All Forum Posts by: Mike Makkar

Hi Andrew,

I purchased a property 2 weeks back with 16.66% ownership among 6 people. My sister in California is one of them. This was done with an LLC and an operating agreement. What you can do is create a new LLC with you holding 25% ownership structure and you can sell the property back to the LLC.

Hi Matt,

I've been doing this type of fractional ownership with my existing rentals in the DFW area. I'm interested in ideas to streamline this further

-- Mike

I have a couple of properties in DFW (2 duplexes and 3 SFRs) with fractional ownership with out-of-state investors. We are doing this without a loan or a mortgage on the property. This keeps ownership clean.

I am doing this with a couple of investor friends on some Single Family Residences. There aren't too many tools to manage this, but I'm seeing more interest for this among folks.

I am managing a handful of properties that are under fractional ownership between 3-5 investors (under an LLC). I maintain primary ownership/management at 30% to 50%. The rest of the investors are at 15 to 20% ownership. Are there good apps where everybody gets visibility into, tenant review, expense tracking, lease review etc.

I have put my portfolio on Stessa but looking at something that is more scalable with strong LLC and legal formation articles etc.

--m

@Edward Mccracken, I try to get my tenant to do the paid background check ($15 for criminal and $20 for credit check). However, there are several cases where charges get dismissed due to poor landlord documentation or the tenant being more familiar with tenant laws, we as landlords may have to do better due diligence. Infact some tenants are more familiar with these laws than lawyers, the "professional tenants" and their mischiefs may not show up in the background checks. 

I try to do a court record search in the 4 surrounding counties of where I have my rental. This takes 15 to 20 minutes. All we need is their last name. The more of this you do, the faster it becomes. Standard websites and web searches. I also make sure I do a proper reference check of previous landlords. An hour invested here is better than having to go through 2-3 months of lost rent and eviction costs.

@Vitaliy Volpov, I have portfolio of 12 rentals which is similar to your portfolio. This is what I have for my rent collection.

• 4 tenants on automatic payments with cozy.co (pros: slick interface, integrated tenant screening cons: 7-day delay to get money)
• 1 tenant pay using paypal friends/family (pros: faster than cozy, but extra management)
• 3 tenants on automatic payment through Section-8 Housing
• 3 tenants go to BofA branch on the first friday/thursday of the month and make a cash deposit (cash deposits makes it available immediately). These tenants don't have proper bank accounts
• 1 tenant has given me 6 post-dated checks for six months out. She doesn't have a BofA nearby

I plan to increase my portfolio to 30 in the near term and I would streamline everything over to cozy.co or maybe even buildium. I've noticed that only Class-A/B tenants can have a cozy.co like system. When you diversify to rent to niches (student housing, group homes, section-8), this system may not work too well and we may have to resort to other types. I'll probably get an account with Chase and Wells-Fargo just to accommodate the few folks without BofA branches and pay my contractors with Chase/WF accounts. 

@Will F., As explained by @Nathan Gesner, since tenants are responsible for utilities, solars on rentals don't make economic sense for a traditional rental approach. However, in certain niche rental models; student housing, short-term corporate rentals or senior living where the landlord takes on the burden of utilities management (for a higher than normal rental rate), then solar could make sense. You also need to keep the house around for longer than 12+ years (or whatever the solar payoff period maybe is). 

I do think there are lot of innovations that are coming here, especially with the panel technology, battery storage, power delivery etc, where you could find ingenious ways to save costs and pass some of those cost savings to the tenant. And of course, if economics is not the only play, there's the environmental factor that is good for our own conscience and could be marketed to a tenant who cares about this stuff.

One good thing that solar does is, whether you decide to go solar or not, is that you will be on a path to make the houses more energy efficient; better weatherization, stop leaks, better insulation. All in all, its goodness!

@Clay Smith, thanks for this data!

I have several scripts written to pull data from various websites (including Zillow) to alert me whenever rental rates, zestimate and inventory changes drastically. Now only if I could automate the jobs information and housing/multi-family permits a little more, this could be fine-tuned even further.

@J. Martin, my philosophy with crunching data with global evidence is how it can be used for local decision. Just in the Texas market, we have oil heavy territories (Houston, West Texas), Tech-heavy (Austin) and corporate-diversified (Dallas). And within the regions, we see swings in rental downturns and upswings, due to local economics. 

I try to track data at a local level (zip codes) on properties that I own and for zip codes in the properties that I plan to own. Granted the data may be anecdotal (number of future jobs) and sales comps & rent rates, but they tend to be more reliable that global data.