All Forum Posts by: Garrett Cannizzo

@Corrie Winter

This is certainly a liability question so it is best directed to your legal counsel. That said, I personally keep all of my properties in separate LLCs for this exact reason. With that in mind, depending on your level of involvement and how many properties you have, it can add a lot of administrative work and costs to have a separate legal entity for each property. Another option, depending on what states you are operating in, would be a "Series LLC", which can allow for separate legal protection for each entity (and you personally) and save on the administrative work and costs by having all of the properties roll into one. As mentioned, you should definitely consult your attorney to figure out what method is best for your individual situation and risk tolerance. Good luck!

@Laura Guy

As both a Hoosier resident and investor, I understand your goal of attempting to improve the perception of landlords, but respectfully think you are wasting your time and money trying to accomplish it in this way. I personally think your energy/resources would be better served tackling the issues of moratoriums, leading by example of providing quality properties and fair tenant experiences, etc. rather than virtue signaling by utilizing new phrases that likely won’t have any impact on public perception.

I also agree with previous comments that I as a landlord am not a “provider”, but indeed a lessor. I provide for my family and transact with my tenants (both as fairly and professionally as possible at all times). In a quick google search the secondary definition of the word provider yields a definition of “breadwinner”, which seems extremely inaccurate given that my tenants earn their own money and provide their own housing, I simply lease it to them. In my opinion the term “provider” is somewhat demeaning to the dignity of my tenants who provide for themselves. As someone who used to be a tenant, frankly, I find this phrase to be offensive.

I truly wish you good luck with your objective of shifting the narrative, but I disagree with the means of which you are trying to accomplish it. I will be sure to contact both my state representative and state senator and express my opposition to this endeavor.

@Christian Walker

I am trying to put this as nicely as I possibly can. Larger real estate deals are very often made up of an investor (or group of investors) “money guy” and an operator. The money guy is typically silent and provides all cash, while the operator is responsible for literally every aspect of the deal. Often times these are structured as limited partnerships. I have seen dozens, maybe hundreds of deals structured this way. The operator generally gets lease bonuses, operating income bonuses, etc. that said, in my experience, the operator’s share of equity has never once been higher than 8%. Obviously every deal is different and I don’t claim to have seen every deal, but your proposal is out of market and if I were your dad, purely from a business perspective only, there is no way that I would ever entertain that deal.

@Alexander Szikla

I am assuming that you are traditionally compensated somehow for essentially being the intermediary?

All,

I really appreciate your input on this. There have been a few good themes throughout the responses that I would like to address all at once.

1. Some variation of rent to own. I have certainly thought through this alternative and is something I am actively considering.

2. Can the tenants afford this or obtain the necessary financing? While this is a good question, I suspect it won’t be an issue given my tenant vetting process and the jobs that the couple has. Also, in my opinion, this isn’t something for me to really worry about. If they can’t come up with the cash, they don’t get the house and my decision is made for me. That said, this does raise another question: if they can’t obtain the financing externally, why would I want to provide the seller financing?

3. Opportunity cost: a few of you mentioned the deal only makes sense if I can find something better. This is an excellent point. I have certainly thought through this, and this is probably my biggest hesitation for the deal. I have really struggled the last 8-10 months to identify deals that meet my criteria in my target investment area. I fully anticipate this struggle to continue unless I start looking in new markets.

Thanks again for all of the helpful thought leadership on this, I appreciate it.

@Alexander Szikla

I appreciate the response. I’m not familiar with the concept of a wrap around mortgage. I will certainly do some homework on this concept. Can you give me the cliff note version?

@Aigo Pyles

Currently, this is my only property. I have had as many as 4 at a given time and generally had pretty good success, however with the significant appreciation in recent years, I have liquidated, most recently selling a longtime farmland investment this past summer. I have struggled to find additional investments in my target area that meet my investing criteria which is furthering my concerns about selling my final property. Obviously, the deals will eventually come and patience is critical, but I would prefer to deploy my investible capital sooner rather than later, which is proving difficult.

@Sean T.

Sean, you are exactly correct and the numbers should drive the decision. For a little additional background, I have all but liquidated my RE portfolio due to the run up of property values far in excess of what I ever thought they would be worth. That said, I have been struggling to find new deals that make sense, which is my primary hesitation. Thanks again for the perspective, I appreciate it.

@Theresa Harris

There is always an appeal of cashing in a guaranteed profit, right?

Finding new tenants is costly. I often find a bird in the hand is worth two in the bush. I would suggest keeping the tenants in place at their current rate assuming you are cash flow positive as you mentioned. Keep taking checks to the bank from good tenants as long as you can. Once they move out, then you can raise rents on the new tenants assuming the market supports it.

Good luck!