All Forum Posts by: Josh Layhue

I met with my lawyer about this and here is what he told me. It is more important to look at who is doing the work on your properties than who owns them. He told me this: In general, people are going to go after the person that did the work because it's easier to prove them negligent. So, if you do all of your repairs yourself then the LLC doesn't provide you much protection because you (as an individual) can be sued for negligent work. However, if you hire out the work or have employees it is most likely that the company will be sued. In that case, the LLC does provide you with protection because only the company's assets can be taken away in a lawsuit and not personal assets.

There is an advantage to having an LLC to protect your personal assets in certain situations, but be aware that if you are doing repairs then you can also personally be sued, which will require an umbrella policy for protection. That's what I've been told... I, however, am not a lawyer and can't be 100% sure about any of the facts.

There are also reasons to have an LLC other than just protection. These have been talked about elsewhere, but it is important to consider them... taxes, anonymity, etc.

I grew up in and invest in a small town. I think one of the major advantages is the possibility of huge growth. Of course, not every small town has a lot of growth potential, but every metropolitan area started out as a small town at one time or another. As many people mentioned, small towns also present some risk if a few major employers support most of the economy.

For sure. That's where I need to start. I just moved to a new area so I'm talking with other local investors to find out who I have the best shot with.

I definitely see that you save money in the long run. I'm looking to get started and pyramid up so I'm more interested in positive cash flow. I would think, if I can have positive cash flow with a 15-year mortgage that could be the best of both worlds, but harder to accomplish.

I have not... I'm not familiar with "quit claiming".

Yes, the small loan amounts seem to be the problem. No one around here wants to touch them. A few banks said they don't even deal with LLCs unless you are dealing in investments over 1 million... I'm far from that! LOL. Our company owners all have good credit and cash reserves as well as documented income. I guess maybe I need to push those facts a little more when they say they don't do 30-year mortgages for LLCs.

There are lots of lenders but all the ones I've talked to in the 2 areas that I invest (10 or more) consider the loans to be "commercial" since I'm buying under an LLC. They say that they don't do more than 15 years on commercial loans. Maybe my approach is flawed. Not trying to get off on a tangent, but I appreciate any advice I can get.

Mike,

I'm having a hard time finding a lender that will give me a 30-year loan on my investment properties. Should I run the analysis using what I'm told I can get (15-years at 6%) or do I just use 30-years at 7% to get a rough estimate of my costs? Probably a dumb question, but I figured I'd ask anyway.

I'm looking to get advice on the following potential deal:

2 bed/1 bath
Asking $32k
Needs about $3k in repairs
Will rent for at least $625/month
Currently vacant

I'd say the market value is closer to $45k-$50k. It's a foreclosure so I'm sure it will be bought "as is".

Any thoughts?

I will first look into subdividing like you suggested then look into the refinance. Thanks, Jon. Other input is still welcome.