All Forum Posts by: David Dachtera

If they don't have cause, they'll fabricate it if you look like you have some monetary value they can go after.

Hi, Rhonda,

Yeah - that's a big bite for a first property. You would definitely need input from contractors and other professionals to determine cost / time to rehab and the extent of the work needed.

Thorough property analysis would help you determine how much you could comfortably offer and whether the deal would be worth doing financially.

With a cash flow of around $100/mo per unit, is that within your investment criteria?

Hhhmmm...

Sounds like you need to study up on property analysis.

Garth mentioned PMI and yes, on an FHA loan you'll have to refi to get rid of it now. So, figure that into your strategy.

Remember that 5+ units is considered "commercial" property and financing depends on the building's income rather than yours, though your own credit-worthiness may still come into play. Even for SFRs and 2- thru 4-flats, it's still a good measure to use in your property analysis to make sure the cash flow you need is there.

Very good, Shana! Aaron makes some excellent points, as well.

Here's a formula some investors use...

Determine the ARV.

Start from 65% of the ARV.

Subtract:
- your profit
- closing costs
- cost of repairs / fix up
- holding costs and other expenses

... to arrive at your maximum offer price.

Why 65% of ARV?

To allow room to negotiate and to put the fixed-up house back on the market "priced to sell quickly" to minimize your holding costs.

Not a "hard rule", obviously, but do consider those factors when formulating your offer.

Hindsight is always 20/20. So, what should have happened isn't relevant now. You seem to know your position and what to do about it: have a good attorney to represent you and help you make your case.

The question is not "Can I be sued?", the question is "When will I be sued?"

The point is to make yourself as unattractive as possible as a potential target of a lawsuit. "Control everything, own nothing." If you look like you have no assets to take on paper the chances of an attorney taking such a case are much lower than if it looks like you own income property in your own name (ALWAYS a bad idea!) instead of in a properly structured business entity.

So, deal with this one the best you can, then position yourself for asset protection. Refer to a competent professional to help you do that - DON'T try to do-it-yourself thru LegalZoom or anything like that - the only thing that will be "zooming" is money out of your wallet / bank account(s).

Can you be sued? Of course you can.

When will you be sued? When you look like a ripe target for a lawsuit (lots of assets / income property in your own name).

I don't actually recommend buying properties in your own name. It's one of the reasons I prefer to associate with educated investors. A single liability suit could strip you of your entire holdings, not to mention the borrowing issues.

Yes - set up an LLC or LLCs as (a) holding company(-ies) to own the properties. However, use an S-Corp for the cash flow. That's the recommended structure. Set up a personal trust to own the other entities. Contact a legal/accounting professional for advice since I'm neither. Remember: control everything, own nothing. That's how you protect your investments and limit liability.

Your business(-es) will be able to get more credit than you can personally, and none of it will show up on your personal credit history, unless you default on business credit having a personal guarantee.

Hi, Richard,

From the little I know about the lending industry, I'm thinking that in order to broker private money you must first solicit private money to lend out, and that suggests you need to have some kind of approval - call it licensure, certification, whatever - from the SEC. I'd contact them first and see what information you can gather.

Second guess time suggests you may need the same from each state in which you want do business. Then, you'll want to explore the implications of doing business on-line across state lines.

There's probably a fair amount of read-tape to organize. However, since private lending is  likely THE source of real estate investing financing for the short- and mid-term future, it would be well worth the effort, I'm thinking. I've already got some feelers out locally to set up just that kind of business in the western suburbs of Chicago.

Hi, Shelley,

Mind if I ask which "guru" sells PropStream? ...and what they charge for it? (Cost to acquire? ...monthly charges?)

I've found that the major challenges data aggregators face is that there are as many ways to retrieve data as there are counties in the US. Some counties are still not "digital" or at least if they are they're not web-accessible or aggregator-friendly.

So, whether you're using PropStream, some other software or going through Zillow, Trulia or another web-based data access there still will be properties where data is not available or not provided/complete.

Dunno if this helps...

I'm also looking for similar software.

The people who provide PropStream also seem to be hosting the install file for the current version of a program sold thru the Yancey ("Flipping Vegas") organization called Property Pro. I've not seen PropStream yet. So, not sure how they compare.

Does anyone have experience with both PropStream and Property Pro who would be willing to share their experiences?

Thanx much in advance!