All Forum Posts by: Gordon French

If your the accountant and don't want to use the classes then I see no reason to use them. I had each house set up as a company and then used the classes for the tax categories. That was a mess

I then tried making a class for each property and one company. This was much better. I want to see the year ends for each property to see what houses are working the best. It gives me more info when buying the next one. 

But I am sure there is someone better to answer since I trashed it all and wrote my own accounting program. I truly hate quickbooks as a developer and as a property manager. 

Worry about nice later... Nice guys finish last. 

Get that property locked up in a contract and then deal with the hurt feelings. If it was me I would just pay me agent a commission for finding it She would be very happy with that and would fully understand. 

I hate quickbooks.... It was a total mess for my property management.

Anyway... ask your accountant. Mine helped set up the classes the way she wanted for free as it saved her a lot of time at the end of there year. 

hmm.... why? Im missing something. 

If the interest is 18% on the Line of Credit and the interest on the home is 4.8% then don't even think about using a line of credit for that. Take the money you are going to use to pay the line of credit and just apply it to the mortgage. 

Some where you are getting the funds to pay off the line.... To me you can pay the mortgage off faster at 4.8% then at 18%

As for the tax side... The line of credit interest might not be tax deductible. That law changed this year and I would have to speak to my accountant. 

18% what the hell... that is insane and might as well be a credit card. You should be getting 6% to 8%

I did it... basically

I took out a line of credit against my home. I then used that money to purchase homes. I would get the home bought and then take out 80% in a mortgage on the home and put that money back on the line of credit. 

I soon learned it it was less cash out of pocket to just finance the home at the time of purchase. Less fees. Many of the fees like title work has to be paid twice. Once when you buy it and once when you finance it. 

Next... I didn't get lower rates. I got the same business rate rather I financed it at time of purchase or later. If you can get low enough rates to offset the loan origination fees and title work then go for it. 

I closed the line of credit. I now have about 8 mortgages on my home. I pay 10% down, then put a lien on my home for 10% and the remaining 80% goes on the actually rental property. My bank is good with this till I run out of equity in my home. I only have one mortgage payment... there isn't actually two loans. Just two liens. 

My town is hard to research in that the is pretty much never a home for rent. They rent in hours. Not Joking. My biggest issue was learning what something should rent for, 7 years later with 11 homes I am kinda the go to guy in this little town for rental rates, at least in my circle. 

I went old school. I asked... I talked to everyone I met. I asked them if they were renting and what they paid for in rent. Explained I wanted to get into real estate. Every house I looked at I talked to the current tenant if it was a rental and they were very open about the rent and what they didn't like about the property. 

I joined a good local Church, as I am a Christian and started networking. I met other investors and got there feed back. 

I joined the local chamber of commerce to meet more people. This really opened doors to a few other investors that were happy to share there experiences. 

I ask my tenants. You would be surprised. I have a few that have told me the rent is to low. I left it low in there eyes because they were the dream tenant that pays on time and takes great care of my home. I want them to stay and don't care about $25 a month if they are happy. 

It took time... I took some risks... and it all paid off. 

I did none of it online as Zillow is a joke when it comes to rental rates in my area. Strangely the local real estate companies did not know much about rental rates as they sold them and didn't rent them. I found more often then not they were to low. I'm pretty close to a few of the firms and they come to me now asking how I get such high rents. 

If your loans are 7% will you make an ROI of greater then 7%?

Its kinda simple math to decide the best approach. I own 90,000 is student loans and have 11 properties. I don't give a flip about the student loans as they range from 2% to 7%. I do make additional payments on the higher interest ones. 

My 11 properties average a ROI of 14% not counting the fact that I will own them free and clear in 15 yrs. I will keep my student loans at the 30 years and invest in everything I can that makes more then they cost. The homes will easily pay off the student loans once the house is paid for.

I would not put money in stock that might make 7% when I owed 7% in student loans or 21% on credit cards. That is a bad investment at that point in time. 

You need to review there leases. My leases are terminated if a property is sold but not all states allow that and it likely has to be in the lease. I do not think you can force the seller to remove them. At best I think you have to take ownership, give 30 day notice and not renew there lease. Process will likely take 60 days to get them out. 

You can require a copy of all there leases be sent to you before closing. 

The company account also separates your personal assets if you were sued or audited. My bank insisted that I not mix funds for legal reasons. I guess when sued a shared account ties the assets putting your personal funds and assets at risk.  

I joined yesterday... I haven't seen much on vacation rentals and actually started a thread asking about them.