.

I have an offer outstanding on a SFR in the Indianapolis area and hope to close on that soon. Ive found much better cashflow there and I have a local friend who is a property manager. My first goal is to get to 10 SFRs, probably in 3 different markets, over the next 4 years. I am considering finding some fix and flips to help me get there faster, but my day job can be time consuming.

I found BiggerPockets from the podcasts and was amazed at how useful it was. I have been doing as much reading as I can on RE but dont have a connection to any community so Im looking forward to collaborating with all of you on some deals!