All Forum Posts by: Dani Beit-Or

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.  

Hi @Shay Levy

Looks like you have many leads for good agents.

If you still need ones I have 2 that I have worked w/ for many years. Both run a PM co. as well.

Both have experience w/out of state AND out of the country investors, both have Hebrew speaking clients too. 

All assuming you are looking for SFHs in good/nice areas and not commercial properties. 

BTW,
1. I started investing in OKC in 2005 and stopped around 2014 and have suggested since to all my clients not to go there - there's nothing bad about OKC (I actually like it very much on a personal level).

2. You should also know there an obscure old law that may affect non-US citizens owning RE in OK (it may have changed years ago) that even experienced locals are not familiar with. 

BTW, if it sounds I'm anti-OKC - that's not correct. My personal actual experience taught me other many markets do/did better. 

Let me know if you need local resources and most important . . . good luck 

Few things

By now plenty responders commented about buying cash vs w/ a mortgage. IMO there is no right or wrong,  but what is right for you. ex, If you are someone who is looking to retire soon and need to put emphasis on cash flow (CF) it favors one strategy over the other.  

BTW, between all cash or a 20% down there is a VERY nice middle ground - 50% down - which gives you both a better CF while still leveraging - just an idea. 

As for your questions which seems to be mainly Austin vs. Nashville.; I'll assume you mean the metros of each and not the actual city. 

I know both metros VERY well. 

Few pointers:

Both metros are about the same size population-wise. 

Austin (TX) property taxes are approx. 2.5 higher than Nashville

Ins. rates are approx double in Austin vs. Nash.

Austin had appreciated in a much higher rate than Nash. in recent years. 

100k purchase price in both would be a crappy property. 

For nice good schools, middle-class area you are looking at 175k +/- in metro Nash and 250k+/- in metro Austin.   

All in all for many reasons Nash. wins, IMO.

That doesn't make Austin bad, not at all. There are many good things working in its favor. 

BTW, as someone who has been investing in all TX main metros sine 2004 I'd say if in TX . . . than Dallas and not Austin.

BTW,  what made you decide Austin and Nashville to begin with?

Just to be clear I live in CA not in Nash or Aus or DFW just in case it sounds I'm biased. 

One idea that came up is to record a lien. Even my own lien of a "fake" amount.

That will make it harder to take it or less attractive and the lien holder can be me.

100% safe/prevention - probably not.

Better than nothing on a free & clear - probably yes.