All Forum Posts by: Irina Belkofer

@Joe Splitrock I was exaggerating because we are talking about $1M net worth.

If we get real life examples for real people, there is plenty of net worth millionaires because they have paid off houses, 401-K's etc - they worth a lot but no cash flow.

Off course, capital gains count too, in Cali it's a major consideration, but no cash flow.....and with all that net worth people have to live and work and keep saving in 401-K.

My second part is about controllling assets which is not really your own net worth: for example, if I have $300K in debt with today's worth $450K of real estate (also including my primary residence, which is not income producing), but I have cash flow of $5.4K per month after expenses, it's still better than $150K sitting in bank and producing nothing.

Net worth is like a balance: it shows only today's net worth. If market crashes tomorrow, it will drop to 40-50% today's number. Cash flow is like income statement: rents won't disappear over night, people do live somewhere. It might decrease as well as vacancies, but it still will support your living expenses.

Small real life example doesn't connect to %%, terms etc but it shows the same: net worth alone doesn't tell you the whole story, it needs your P&L as well as cash flow statement, to estimate who is wealthy and who's rich in paper only.

BTW, definition of accredited investor includes not only your net worth(excluding primary residence) but also your income.

 By definition that might be true but in real life it might be very misleading.

Here is two opposite scenarios:

1. House paid off in California as a primary residence $1M - no cash flow and the only asset (potentially could be sold, off course)

2. Highly leveraged rentals somewhere in Cleveland 5% down 200 houses each worth $100K. Net worth $1M, NOI=$1,440,000/year (30 year fixed, 3.5%, $95K each House; with $14.4K gross income - $1200/mo rent, free cash flow $7200/year each). Ok, %% is arguable but generally numbers are ok.

Where would you prefer to be: net worth wealthy or cash flow wealthy?

Windows usually the easiest part of rehab: don't measure yourself though, let contractors handle it.

Some window factories do it together with labor, $10-15 more expensive but fast and no hassle.

I usually go with my contractor, especially when it's few windows. Here it's $160-180 per window with all labor.

Replacement needed not only for esthetic reasons or better insulation: city requires to replace old windows when you buy property (POS) or on Rental inspection. We have to pull permit also do the city will inspect the proper installation.

Disagree about low ROI on windows: it's hard to rent a house with old windows leave alone for a decent price.

It's like appliances: the more you have, the better the price and amount of applicants.

 That's not correct. K&D as well as other big LL file eviction on the 6th - their due date on the 5th.

When tenant pays, they dismiss the eviction - it called civil dismissal.

If there is forceable detainer, yes, that the real eviction, but very few people have it. Most of the tenants don't even know they have an eviction - they never get evicted, just paid couple days late.

Also, it doesn't rake that long to get your property back. You post 3 days notice in the door, on 4th day your lawyer files in the court, the hearing might be in a week or so, after that couple weeks given for them to move.

So, it's a month and if I take first and last month Rent, it's covered.

Most tenants don't want any evictions, so they might leave but still pay till the end, letting me find new Tenants to avoid early termination fees.

When you have 1000's units, it's hard to see people behind each application. But when you talk to people and see their why's, it's not so complicated. I filed eviction only once and only because the owner get involved....BTW, thesetenants didn't have prior evictions.

When I consider people with evictions, usually it's not their fault (I verify that), they put Sec dep, first and last month Rent and they do have at least 4 rents income/month.

So far, all of them lived through their 2 year leases, some still staying and never had late payments. 

I don't ask Tenants to leave - I talk to them if they still can afford rent and if something happen (lost job, health problems etc) I offer them to find a replacement if they keep property in Showing condition and we part peacefully.

If the owner doesn't lose money - they won't too.....that's the incentive for them to cooperate and leave the property in the best condition 

 Unless they left you bed bugs and flooded the house when get evicted.....then verything go to a dumpster

Unless you create an LLC as a corporation, it won't make any tax difference.

Your LLC is disregarded entity for tax purposes, if it's single member and if it's partnership - K1 schedule is still pretty much won't get you anything.

If you pay yourself a salary and create C Corp, then you really have to count benefits: there is break even point before which you'll lose money.

I'd discuss it with your CPA before you open an LLC.

It not that expensive in Ohio ($99 to open, no maintenance payments) but it won't protect your assets....as it was stated before, in case of litigation, you'll have to show your personal tax return, where all your LLCs living :))

Partnerships in K1's, rentals in sch.E, managing in sch.C etc. The only reason I'm using LLC's is identity protection.

When you file any paper with city or county, you don't use your SSN as an owner but rather EIN of the LLC.

Also, the info of ownership is public in Ohio: you don't want every tenant to know that you own tons of houses.....especially if it's free and clear......that's when people want to think how they can take you to the cleaners  

@William C. I'd say it's quite time consuming process to analyse the property.

To get an ARV, you have to get all comps, go through them to see the pictures if any (and many agents delete pictures ones it's sold), drive by and see any pros&cons of the location etc.

If it's a listing on MLS, you have to see insid and estimate the repair values (given that's not your first time and you don't need some contractors). If it's off market listing, you need to meet with an owner to estimate the repairs as well.

ARV is basicly a market value as of today and can fluctuate seasonally and even considering changing in economy (for example, properties around Amazon distribution center don't get sold that cheap anymore as it was just few months ago).

If someone randomly trying to low ball owners without knowing the market, it's just kills his business

IMHO

I think you might create a system in quite small location where you can remember all sales, rents, know it on the streets basis. If you're analyzing properties randomly - it takes more time.

I work in very small location and check every day new listings (sale&rents), what was sold, price and terms. I do drive around to preview listed properties(MLS) and if I'm buying off market, I know what's it gonna Rent for or flip or how much the repairs cost

 It's not a strategy at all, more of that - it hurts your reputation as an investor.

One of my client has an amazing saying:"don't send a boy to do man's job"......every time I try to persuade him to decrease his offer, he answers me like that....lol

I like low balling and it does work sometimes but even low ball has to be reasonable: you give the comps, repair costs and everything should be reasonable....especially when a seller is OO. Banks don't get offended on any offer but even with them you can get cut off and won't get a counter - they will work with a serious buyer.

This thing "5 offers a day" keeps your purchased properties away.

 I think it's not real offers - these are low balls or even lower.

You can do 100's per day - highly unlikely anything will be accepted.

If there is any reasonable offer was submitted, it would be already accepted.

Even in low ball offering it's like 1 offer on 10-50 is accepted, depending on how low.

It's not 2010 anymore

It's not customary in Ohio. When you submit an offer, agent will sign an Agency disclosure and still will receive the comission in the sale, which he's the procuring cause.

Some states do it all the time (PA) but here the exclusive buyer agreement usually used for off MLS properties (when seller doesn't pay comission, auctions where buyer pay comissions, short sales).

Everything from MLS is already regulated and doesn't need exclusive buyer agreement