All Forum Posts by: Greg Scott

Personal recommendations are great, but if you don't get many, I wouldn't search Google.   Here is a better place to search.

https://www.narpm.org/   Look for people with lots of designations

@Lynn McGeein

I agree with your assessment on condos.    I owned one as a rental that worked out fine, but have seen the downside too.

My wife lived in a condo before we got married.  She had carefully budgeted her expenses but got socked with almost every year with two large and unexpected "special assessments".     That property would have looked like a good rental on paper but would have been terrible in reality.

@Ryan V.

If this guy is a retired lawyer, I would DEFINITELY have my own lawyer look it over.    You likely won't have an issue but you don't want to get suckered by a devious lawyer who knows how to use legal mumbo jumbo to create problems later.

Yes, a Realtor will want, and should get compensation if you bring them into the deal.  I'm sure you can have the seller pay for it out of proceeds but only if you raise your purchase price to cover that cost.

I am not a lawyer but a long-time investor who has tried to learn a lot on this topic.  So, this is how I view things.

An LLC is NOT my first line of defense against getting sued. There are many layers .

1) Run the property right.   If I quickly repair all safety concerns and manage the property well, I will eliminate most issues.

2) Have property insurance.   I always get $500K liability

3) Have a mortgage.   While it may be harder for a lawyer to find out all my other assets, a paid-in-full rental property is an easy target in a tenant lawsuit

4) Have an umbrella policy.  I have an umbrella liability policy for $2M.  It covers anything over $500K and protects me against non-real estate issues like a car accident

5) LLCs probably come in about #5. Just remember it isn't enough to have one, you would have to maintain it correctly. Some of my friends also like to put a house in an LLC and then put the LLC into a master LLC. Personally, I feel comfortable having my SFRs covered by just items 1-4. Although apartments I always put into an LLC.

I suppose I could add an item zero.   0) Nobody is going to bother suing you if you are broke.  Think of it from the lawyer's perspective.  They sue to make money.  So, if you have limited assets right now, you probably don't have much risk either.

A Realtor is not necessary to close a transaction, but for newbies, they are often helpful to have engaged in the process as they can flag unusual items in the sales agreement.

Is the seller using a standard sales agreement or do they have something they made up or pulled off the internet?   I would definitely engage a lawyer on a non-standard contract and possibly even on a standard one.   Just make sure they are a lawyer who is regularly engaged in real estate transactions.

You didn't ask about this, but have you done full due diligence on the condo's HOA fees? Many HOAs keep their monthly fees low but have regular "special assessments" for big projects. You don't want to think you are getting $500/mo cash flow and then have a $6K special assessment every year.

If the PM is screening correctly an eviction should be a fairly rare occurrence.  In my SFRs I had only two in 10 years.   The biggest cost from an eviction will likely be loss of rents and turn costs.  I expect the legal costs in tenant-friendly states might be significant, but I would be surprised if your costs in Montana would be more than $1000.

Ask your PM what it normally cost them to evict a tentant

Answer: Happiness.

Amount of time varies.  If you buy it right, you may be able to have 2x the equity in your property as your down payment.  In that case you have an instant 100% return.

@Joshua Tikal

Every state is different and I'm not a lawyer.

In my experience, what the state wants is a location with a physical office in that sate so they can serve legal papers to someone. They usually like your personal address or the address of your attorney or a Resident Agent; I don't believe you can use a PO Box. The Resident Agent is basically someone that collects any mail for your LLC and forwards it on. There are many of them out there in every state.

In my own state, I have different strategies.  If I'm not too worried about privacy, I use my personal address.  If it is a property for holding an apartment, I don't want a savvy tenant tracking me down so I use a Resident Agent.

For other states, most require you have an address in their state.  In my Texas LLCs, for example, my Texas attorney acts as my Resident Agent.

On the other hand, I do believe that LLCs are over-sold to investors.  Most buy & hold single family risk protection can be handled by insurance.

Did your expense numbers include property management?   If you intend to do the work, that is fine, but if you want to run the numbers as if it were a business deal, include the cost of property management when analyzing the numbers.

Most states will require you have a registered agent in the other state, which typically costs about $100/yr. Some states require that your LLC be registered as a foreign entity and fees vary.

A bigger question is do you really need an LLC? What are you doing?