All Forum Posts by: Dani Beit-Or

In the ideal scenario:

1. You qualify for a mortgage 
2. You find the house
3. Make an offer (+include your pre-qualification letter)
4. IF/when accepted - during the inspection period you bring GCs to give you bids 
5. Based on the bids and an inspection report you can determine what to do next - proceed, terminate?

If you plan to live in it why do you need a property manager?

Few suggestions:

• Make sure you have a scope of what you want to be done in the house before you bring GCs on site
• Try to have a longer inspection period (14 days, or more) you will need it to have time get GCs and your scope.
• These days on a new listing 14 days inspection period is VERY long - maybe try to tackle houses sitting on the market longer.
• Hire a project manager and/or a designer to work with you - unless you carry that ability or doing a lower-end home. 

There is much more to it but wanted to give you some direction. 

@Bao Chau Tran after 16+ investing years and 4500 transactions I'd say you can either use a prop. manager or manage yourself. 

If you use a PM they collect the rent.

If you self manage you can use diff. methods to collect the rent from the tenants such as Venmo, PayPal, e-check, regular check, and other online platforms that assist w/ such. 

If using a PM all calls directed to the PM.

If you self manage all calls/texts/emails will be directed to you to handle. How to manage such calls/issues is a whole other chapter in the book. 

VERY VERY tricky and risky. 

I asked myself this Q for many years, and so far was unable to find a minimum risk method to do it. 

From my experience there could be two reasons why you would consider using LLC or not:

Risk/liability

Tax

Over the years I have noticed many attorneys who want to sell their services and products put fear into investors, especially beginners, about investing only through LLC.

From a tax perspective, I would suggest exploring this conversation with a tax expert.

Former risk/liability perspective here's how I would approach this question:

Let's say you invest inner lower and property with a higher risk of issues, say the cost of the property is $50,000 and you anticipate high potential risk class you're buying the property for cash. 

For me, such a scenario that has higher risk I speak to it and no mortgage is a classical case to consider using LLC. I would see the loc as another layer of protection in My overall protection skin such as insurance and maybe even umbrella insurance.

Now let's take another somewhere you. Let's say you're buying a nice middle-class rental for 200,000 and rent it out. And in this case, you actually want to use a mortgage. In order to obtain the amazing mortgages we have here with the Amazing Race, I should say super-low rates, the bank he's not willing to lend to an entity only to an individual.

Now, is there a work-around for such case? The simple answer is yes, you could quitclaim the property from yourself 250. The more complicated answer is if you do quitclaim the property you will be in breach of the mortgage agreement in the bank May exercise the due on sale clause.

The third scenario would be to buy commercial property using commercial lending any such instance buying and financing for an entity is quite common practice.

So, coming back to the beginning of this answer it's all about the type of investment you're looking to do and the risk involved in doing so.

I do want to share my two cents on the matter. Please allow me to say that I've been investing primarily in rental properties for the past almost 20 years. Any my career I've been involved in more than 4,500 transactions buying rental properties in more than 50 US metros. What it sounds like I'm trying to show off, I'm only trying to bring some credibility to my writings.

For the past 10 plus years every time I speak about real estate investing I get asked about llc's. Every single time. And before I answer no matter which room I mean I'm always trying to find out who has a story to share about how the LLC saved his investment or not having one hurt him. I have probably asked this question more than 200 times on 200 different occasions.

Today's date I only have one story but someone told me about their experience, it to keep it short duck couple were sued by a person who cross their front lawn, off the rental property, and broke his leg. The person sue them for $50,000 and their insurance scheduled on $25,000.

The reason I'm telling you this story is to show you that such stories are rear. I'm sure there are stories out there but the fact that I am unable to find such stories, and I'm really really searching for one, tells me there is more motive by attorneys tell us fear stories than the reality actually is. Once again I'm sure there are more stories out there.

Full disclosure I am not an attorney and I hope you will use it's not common sense at least approach legal advice on the matter to make the best decision to your specific situation.

Good luck and Happy Thanksgiving

I'd add 

Vandalism clause (could be done by a tenant or as a result of a breaking)

Thefdt/break-in

Water damage due to pipe bursting (freezign) 

I don't think the 27k is a write-off, it is an investment/equity.

I think you can write it off if you lose your investment. 

Speak to your/a CPA for the best answer. 

This is a legal Q and best to spend the 1-hour att. fee for a consultation. 

But I fully agree with @Lien Vuong and see it all too often - BEST focus and use of time is finding a deal not on LLC this or that - a Q that can be easily answered by an att.

Price varies based on the simplicity or complexity of the system. 

Most are inexpensive.

I'd do the following: 

Option 1: you pay for material tenants installs (if the tenant can) 

Option 2: "Hey tenant, I was not planning on spending . . . but how about this - we split the cost of it?"

I have done many many many transactions as both seller and buyer. 

As a SELLER I have to say I hate that there is such MLS regulation that specifies, at least w/ every MLS I worked with (many), that once a property goes under contract MLS statues needs to be changed to "Pending" or "Contingent"

Am I the only crazy one here who is annoyed by it? 

We all know that buyers don't shop pending homes. And if 20%-25% of deals fall through sooner or later I would like to keep showing my for sale house and build a backup list of buyers.  This will empower me when buyers are playing "tricks" of delaying and asking for more things or dragging their feet. 

This MLS regulation really both weakens my position and causes me to lose time and $$$ in case a closing doesn't take place.

Does anyone feel the same?

Have you seen something different?

Is there a way around it? 

do a month to month lease