All Forum Posts by: James Bradley

Many investors (me included), start off with single family or multi-family (4 or less) homes to renovate and rent. When financing these properties the BEST rates and terms are available via conventional (or FHA) mortgages to regular people. It's the same type of mortgage you would use to buy a personal property. Most are 4-5%, 30-year mortgages. For an investment property, you'll need 20-25% down. But due to government Freddie Mac/Fannie May rules, they are only available to people.

So if you buy a house with an LLC, you're no longer eligible for these loans and you need to get a commercial or portfolio loan. These are more experience-based (they don't usually like loaning to new investors), and you'll be paying 6-8%+ on a 10 year balloon loan. Not horrible of course, but not nearly as enticing.

Lastly, will you be managing these properties yourself? A big focus of LLCs is liability protection - if someone falls down the steps, can they blame (sue) you for that? First off, of course they can. And any decent lawyer is going to name you personally in the suit, with or without an LLC.

So I (and others) feel the best solutions for liability is to keep your properties in good repair (if someone falls down a broken set of stairs, it's going to be your fault regardless. If someone falls down a good set of stairs, that you keep in good condition... it's harder to blame it on you).  And also keep good insurance.  A landlord policy coupled with a $1 or 2M umbrella policy will protect you from just about anything.

The biggest issue with an LLC is that it takes your mind off the main goal - to get a property and start making money on it. Spend that hour that you're going to read about Nevada LLCs - and spend it instead looking for properties, cold-calling, or whatever it's going to take to get that first deal done.

Good luck!

@James Bradley what are your RE goals? If you're looking into commercial properties including large apartment complexes, an LLC is the way to go.

If you're instead planning on 1-4 family houses, an LLC and asset protection should be way way down on the list. Many investors don't go the LLC route until they have to - around 6-10 houses. The benefits of NOT using an LLC far outweigh the possible benefits.

Go line up some funding and start looking for a good deal! Asset protection is easily handled with good insurance (landlord and umbrella) for your first bit of investing.

 There are books out there that give an overview of multiple strategies. If you are on Instagram we post different strategies all of the time. BTW, we have done most of the things on your list. We haven't bought a note but we have done hard money lending.

Education involves paying for a class through a guru. There are many options out there. I am not going to recommend one. You really have to research quite a few yourself. I did not personally go this route. Instead my strategy was to focus on networking and reading. 

The best place to find a mentor would be at your local REIA. Every major city has at least one. Keep going and learn who the regulars are.

If you are handy perhaps you could start with a fix and flip.

 I would spend some money on education or a mentor.

I can't give you a lot if guidance because I still know enough about you skills and other income. 

I guess that another thing that I would do would be to start networking. 

You have to find a strategy that plays up to your strengths. You can be successful at any strategy.