All Forum Posts by: Dan N.

This is meant fo the newbie out there who is in my situation and is just thirsty for any info to help them make a good decision. These are the data I wish I knew beforehand.

Hope it helps.

1. Add 50% (yes, 5 0) above what the contractor quotes you for underwriting purposes. Best case scenario - it goes as originally planned, but at least you did your underwriting based on the worst case scenario

2. There is a very different cost to insurance if the house cannot rent within 30 days. Make sure to find out and plan accordingly

3. Get insurance quotes on similar houses to what you are looking to buy BEFORE you even put in offers. The state i bought in apparently had many companies bail in the last 2 years and insurance was way higher than expected

4. Make sure you know the EXACT age of the roof from the seller and if not, you might have a problem even getting the house insured for roofs older than 15 years old in some states

5. When I did underwriting, since a portion of the insurance costs and property taxes are collected at closing, I reduced those from the first year of expenses. What I didn´t understand is that you pay 1 year of insurance in advance, plus 3 months insurance for escrow, plus every month from the first month you will still pay insurance. Same with prop taxes

6. Unless it´s a screaming deal, do not buy a house from someone going through bankruptcy.

7. See if there is a way to get a police report to see if there are any criminals, or sex offenders on that street.

8. In certain states where termites are an issue, you should include $150-$200 yearly for renewing your termite report in your underwriting.

While some may read these points and say "duh, you didn´t know that", this is meant for those who want to gather as much info as possible before deciding on a deal.

Happy investing to you all.

Hey Dan,

This is valuable information and good insight for those new to investing. Just curios, are you doing the BRRRR method on this property?

Hi Logan

unfortnately, this property's ARV doesn't support the BRRRR method, but it's in a great area for LTR

0 Votes

So after 1.5 years of searching, putting in offers, losing deals after inspections, yesterday I finally closed on my first investment property.

I put together a document of all the lessons I learned that I did not know prior, despite countless hours of investigation on my end.

This is meant fo the newbie out there who is in my situation and is just thirsty for any info to help them make a good decision. These are the data I wish I knew beforehand.

Hope it helps.

2. There is a very different cost to insurance if the house cannot rent within 30 days. Make sure to find out and plan accordingly

4. Make sure you know the EXACT age of the roof from the seller and if not, you might have a problem even getting the house insured for roofs older than 15 years old in some states

6. Unless it´s a screaming deal, do not buy a house from someone going through bankruptcy.

7. See if there is a way to get a police report to see if there are any criminals, or sex offenders on that street.

8. In certain states where termites are an issue, you should include $150-$200 yearly for renewing your termite report in your underwriting.

While some may read these points and say "duh, you didn´t know that", this is meant for those who want to gather as much info as possible before deciding on a deal.

Happy investing to you all.

5 Votes

Quote from @Stuart Udis:

@Dan N. The operating agreement is more important than the certificate of organization/ state filed equivalent. Adhering to the procedures laid out in the operating agreement is what you rely on to be viewed and treated as a business rather than as an individual. I don't want to pick on you but you recently posted about utilizing land trusts and Wyoming LLC's to purchase real estate in Arkansas and also posted questions suggesting you were unclear on how general liability coverage works/ is issued for a $170K purchase.

This is the problem I observe with most when in comes to entity formation and asset protection. 99% of the individuals who post questions in these forums are for some reason pushed to believe they should at least research entity structures that are completely unnecessary. Meanwhile they cannot articulate the liabilities these strategies will protect against, do not understand insurance or how to correctly operate the LLC's they form. It's a real problem and can only imagine the number of investors out there who are operating their businesses recklessly under the false beliefs of protections of an LLC created and stored away in file cabinet.

HI Stuart

Thanks for the detailed reply.
Part of the research process for me is posting in the forums and hearing a variety of responses, since many times online sources are just promotion of services that solve a problem related to the search term.

0 Votes

Quote from @Bob Floss II:

@Terris Elliott It is very easy to file the articles of organization and obtain an EIN. I have no doubt you can do that yourself. When someone pays me for an LLC, they are mainly paying for creating the operating agreement that governs the operations of the LLC. When it comes to the operating agreement, you get what you pay for.

Hi Bob,

If the LLC is a single-owner LLC, is it still crucial to have an attorney create the operating agreement versus a service like LegalZoom?

0 Votes

Atlanta, Georgia

Quote from @Sean Morrison:

Disclaimer: I am an attorney, but I am not your attorney. This is not legal advice, just friendly information.

Obviously, I'm biased, but an attorney should put that together. A single member LLC is not as big of a deal, but once there is a partner involved, an attorney needs to be as well.

Hi Sean
You mentioned in your answer that "A single member LLC is not as big of a deal", but I was wondering if a single owner LLC still needs an Operating Agreement, or not?

Thank you

0 Votes

Indianapolis, Indiana

Quote from @Basit Siddiqi:

Creating an LLC is simple and can be done by anyone.
Creating an operating agreement / LLC agreement should be done by an attorney.

Hi Basit.
If the LLC is only owned by me, do I need an operating agreement?

1 Vote

Good point Jerry.
Thank you

0 Votes

What a great analogy lol
Not decided on that strategy, just researching about that specific one.

The main reason was because a land trust can be a co signee on a conventional loan and can help with transferring the conventional loan to an LLC later one without triggering the due on sale clause

0 Votes

https://nchinc.com/

0 Votes

Quote from @Chris Seveney:

@Dan N.

I would ask your agent to ask their agent is the home being included in the bankruptcy?

Why is the borrower filing for bankruptcy ? Usually it’s due to being behind on her home. If you have it pending I would think they would sell it first then file bk.

With the home in BK you would need to get the trustees approval (assuming ch 13) if it’s ch 7 then it should be faster but still take 3-6 months

Thanks Chris. Great starting point!

0 Votes

All Forum Posts by: Dan N.

Dan N. has started 31 posts and replied 118 times.

Post: Just closed on 1st property - Here are some lessons I learned

Post: Just closed on 1st property - Here are some lessons I learned

Post: Creating an LLC online or through an attorney

Post: Legal Zoom or Lawyer

Post: Did you use a lawyer to set up your LLC?

Post: Creating an LLC online or through an attorney

Post: Can a Wyoming LLC own an investment property in ANY state?

Post: Setting up a land trust owned by a WY LLC - any recommendations (Besides NCH)?

Post: Setting up a land trust owned by a WY LLC - any recommendations (Besides NCH)?

Post: In escrow, seller in bankruptcy, what should I look for?