All Forum Posts by: Guy Yoes

Did you look at doing a 1031? If you had it more than a year (in some cases less) you can trade out the property for another and defer cap gains and depreciation.  Look up Dave Foster on here. He is the 1031 Guy!

good luck

I am mentoring two young associates who are interested in starting in real estate. I advised both to house hack. It is the best way to get started. If you buy SFH you have to put 20 to 25 % down plus closing costs. If you buy a duplex you get qualified as a first time home buyer. This is the cheapest way to get started (outside of mom and dad funding you).

You can write off your taxes and insurance plus any improvements you make.  Good luck.

@Mike S.

@Michael Plaks

Okay, I verified with the attorney that the Property management does not own the other LLCs but has a contract with each for management. Each property  is treated as a separate and distinct entity from the parent. I had misunderstood our conversation. I am also going with 1 account for the prop mtg company. As stated, it would be easier 

thank you both for your input and time. 

@Michael King

@Michael Plaks

@Kathleen D.

After consulting with my attorney again, this appears to be the best way for me. My parent company (prop mgt) is the owner of my four duplexes (soon to be five). Each duplex has it's own accounts, two for each tenant. One account is for deposit of rent and the second for escrow (deposit) because that has to be separate from the rent account. The rent from each account will flow to the parent. 

If there was only one account for all the rents, that would co-mingle the funds between all the duplexes. It could possibly be viewed as co-mingling if a lawsuit was initiated. 

The parent company as owner recovers the rents and pays the expenses for each property. I am listed as manager (not owner) for each account. Those funds are then funneled off into another investment not owned by the parent company. This keeps the funds in the both the parent and child account low enough that no attorney would spend time on a lawsuit (if it were to happen).

It may be a bit of overkill, but as I add more properties and grow the business I will already have a working system. The properties I manage will be in a single account and the funds collected will flow back to the prop owner in short order.

Thanks to everyone for your time and comments.

@Michael Plaks

Thanks for the input.  That's pretty much my plan. I talked to my banker and set up the property management company and will list each property under that. I'm setting up quick books and can list each property (account) under separate accounts.

Thanks again for your impute.

I set up a parent LLC (not a series) for my properties (each have a LLC). I have a separate acct for each door. Each account has a checking and savings. the savings is for deposit escrow. If I move my rental income to the parent LLC is that considering co-mingling?

My parent LLC is set up as a management company and I am using it as the owner of the rental properties. I an thinking that using the parent to pay the bills, taxes, insurance, etc will give me another level of distance in case of a lawsuit.

I am listed as manager of all the LLC's and will pay myself from funds transferred to the parent. This will allow me to keep only a small amount of funds in the child LLC's .

Am I piercing the veil with this process? Is there a better way to do this?

One idea would be to find a nice 3bd/2bath in a decent area and rent out two of the rooms to friends. They could make the payments and allow you to increase equity while building reserves. It would be a long process but you would learning. Slow and steady allows you to take one step at a time. You will set backs and success. Learn from the set backs and build on the success

@Sharon Steenbergen

Sharon- Sounds like you have a plan and are working it! Are your properties mainly sec.8? I surmise so by the price range. Does this effect your ROI? I have heard section 8 pays well compared to prop value, but also has higher expenses and vacancy rate? To what extent are you involved with your team and properties? Hands OFF / Looking over the shoulder/weekly contact?

@Stephanie Jones

There has been some discussions lately on turnkey operations. Some hot terms associated with Turnkey's are: Ethics/value/client oriented/ communications.  Like in many industries, a small segment's actions can impact the reputation of the whole collective. How would someone like myself, looking into OOS properties, educate myself on selecting a turnkey company? Yes, reviews can be helpful. But are not always easy to verify. 

George and Sharon appear to be very please with their team, and Caleb stated that they can offer value to some investors.

I'll open this up to any of you, what are the red flags to look for in a PM company?

Have a blessed weekend ;-}

First. Dave Foster is the 1031 GUY. There is no one better. He did 2 for me last year and I am glad I used him.

Second. I'm from Oklahoma and now live in Springfield Mo. I sold all my properties in Tulsa and moved my business to Missouri. Why? Because the properties in Tulsa, OKC and associated areas are now way over valued. This is due to a large number of OSS investors driving up the prices of properties. What they have yet to understand is that the income and rents in Oklahoma have not changed. 

The last property I sold in October of last year (in Tulsa) was for 123,500.00. I paid 78K for that property in 2015. The property rented for 900.00. I made money at 900.00  It will be difficult to make money on it if you pay 123,000 or higher.

Please understand this. 

1. Income in Oklahoma is stagnant. Wages are low and will not increase much over the next few years.

2. There is no housing shortage in Oklahoma. There are plenty of houses for sale and rent.

3. The only people selling houses are landlords. They are getting top dollar and eager to sell.

4. Why? They are betting they will buy the houses back  at lower prices because OSS people will not be able find renters willing to pay higher rents.

How do I know this? I owned properties in Tulsa and sold my rentals in 2019 for 30-40 % more than I bought them for 4-6 years earlier. 

Do not buy the HYPE! Do your research and talk to local agents. Don't buy when everyone is buying .  Buy when and where everyone is selling. 

@George Pauley

Sounds like you have a plan and it's working for you.  Thank you for sharing.