All Forum Posts by: Dani Beit-Or

I'd say it depends on your personality and challenges. 

A good idea is to actually start w/ a series of questions to ask yourself (both) and self-map your position. Such as:

1.How much funds do I have?

2.What’s the source of the funds?

3.Do I have money in my rainy-day fund?

4.How free/busy am I and do I want to be actively or passively involved?

5.Can I get a loan?

6.What am I trying to accomplish?

7.What are my concerns:

•Vacancy, mortgage, will it go up or down, will it rent, can I trust the property manager

8.Do I know how to analyze a deal?

9.Do I understand the risks that are involved?

10.Do I have exit strategy/ies?

11.Have I set my investment criteria (baseline)?

12.Am I a doer?

Will I be able to pull the trigger when the time is right?

Once you have a better grip on the answers it will help you decide should you consider a coach or not. 

BTW, not all coaches are expensive and well worth the time saving, the guidance, etc.  

What @Ric Ernst said + where in IN, most PMs are local.

Sounds simple.

Have a meet w/ the seller and hash things out verbally. 

Present your challenge and build empathy. 

Say you plan to put your mom there.

Be honest and sincere and ask what is the seller looking for. 

If there's a gap you'd need to be creative to find ways to bridge the gap.

If you feel insecure to do such a deal hire a realtor to consult you in the background for a fixed fee. 

1st you typically need to have single property insurance.

Umbrella is simple and cheap and for that reason, I consider it a no-brainer. 

No Umbrella policy will cover you w/o property insurance. Umbrella's coverage starts where the property insurance coverage ends.  

The topic of LLC is more complicated and can be looked at from tax benefit and asset protection benefit and has a lot to do w/ risk-management.

While deciding on the LLC yes/no approach may take time and Umbrella is easy and you should not wait for one while you handle the other.

BTW, I am not an insurance agent. 

too vague and too many variables are unknown to assume one way or the other.

VERY generally speaking you probably correct but it is all specifics to know best. 

Option 1 - Buy a package of rented homes w/ rent history and fo to a commercial lender. Such a lender LOVES producing assets and "hates" to-be-rented ones.

Option 2 - Buy 10 120k houses

Options 3 - Buy 7 175k houses in nicer parts of town.

Buy as many as you can w/ no financing and others w/ financing. For example 3 cash and 4 with financing. This way you can reduce the # of mortgages during the 1031 to simply the 1031 process.  At a later time do a refi when all is calmer and relaxed.  

Buying multiple properties can be hectic as it is, doing it w 1031  makes it crazier. Reducing the # of the transaction make your life easier. 

As for part 1 - Can you, yes. If you have a residential mortgage will that create an issue w/ the lender - yes  

Lookup/search what "due on sale clause" (DOSC) means. It's in every mortgage docs. 

If you transfer to an LLC, does it mean your DOSC will be triggered? historically speaking most likely no, but no is not never.

As for part 2 - as much as I know there is no such thing as a limitation. That doesn't mean you want to transfer all your properties into one LLC

I'd say decide based on your main needs and associated fees.

For example, if you need to do many domestic and/or int. wires - make sure you find a plan that will reflect that.

If you think you'd need lots of support due to a great deal of activity find a relevant bank.  

Just be aware that cheaper properties tend to be:

Old and require lots of ongoing repairs.

Old and many repairs would cost more in order to bring the property up to code

Tenants from on the lower end of income that tend to have more challenges paying the rent

Higher vacancy and tenant turnover 

Higher frequency of eviction

Cheaper properties are more difficult to finance (for your future buyer) due to the higher cost of the loan relative to the loan amount.

Price appreciation is minimal

Many investors do not factor in the eROI (emotional ROI) which means such properties:

Will create more "noise" in your life

Require more of your time and attention. 

When you have a property that's every month has issues, and you are doing it remotely, in you mid you ALWAYS think someone is cheating me or taking advantage of the fact I'm not local. 

So while it may look like a great cashflow deal it may not necessarily be this way. 

Can I be wrong on all the above - absolutely? You can get lucky and end up w/ a good property and tenant and will have very little issues. But the odds are not in your favor when buying an old property in a not so good area. 

Are people successful w/ such properties? yes, mainly when they know what they are getting into and willing to "pay" the eROI - it is mainly a matter of managing/calibrating expectations. 

BTW, from my experience, if you can get a mortgage, and use the $55k as a down-payment on a nice middle-class community w/ good schools house, newer, nicer, attracts stronger tenants, over 10+ years of holding you will be much better off. 

BTW, kudos for taking a step, any step, and not just talking about it. for you, I think taking any step is better than doing nothing. So if you believe system and values tell you that the house you are looking to buy is the right thing - go for it and ignore my words. I'm speaking from experience (over 4500 properties) but there is more than one way to go about. 

Good luck. 

@Travis Fairbairn when I say Dallas I mean DFW.

I like DFW better as it is 3.5 times bigger economy than Austin which for me means much stronger and stable local economy. + the rent-purchase ratio in DFW is for the most part better than Aus.