All Forum Posts by: Izabella W.

I've been operating with 3 LT rentals for a few years now (both me and my business partner are listed on the deeds) and it's been ok except for a few issues like being able to get loans and such (we're both responsible for all liabilities), taxes are a bit of a hassle, etc. I am considering transferring the properties to a LLC so we have more control over our personal income (take distributions as we need, etc), have more borrowing potential under our own names (liabilities would disappear from our personal taxes), and have more protection. I'm just not sure it's worth it, it sounds like a hassle (transferring properties, getting everything set up again, etc). I'm not even sure where to start, where to setup the LLC, how to transfer the properties (do I need to sell them to the LLC?), etc. What are the ramifications of this, what if one day I want to live in one of those properties, how easy would it be to transfer it back to individual ownership? What else should I consider and do you think this would be a good idea? Thanks for your input!

There are property investment loans that are based off of future income produced instead of your income and credit. It's been mentioned on BP before but I don't remember the names of the institutions that provide those loans (perhaps a search would yield some results). If you're living off of your rental properties and have been filing your tax returns with that income, you could use your tax return. If you haven't had to file your taxes with that income yet, there are some lenders (i.e. credit unions) that might work with you if you provide copies of leases.

@Edwin De leon

I'm also in a tenant-friendly county & state; this scared me at first but I learned to throughly screen my tenants.  In the few years I've managed properties, I have not had any tenants that haven't paid (knock on wood); and in that time frame, more tenant-friendly laws were passed. I've come to the conclusion that I'd rather have empty properties than to place a tenant I wasn't confident about. A multi-family building poses additional challenges as tenants tend to talk, so you need to be very careful with what you say and what you do. If you let one tenant slide on something, chances are that other tenants will find out. Everything is scary at first because we are not familiar with it but after a while we get more comfortable. Plan ahead, stay organized and you'll be fine.

I'd say it depends on your friends (only you know how comfortable you are with them). I have a different thing for you to consider.  I'm starting to see the market slowing down a bit (maybe it's just my market) and I saw the same stated on business news. Have you considered what would happen if the market turned to a buyer's market in a year? You might loose some money because your friends will be renting at half market value for a year and if the market turns, you might not be able to sell your property for the amount you could sell it for now... That might also mean that if your friends are not prepared to buy in a year, you might get stuck with them (and you won't be able to double their rent).  Something to chew on.  Good luck with whatever you decide.

I manage a few condos in the south/west suburbs and agree with @Quincy Lockett.  My potential tenants usually have bad credit, work minimum jobs or cash jobs and don't meet the income requirement but will complain about the unit not having an island, or no central air/garage, or a neon green bath tub (everything else was remodeled).  The IL government needs to work on lowering property taxes and then the rental market will come down.  Tenants don't know/don't care how much we're paying in property taxes but they expect high end apartments for a lot less than it costs to maintain them.

I have a good roofing contractor I can refer, I don't get anything for referring him but he's done 2 buildings I manage and 1 building on the block because I referred them.  One roof has 12 years on it already without any problems.

That is strange and like others have mentioned, I would find another agent.  I don't understand how that would make sense... # 1 I did the same thing and got a landlord policy in place right away (without a lease and my agent knew the unit will be vacant until I do repairs); #2 If what your agent stated is true, let's say you find a tenant, in a year your tenant moves out and it takes you 2 months to fill the unit (hypothetically speaking), are you supposed to call every time your unit is vacant and switch policies? 

My agent told me if and when something happens, I'll need to produce a lease, unless of course the unit is vacant at which point I cannot claim lost income but all other coverage is in place.

There are always unexpected things that happen with remodels, I have not heard of one flip that was finished on time and on budget.  If you're willing to risk everything you have, go for it.  You will not know if you do not try.  I like to have options so I'd get another job before taking on a flip knowing that anything can happen.

I would not buy a negative cash flow property unless I was pretty certain that I could make out on the appreciation. I agree with @George Pauley that chances are you will have expenses that will come up and your negative cash flow will swallow your pay check.  

Case in point; I have a property that has a positive cash flow of about $250/mo.  A few months ago there was an issue with a shower faucet and some pipes which required a plumber and that cost me about five months of cash flow.  As an added bonus, the property taxes went up significantly and that added three more months of lost revenue. When I was renovating I estimated it would take about two months to remodel and rent the place out, it took four.  It's not the end of the world for me because I had positive cash flow to begin with but can you see yourself doing the same when you think of starting out with negative cash flow? Always always have reserves and a plan B (and an exit strategy). 

As for your question on should you look out of state... it may work out but what I know from personal experience is that managing people (whether they are tenants, property managers, contractors, etc.) from far away is a challenge at best.  

I felt the same way you are feeling... patience is key. Another thing to keep in mind... the market is hot now but what happens if you buy high and not only have to deal with negative cash flow but also a loss in value if the market cools off?  

I figured I would check here to see if anyone has experience with renting to tenants who need a short term rental (their homes were burned) and are using Housing Headquarters.  I had a couple of calls from HH regarding two different families who need short term rentals (6-8 mos.) and HH would be willing to pay more to make it worth my time.  I'm not even sure how this would work since the insurance company is paying HH and HH would be paying me.  Does anyone have any experience with HH or any other company that is involved with finding short term housing and directly paying the landlord? Was it a good or a bad experience? Any advice?  Thanks!