All Forum Posts by: Janel Page

Hi Dillyn.

It was nice to meet you at the Northwest REIA meeting in Salem tonight. You're welcome to come to any of our meetings. As I mentioned tonight, if you have questions about starting a meeting in your area, give me a call. I think you have my card now.

G'nite, Janel :-)

@Kyle R. - You're right. You don't have to form an LLC in your home state. It can be helpful to form it in the state you are doing business in, but there are sometimes exceptions, or good reasons to form them in other states. I think you have to pay double the LLC annual fees if your LLC was formed in a state different than the state you are doing business in. So you probably have to pay fees in Texas and in NC? But the series LLCs can be helpful for a variety of reasons (I'm no attorney, just remembering from a boot camp).

@Kyle R.

Since I've received a few votes and kind comments on my earlier post (thank you! :-) , I'll add to it a little. 

@Kyle R.   re: series LLCs, only some states allow these.  Oregon is not one of them (my state).  I don't think NC allows them.  I think 17 states do allow them:  Alabama, Delaware, Illinois, Iowa, Kansas, Minnesota, Missouri, Montana, Nevada, North Dakota, Oklahoma, Puerto Rico, Tennessee, Texas, Utah, Washington DC, & Wisconsin. 

I'm loving the comments on this thread.  Good stuff!

I'm a student of LegaLees. I don't get paid anything to say nice things about them. I just really like their materials. Before buying educational materials from them, I knew nothing about estate planning, asset protection, different company types, etc. I have put their materials to use, so they have more than paid for themselves. I've been pleasantly surprised how much easier it is to talk to attorneys and my very experienced CPA. The $20 Protecting Your Financial Future book is great for folks to buy. It's a good place to start with. It talks a lot about wills, trusts, probate, LLCs, and creating a plan to make it all work together. The info about the states that allow series LLCs is from their LLC Wizard System, which I am about to put to use to create another LLC!

I'm going through this now. I'm trying to figure out the best overall business structure. I currently have 2 LLC companies. I set up one for management and marketing. I have another that is currently holding 3 duplexes in the same state. I've ended up doing wholesaling from both of them, and a flip from each of them. I keep separate books for the 2 LLCs, and my CPA enters the complicated and the year end entries, and prepares and files the tax returns. So this makes 3 annual tax returns (2 LLC; 1 personal). I'm now buying a larger business in my area, which will be a 3rd LLC (and 4 annual tax returns). I have credit cards and lines of credit in the name of each of the businesses. I plan on buying a lot more cash flow property.

The problem with having a lot of LLCs is the management and maintenance of them. A separate LLC for each house or property isn't practical. You need to do a separate tax return for each one. You need to make sure you are doing the proper formalities for each LLC for the asset protection. If you are sued and have not followed all the formalities, then the court can pierce the corporate veil and there goes your asset protection. So you need to file the Articles of Organization forms with your state's Secretary of State. Answer the questions properly to have good asset protection. Make sure you have a separate Operating Agreement for each LLC, and follow it. If you don't know how to do the A of O and OA, then hire an attorney. This costs some extra bucks. Set up a separate checking account for each LLC. Make sure you hold title to each property in the name of the LLC that owns it (or leases it, in the case of Lease with Option to Buy).

As I'm sure you know - you need to make sure not to co-mingle money. So keep your income and expenses associated with each property in the LLC it is owned by. DO NOT pay personal bills from your LLCs. If you are low on capital, take a distribution from 1 company, and make a contribution to the other 1. Or have Company 1 loan Company 2 money, and document it properly with a promissory note with market rate interest. You have to treat each company as a separate entity, which it is.

The more LLCs you have, the more complexity you have.  This creates more opportunity for errors on your part.  The paperwork can get away from you.  I've been using LegaLees (www.LegaLees.com) for a few years, and it's really been helpful. Lee Phillips gives practical advice. He advises breaking up your businesses into a few chunks that make sense, and managing them well. If you have properties in separate states, have an LLC in each state you own property in. If you buy a big business, or have another business function or set of activities, create a separate LLC. For example, rentals in one LLC (passive income), and a contractor business in another LLC (active income). Perhaps limit the value of assets in each LLC to about $500k, except if you have a bigger biz (like storage units), then it may be valued at more than $500k, and that's ok. His advice is that it's better to have 1 or a few well-managed LLCs that follow all the proper formalities, then a whole bunch of them that might not be well-managed.

Increased insurance coverage is not that much more (I'm looking into that, also), and is much more simple than a lot of LLCs.  I'm also looking into an umbrella policy.  Insurance will protect you from a lot of things that can happen.  

Besides the cost of the annual LLC fees, you have to take into account your time managing all the paperwork and keeping things separated, AND the cost of legal fees setting this stuff up, AND the annual filing fees, AND the cost of help from a good CPA, AND filing the separate tax returns.

Check out the website www.LegaLees.com. Buy the book Protecting Your Financial Future for about $20 to learn more about this topic. It teaches with stories rather than boring, technical, legal speak (although it's still a lot to digest). It will also teach you how to work with attorneys and speak their language. Watch the LegaLees YouTube videos on LLC topics - they have a bunch of them - and this is free, general, practical advice from an attorney. As I said, this was very helpful to me.

Hope this helps.  Good luck! 

Link to register (click on an event, then register): https://www.northwestreia.com/Calendar.aspx

I help moderate this round table. We meet up the 2nd Thursday of each month. Topics vary. Networking is encouraged. This is one of many meetings offered by Northwest REIA (www.NorthwestREIA.com).

We generally have 20-40+ people show up to our Salem meetings, with all levels of investing experience. The cost is $10 per meeting, or you can sign up for an annual membership for $150. Please go to the website to register. Northwest REIA is a non-profit organization based in Portland, OR. During Oct 2017, there are 8 meetings available for you to attend (as of the date this was created). There are usually at least 6 every month.

In Salem, we focus on networking and learning. We may invite a local vendor or business to present to our group if we feel they have valuable information to share. We have invited LOCAL real estate agents, title companies, an escrow company, a 1031 exchange company, property managers, a property inspector, and others to present to our group. These folks sell local services, but there is no pressure to buy anything, ever. These are local folks who are good at what they do. Sometimes we just pick a topic to talk about, or other times, we leave it open for general discussion. Please do bring questions - and business cards to swap with others.

Create a FREE User Account. This will add you to our mailing list to receive future event notifications:
https://www.northwestreia.com/MyAccount/MyAccount....

Come check us out. If you found this on BiggerPockets, and that's why you decided to come - please let me know and I'll keep posting our events here.

Thanks :-)

Janel Page 

Link to register (click on an event, then register): https://www.northwestreia.com/Calendar.aspx

I help moderate this round table. We meet up the 2nd Thursday of each month. Topics vary. Networking is encouraged. This is one of many meetings offered by Northwest REIA (www.NorthwestREIA.com).

We generally have 20-40+ people show up to our Salem meetings, with all levels of investing experience. The cost is $10 per meeting, or you can sign up for an annual membership for $150. Please go to the website to register. Northwest REIA is a non-profit organization based in Portland, OR. During Oct 2017, there are 8 meetings available for you to attend (as of the date this was created). There are usually at least 6 every month.

In Salem, we focus on networking and learning. We may invite a local vendor or business to present to our group if we feel they have valuable information to share. We have invited LOCAL real estate agents, title companies, an escrow company, a 1031 exchange company, property managers, a property inspector, and others to present to our group. These folks sell local services, but there is no pressure to buy anything, ever. These are local folks who are good at what they do. Sometimes we just pick a topic to talk about, or other times, we leave it open for general discussion. Please do bring questions - and business cards to swap with others.

Create a FREE User Account.  This will add you to our mailing list to receive future event notifications:  
https://www.northwestreia.com/MyAccount/MyAccount....

Come check us out. If you found this on BiggerPockets, and that's why you decided to come - please let me know and I'll keep posting our events here.

Thanks :-)

Janel Page 

Link to register (click on an event, then register):  

https://www.northwestreia.com/Calendar.aspx

I help moderate this round table. We meet up the 2nd Thursday of each month. Topics vary. Networking is encouraged. This is one of many meetings offered by Northwest REIA (www.NorthwestREIA.com).

We generally have 20-40+ people show up to our Salem meetings, with all levels of investing experience. The cost is $10 per meeting, or you can sign up for an annual membership for $150. Please go to the website to register. Northwest REIA is a non-profit organization based in Portland, OR. During Oct 2017, there are 8 meetings available for you to attend (as of the date this was created). There are usually at least 6 every month.

In Salem, we focus on networking and learning. We may invite a local vendor or business to present to our group if we feel they have valuable information to share. We have invited LOCAL real estate agents, title companies, an escrow company, a 1031 exchange company, property managers, a property inspector, and others to present to our group. These folks sell local services, but there is no pressure to buy anything, ever. These are local folks who are good at what they do. Sometimes we just pick a topic to talk about, or other times, we leave it open for general discussion. Please do bring questions - and business cards to swap with others.

Create a free account at the link below to add yourself to the Northwest REIA mailing list. You will receive future event notifications.

https://www.northwestreia.com/MyAccount/MyAccount....

Come check us out. If you found this on BiggerPockets, and that's why you decided to come - please let me know and I'll keep posting our events here.

Thanks :-)

Janel Page 

Link to register:

http://www.northwestreia.com/Events.aspx?ID=Salem-...

I help moderate this round table. We meet up the 2nd Thursday of each month. Topics vary. Networking is encouraged. This is one of many meetings offered by Northwest www.NorthwestREIA.com

We generally have 20-40+ people show up to our Salem meetings, with all levels of investing experience. The cost is $10 per meeting, or you can sign up for an annual membership for $150. Please go to the website to register. Northwest REIA is a non-profit organization based in Portland, OR. During Sept 2017, there are 8 meetings available for you to attend. There are usually at least 6 every month.

In Salem, we focus on networking and learning. We may invite a local vendor or business to present to our group if we feel they have valuable information to share. We have invited LOCAL real estate agents, title companies, an escrow company, a 1031 exchange company, property managers, a property inspector, and others to present to our group. These folks sell local services, but there is no pressure to buy anything, ever. These are local folks who are good at what they do. Sometimes we just pick a topic to talk about, or other times, we leave it open for general discussion. Please do bring questions - and business cards to swap with others.

Come check us out. If you found this on BiggerPockets, and that's why you decided to come - please let me know and I'll keep posting our events here.

Thanks :-)

Janel Page 

Wow - some great comments on this thread. I live in Keizer, and like to buy rentals and flips in the Salem/Keizer area, and within about 30-45 min drive time. For rentals, I first look at a property using the 1% rule as described by @Nat Borchers. But then I break it down further. Financing makes a big difference. Also, if a property is currently rented under market, the upside makes a big difference.

I have purchased with seller financing with $10k down, and seller carries the balance for as low as 4.5%. For that duplex, rents were $600 x 2 = $1200 when I bought it, and I paid $165k. That was early 2015, when the market values hadn't gone up to where they are now. Duplex didn't need immediate work and was rented. It was going to need exterior paint and some TLC in the next few years. Seller was firm on price, so I negotiated the rate lower telling them I needed it to at least break even at current rents. In my simple calculation for breaking even, I included 5% for maintenance costs, 7% for vacancy, water & sewer (paid by owner), and PITI (principal, interest, taxes, insurance) costs. I showed about $10 per month cash flow.

After the purchase, I raised rents for each side $75, bringing them up to $675 each. Comparable rentals were about $850 at the time. I had other projects taking time and money, so I was happy to keep the current tenants and not have vacancy and turnover costs while working on the other 2 properties I purchased at around the same time. I was running low on time and working capital. (The other 2 properties were another seller-financed duplex and a house I was buying on lease option. Both properties needed work.) After rent increases, I was making about $200-250 over the monthly fixed costs. I signed new rental agreements with tenants and explained verbally that I expected to give them about a $75 rent increase each year. Both sets of tenants were good about paying on time. Seven months after purchase, one side decided to move into a 3 bedroom and gave 30 days notice. I made some small repairs, cleaned it up, and re-rented it. Now that side is turning over again. So 2.5 years later, one side is rented for $900, and the vacant side is advertised for $1050. I have now hired a landscaper to take care of it, as that is easier than trying to make sure the tenants do it.

I have cleaned up the vacant unit again and made some additional small repairs. I am adding ceiling insulation to the whole building to remedy the discoloration problem on the ceilings where the insulation has blown away from the attic vents. I am going to do some small siding repairs, fix up the gutters, and paint the exterior in the spring. The landscaper will clean it up more, and keep it looking nice. Then I will refinance and take some equity out to buy more properties.

The tenant still there paying $900 is the granddaughter of the seller who financed the sale. Seller said they were fine with me raising the rent. But I decided to stick with the predictable $75/year increase for the granddaughter. I'm still on good terms with the sellers. They like being a private lender reference for me. After I refinance this, I will see if they are interested in re-loaning their money to fund another deal. So it is worth it to me to take the middle ground on raising their granddaughter's rent. I've heard some folks say real estate is not about properties, it is about people. I agree!

I want more deals like this!

Hi everyone.

I'm trying out posting an event here on BiggerPockets. I help moderate this round table. We meet up the 2nd Thursday of each month. Topics vary. Networking is encouraged. This is one of many meetings offered by Northwest REIA. More info can be found on their website: www.NorthwestREIA.com  

We generally have 20-40+ people show up to our Salem meetings, with all levels of investing experience. The cost is $10 per meeting, or you can sign up for an annual membership for $150. Please go to the website to register. Northwest REIA is a non-profit organization based in Portland, OR. This July, there are 9 meetings available for you to attend. There are usually at least 6 every month.

In Salem, we focus on networking and learning.  We may invite a local vendor or business to present to our group if we feel they have valuable information to share.  We have invited LOCAL real estate agents, title companies, an escrow company, a 1031 exchange company, property managers, a property inspector, and others to present to our group.  There is no pressure to buy anything, ever.  These are local folks who are good at what they do.  Sometimes we just pick a topic to talk about, or other times, we leave it open for general discussion.  Please do bring questions - and business cards to swap with others.  

Come check us out.  If you found this on BiggerPockets, and that's why you decided to come - please let me know and I'll keep posting our events here.

Thanks :-)  

Janel Page