All Forum Posts by: Chris L.

If you are holding properties in your personal name you are unnecessarily exposing all your assets to a law suit if something should happen on one of your rental properties. By putting them in an LLC you are limiting your liability to the asset. I know people say you have insurance for liability but you are still putting the fate of ALL your assets at the hand of a insurance adjuster or judge who sides with the one injured on your property. In Baltimore we had a huge lead paint problem so it was just the way I was taught since the time I could crawl. lol. Having my properties in separate LLC's lets me sleep good at night. :-)

I'm not a tax guy so I can't address advantages/ disadvantages with that but I'd rather keep separate business and personal financial records anyway.

A simple written agreement stating that the investor agrees to pay you "X" amount of money if they end up settling on the properties you provide them.  Then get him to sign it with each address listed you pass along. Watch out for the old "I already saw that one when you give them the information", lol. 

Cheers!

Hello Geoff,

I'd say the biggest concern is the deal your getting. If you have a chance to buy a house at a discount, it will more then make up for a month or two of vacancy. You should always allow for a realistic vacancy rate especially in seasonal or student housing. Sometimes as high as 30% depending on whether the students empty out during summer months or hang around and you can get 12 month leases in place. 

Cheers!

Hello Leon,

Call me. I'd be happy to speak with you. We lend in North Carolina and 33 other states. We have great programs for every aspect of the real estate cycle including cash out refi's with only 30 days seasoning. I'd be happy to explain how it all works. Look forward to speaking with you!

Hello Ann,

An LLC is definitely the way to go. You title the property in an LLC but the bank will still make you sign as a personal guarantor for the LLC. Hope that helps.

Cheers!

A quit claim deed is fairly simple. Standard ones are available online. They need to have it notarized when they sign it. Whoever is receiving the deed will need to have it recorded. Its really that simple if the property is owned free and clear. 

If I were the one receiving the deed I would have a Virginia Title Company draw up the deed and record it once its signed since they will be intimately familiar with state laws regarding Quit Claim transfers. It should only cost a couple hundred bucks and well worth the good night sleep knowing title was correctly transferred. They will be able to do proper title and lien searches to ensure good title without encumbrances.

Cheers!

Hello Jason,

Most purchased mailing list are worthless. The odds of hitting an owner at the exact time they are motivated enough to sell with a direct mailing piece are very low. A more effective approach is to target a particular limited geographic area, preferably an area in an upward transition. Then mail smaller numbers of cards but more frequently. At least once a month which will establish you as the expert in the area.

1) Figure out total budget for direct mail campaign

2) Figure out how many pieces you can mail for that budget

3) Divide that number by 12 to figure out how many cards per mailing you can mail

4) Find target market area with turnover opportunity. (Seek areas under redevelopment where old owners are cashing out and new buyers are moving in for motivated sellers)

Just one way to do it that have brought good results for us!

Cheers!

The most straight forward way to structure the deal would be ownership through a LLC with the percentage of ownership broken down by investment.

300,000 Total Investment

250,000 Investor A Interest (83% )

50,000 Investor B Interest (17%)

Because you are managing the property equally but have different equity positions I would put a management fee of 10% on the property that is split equally between you and your partner. Then split the remaining profit according to equity interest as your ROI. Hope that helps!

Just one way of many it could be done.

Cheers!

Absorption rate is huge! How fast are the properties in your particular market turning over. What amenities seem to drive prices up or down. Know those two like the back of your hand. 

If you intend to wholesale you really need to know that info so you can make sure your ARV is realistic so you buy at the right price and leave room for someone who will be doing the work to make some money also.

As far as strategy there are a bunch but one I have used successfully is picking a market in transition and developing a direct mail campaign focusing on a limited area. I mail 6-7 times per year because you never know when someone is actually ready to sell. You have a much better chance of connecting with an owner if you are persistent rather then doing mass mailings hoping to hit that one owner who is ready to sell at the exact moment they received your post card. If you get 1-2 deals out of the targeted mailing area it has more then paid for itself. Then you can expand this strategy to different markets and track ROI on each individual campaign so you know your money is being spent wisely.

If you have not hooked up with an investor friendly realtor I would suggest doing so. They can help you compile market data quickly, educate you on the market and also bird dog for investments that fit your criteria. Best of luck!

Cheers!

My suggestion to you would be find a local real estate investors club and start to attend. There are like minded people looking to do deals and it is a great way to learn hands on how to get started. Try to find a mentor to tag along with if you connect with anyone. The detailed answers to your questions would be to much to write in one sitting. But I will try to do in a nutshell. lol.

How do I get my first deal in place? Pick an area that you are comfortable investing in especially if this is a long term buy and hold.

What questions should I be asking? You need to know all the details of the market you will be investing in. Since you are not as concerned about spread for a fix and flip you really just need to focus that your market is either stable or in an upswing, obviously the latter is better. You want to know vacancy rates, average market rents, what amenities push that number up and down and a minimum of 5 year financial projections. 

What should I look for? If you are a newbie with no construction experience I would stick to something that is cash flowing already. Also I don't know what your current housing situation is but I bought my first duplex at 21 and lived in the downstairs and rented out the upstairs. It was a great way for me to break into the landlord business while leaving cheap! You can go up to a 4 unit and get favorable gov't financing for owner occupied buildings with low down payments and low interest rates. 

I will tell you the buy and hold strategy is a capital intensive business. Things break, tenants turnover, people don't pay their bills but you still have to so make sure you have some cash in the bank for emergencies. If your light on cash you may want to learn how to wholesale or buy and flip first so you can get some working capital and a cushion. Hope that helps!

Best of luck!

Cheers!