All Forum Posts by: Michael Powell

James,

An LLC is a good entity for holding rental properties for tax purposes and asset protection. If you've had the properties for 10-15 years, you probably have some good equity.

You could hold both properties under one LLC and add other properties to it later or you could create separate LLC's for each property. Remember though that you're going to have to do tax returns for each entity plus set up separate bank accounts for each one and be sure not to comingle funds. It can get expensive and require a lot more administrative effort. I've had three companies before and now I'm relieved to just have two.

Everyone is different, but I think having 3-5 houses in one LLC is a nice balance between cost and asset protection. It makes sense to me to have a separate LLC for a larger property like an apartment building.

Consult with a CPA to see what works best for your tax situation.  

Hope my limited experience has been of help.

Mike

Linda,

If you can find owner financed properties, some owners will be willing to finance long term. The loan won't show up on your credit report and you can place the property in an LLC. Very likely, you'll need to provide a personal guarantee for loan repayment. Obtaining a conventional mortgage will affect your borrowing power in the future although you might get a better interest rate which may be worthwhile.

Network with members of the Realty Investment Club or Wealth Club in Houston and you'll be face to face with many potential private lenders.   

Monique,

Do you mean as a buyer of owner finance homes or as a seller who will owner finance?

I've purchased homes that were owner financed and they've been great.  Low down payments if you can negotiate it and sometimes the owner will even finance for 30 years.  There's so many possibilities.  It doesn't go on your credit score as a debt and your closing costs are lower.  

I bought a couple of owner financed properties with the help of realtors.  It's also easy to search for them on the mls by searching for properties with the parameter 'owner financing.'

One deal the owner agreed to finance for 7 years and then required a balloon payment after term was up, but that gave me plenty of time to take advantage of the relatively low interest rate and down payment and refinance later at even better terms when interest rates dropped.

From the point of view of someone who is selling a property as an owner finance deal, it may help them tax wise by not taking a lump sum and instead taking the payment over a period of years.  I've never sold as an owner finance deal but someone else can likely fill you in.  :)

Maua,

I found The Secrets of Power Negotiating by Roger Dawson to be a great book on negotiating fundamentals.  Actually, I own the audiobook, audio being my preferred method of learning.

Audible.com is a great way to find educational books and listen to them on the way to and from work or at your leisure.  I can't get enough.

Another book that was helpful to me (although not available on audiobook yet) is Building Wealth One House at a Time by John Schaub although it's not specifically focused on just negotiation.

Hope this helps.

Mike

Kyle,

Congrats on taking action.  I believe six months of cash reserves is reasonable, but you may contact a local mortgage broker to shop deals among various banks to see if there are some that aren't as stringent.

Mike

Gino,

Thank you for sharing your story.  It looks like your progressing on to bigger and bigger deals each time.  It's interesting to see how much a coach helped with your development.  I always had the impression coaches were just after a quick buck but looks like it's something I need to reconsider.  Glad to hear that you now have more time for your family and that you're doing what you love.  Great success story!  

Mike

Ankith, 

I'm also into cars so I know the temptation well.  Just think though with all the rental properties you'll have in the future, they may be able to buy you a nice company car!  Robert Kiyosaki always said let your assets pay for your liabilities and don't use your earned income to buy depreciating assets.

I'm also in the Houston area near Spring.

Best of luck!

Mike

Now that's what I call massive action!  Congratulations Nnabuenyi!  

Inspiring story, Brandon.  I've taken notes from your success and aim to be a more active member of the BP community by practicing what has worked for you.  It will help me as a business owner and as a real estate entrepreneur.  Thanks!

Jaden,

I'm glad I read your post and the comments afterward because I also had the same questions about going forward with commercial real estate.  Jeff and Howard presented some great ideas about partnering up with other investors.  I'm also in the process of doing the same to pursue my first commercial property.  

Wish you success!

Mike