All Forum Posts by: Greg Scott

With an SDIRA, you can buy a bond.  That is the same thing as making a loan.  Each account could go by some T-Bills.  That means both SDIRA holders would be lending to the same entity, the US Government.  I don't see how having both SDIRAs lend on the same project could be prohibited.

Regarding your second question, a shared co-loan seems a very bad idea and would likely be prohibited.  You have to treat the SDIRA like it is a separate, unrelated person.  Co-mingling the investments could create major problems.

My phone rings 10+ times per day with garbage calls, some asking to buy properties I haven't owned in well over a decade.  

Texting me spam is an immediate addition to my blocked numbers list and spammers often receive a colorful emoji as a reply before they are blocked.  Texting is too intrusive. I block callers regularly and have more phone numbers in my blocked list than my contacts

My email fills up with spam created by AI agents that found my LinkedIn profile and used a database to grab my email.  (I de-contented my LinkedIn profile as a result.)  I've had proposals to do my bookkeeping, generate more leads, buy my business, buy my properties, loan me money, etc. etc. It gets annoying.  

Best thing that works for me is make it easy for me to find you when I'm looking.

We've gone through this process, sadly, hundreds of times.  I may be a bit more jaded because of it.  Seems to me there is a portion of the population that simply doesn't care if they don't pay their debts.  They only do what they are forced to do.  Our motivation for us to do this is that the debt gets on their credit and if later in life they want to finance a new car or buy a house in that state, they will have to pay off their debt.  Sometimes we can get wage garnishment too.  By the time we evict, we usually have balances-due around $4,000, sometimes more, depending on circumstances.

Steps:

1) Go to Small Claims Court (in most leases filing fees and attorney fees can be added to the debt owed by the tenant)  Bring all your tenant-related paperwork showing what they owe you.

2) Get a money judgment from the Court

3) Hand that money judgment off to a collections agency that will go try to collect

Is it worth it?  That is up for you to decide.  I would say that less than $1,000, it is probably not financially prudent for you. Remember, you will have to up-front pay for the court costs, and when you hand it off to a collection agency, they keep half of everything they collect.  Your odds of collecting anything from this person in the future are probably around 10-20%.

I have extensive experience managing insurance claims.  It is a counter-intuitive process and I can tell it is creating confusion.

First, the insurance claim payout amounts are governed by law.  Typically, they require the payout to be able to cover the 95th percentile of cost, and may have a much larger scope of work than you would do yourself.  In other words, there is usually a LOT more money you can get from your insurance claim than what you need to actually complete the repairs. 

The insurance company can try to pay you less, and if you accept, that is your payout.  However, you are going to be better off collecting what you are legally due, and with the excess cash, have your contractor fix other things on the property you wanted repaired.  You don't get any bonus points at your next insurance renewal for having saved the insurance company a few dollars.

You definitely want a GC that understands the insurance claim process.  The unethical ones, working with uninformed owners, simply pocket the excess profit.  The ethical ones will give you good value for the insurance money on other improvements to your property.  I've typically had my deductible paid by the GC, which is also legal to do.  They may be able to also remove the branch for $5,500, even though insurance will pay $10,200 and then give you $4,700 of repairs on another part of the house.

For example, we had a fire in one building.  We repaired everything the insurance claim covered.  We had enough money to also do the following:
- Re-roof a different building
- Add insulation in that different building
- Completely re-plumb the building that was affected by the fire (and this was not in the claim)

Have a conversations with your GC about how this will work.

You went immediately to the tenant, but I would say you are looking in the wrong area.

You said the fire was pretty significant.  While that description is unclear, the fires we've experienced have destroyed most of the belongings of the tenants.  Even if they were not charred, smoke leaves a nasty smell and dangerous chemicals.  Most of their belongings are probably junk.  Removal of the damaged debris should be covered by your insurance.

(FWIW, if this is your first major insurance claim, consider hiring a public adjuster.)

Usually in a situation where the property is unsuitable for living due to a loss, most leases automatically terminate.  You have a signed notice from the tenant that they were moving out, with a date.  That should be sufficient that they were leaving. If they also gave you keys, you clearly have possession.  If they didn't, it wouldn't hurt to reach out to your local attorney to confirm.

I typically have waited a few months to see if any forgotten bills or unexpected checks show up.  Sounds like you are doing that as well

In mid 2020 I sold an apartment. I wasn't sure how long to keep the LLC open. I talked to my SEC attorney. He said it made sense to keep it open for the rest of the year. I asked him, "What if someone comes after us with a lawsuit next year." He said, they will be looking at suing a defunct LLC with no cash and no other assets.

I suspect in some states, there may be a way to try to claw back from the LLC owners. You may want to talk with a local attorney.

No.

If you have been curious how people have achieved financial freedom through buy & hold real estate, you will want to attend this event.  I am very excited about this upcoming gathering in Cincinnati because we have some amazing presenters.  Normally, you have to be a member of Lifestyles Unlimited or one of their guests to attend.  I'm offering to let you come as my guest as I will be the MC for the evening. If you wouldn't mind, please DM me on BP that you want to come and I can make sure your name is on the list.  

What is being presented?:

Single Family - A couple from Lafayette Indiana has bought 10 properties in the last 18 months.  They have averaged only $11,461 cash out of pocket, and by following best-practices they have averaged an amazing $38,780 in equity capture PER PROPERTY.  They now have almost $50,000 in passive income, tax free, every year!    This is a clear path to retire yourself quickly.  In their case study we will talk about their total portfolio and dive deeply into the mechanics of one specific single family deal.  Come check it out!

Multifamily - A couple from San Antonio has been buying apartments in the Cincinnati area, both in Kentucky and Ohio. Come listen while they share their experience.  See the kind of returns you can generate when you buy and operate an apartment correctly.  They will dive deeply into one of their apartment deals.  You will see they have created a fantastic place for residents to live and provided great returns for themselves and their investors.

Passive Investing - My wife will be presenting an overview of our passive investments.  We've invested in over 40 apartment syndications across eight states.  We can now live comfortably off just our passive investments alone.  (Although we are also active investors.)  Imagine achieving a place of financial stability without even having to do any of the work yourself!

I hope to see you there.

Your loan will almost certainly have a due-on-sale clause. If you ask the bank about it, you will draw attention to your situation. I also understand FHA has language in their loan docs that require the borrow to be a human, not an LLC.

I've heard lawyers argue that if the loan is in your name and the deed is in an LLC, if there was a big lawsuit, the opposing counsel could argue that you have pierced the corporate veil because you have not treated the LLC like a separate entity. In that case, the judge might conclude your LLC is invalid, providing you no protection, which is the worst case scenario as a landlord.

On another note, if you put the property in the LLC and later want to do a cash-out refi with an agency loan, you would have to quit-claim it back into your name and then wait 12 months to do the refi.

Alternately, you could beef up your insurance.  When I had lots of SF rentals, I used to have $500K liability coverage for each property plus a $2M umbrella.  Seemed to me that covered 99.9999% of possible issues.

Interesting to see this post.  Condominiumization isn't new.  It seems to happen at regular intervals around the time housing affordability hits a low.  You can absolutely make money at this if your timing is right.

On the other hand, the window in which this strategy works is historically short-lived. I've seen a number of apartments for sale, where a small portion of the units are condos, owned by individual persons.  The condominiumization was not complete when the market shifted. These properties are called a fractured condos.  Fractured condos are not considered desireable.  It causes the apartment to be worth much less.  The condo owners are also surrounded by renters so their condos are worth less.  

There is a subgroup of investors that also makes money by doing the opposite of condominiumization.  They restore fractured condos by trying to buy out the condo owners to assemble a complete apartment complex.

Place your bets now.