All Forum Posts by: Jeff L.

I'm looking for an attorney around the Irvine or Orange County areas who specializes in real estate investing and asset/liability protection strategies.

Affordability is a big concern for me since I'm starting out.

I have some questions about liability protection strategies, establishing LLCs, etc. as well as general real estate investing legal advice.

Any recommendations? Thank you.

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I'm just starting out and looking into 2-4plexes. Is there an easy way to figure out which utilities the tenant pays and the landlord pays?

2-4plexes seem to add an additional layer of complexity because in these the landlord is expected to pay for certain utilities? And also some or most properties don't have submetering....

And also it varies by location?

I'm finding it difficult to do property analysis when it varies by property, type, and location.

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Originally posted by @David Krulac:

Because there is so much variance of these costs, I don't want estimates, I want actual costs. For the utilities the providers keep actual historic records. The Tax collector has actual tax records for the property. and your insurance agent should be able to give you insurance costs, which might be higher or lower than the current seller pays. Also your insurance agent can tell you if the property is in a flood zone. I looked at a property recently that was far away from any water source, but surprisingly was in a flood zone. Since flood insurance rates are climbing under Federal law, that's a consideration also.

Hi David, you do this for every single property you look at? What I'm looking for is something I can quickly plug into my spreadsheet when looking at hundreds of properties.

If something is easily available like taxes, then great! I'll use it. But things like utilities, I'm not going to call every provider. Although I guess I could call them for one property and use that as an estimate for all similar properties I look at.

Again, looking for numbers I can use on a first pass before narrowing down the houses I need accurate numbers for.

Thank you for the reply! It will definitely help me for the second phase where I get the real numbers for the most promising properties.

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What are some easy ways or rule of thumbs to estimate costs when you analyze a buy and hold property? It could be a website, or a percentage of the property or rent price, or a fixed price, etc.

Please use the following template when responding:

- Rent:

- Closing Costs:

- Insurance:

- Property tax:

- Utilities:

- Property management fee:

- Vacancy:

- Repairs/capital expenditures:

- Other rule of thumbs you can think of:

An example:

- Rent: Rentometer.com, Zillow, Padmapper.com

- Closing Costs: $5000

- Insurance: ?

- Property tax: Zillow

- Utilities: ?

- Property management fee: 10% rent

- Vacancy: 10%

- Repairs/capital expenditures: 20%

I'm trying to figure out easy ways to analyze properties on a first pass (before narrowing down and getting more accurate numbers).

For example, I've never purchased a property before so I have no idea how much I should add for the closing costs. Is there a way to estimate it based on the price of the property, or do they usually tend to be x thousand dollars?

I also think it'd be interesting to see the different percentages different people use for vacancy, property management, or repairs.

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Originally posted by @Derek Lacy:

@Jeff L.

I went off of your title and not your specific questions.

There are about 1-2 underwriters (I represent them both), and possible one or more that I don't know about that will write over multiple LLC's. Usual standard underwriting will require one umbrella per LLC.

These specific underwriters prefer to write your full risk. So you personally, then they will only write over solely owned LLC's (the LLC may only be in your or your spouses name).

Again, that is not the norm, the norm is if you have 2 LLC's and your personal name, you need 3 umbrella policy to cover all. But there are options out there.

Hi Derek, thank you so much for the detailed info. So let's simplify my situation. I have:

- Personal automobile insurance

- One property with home insurance (both under my LLC)

Would I get the umbrella policy under my auto insurance and have it cover the property, or do i get the policy on the LLC's home insurance policy, or is it a separate policy altogether?

Also, does an umbrella policy cover ME or my property? I want to shield myself from liability. I'm not sure if the umbrella policy is covering the rental house or myself.

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Originally posted by @Jose Gonzalez:

Liability with loss rents, vandalism (in case your tenant taps to electrical to grow weed), if you don't have your property in an LLC then get a nice personal umbrella policy.

Originally posted by @Doug McLeod:

Some insurers call it a Fire policy or a Rental policy. Others call it a dwelling policy. Key features are insurance against damage or loss to the house itself and attached/related structures (garage, covered patio, etc) and some degree of liability (I like to get $300k). You generally want little or no coverage of contents (you renters should insure their stuff and your lease should make that clear).

It can be a Replacement Cost policy or an Actual Cash Value policy. Flexibility in how much dwelling coverage you can (or must) get is a key driver of cost along with the deductible and additional coverages (like lost rent, damage from water leaks, etc).

Many investors get an Umbrella policy ($1-3M additional liability coverage) over a group of properties (or all of them) in addition to the liability coverage they have per property.

Is there a difference between a personal umbrella policy and one that covers your properties?

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Is it home owner's insurance, or liability insurance, or both? With an umbrella policy is that three separate things?

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Say I have two properties, both under separate LLCs and insurance policies.

If I get an umbrella policy under one of those insurance policies, can it cover the other property as well? Or do I need to get two umbrella policies, one for each?

If I get an umbrella policy personally (like under my home residence policy), can I have it cover my LLC properties? Conversely, if I get it under one of my LLCs, can it cover me personally?

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This is going to sound stupid, but do I need a fax machine and number to do out of state investing, or is scanning and email sufficient to do business with most people?

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Originally posted by @Joe Villeneuve:

Originally posted by @Jeff L.:

Originally posted by @Joe Villeneuve:

Originally posted by @Jeff L.:

Originally posted by @Joe Villeneuve:

Look for the ability to refinance as soon as you can. This gets your cash right back in your hands to re-use. Repeat this in a string of deals. The end result is you are accumulating properties that cash flow, but you never actually spend any money. No matter how hard you try, they keep giving it back.

I'm trying to wrap my head around this. How is this different from simply getting mortgages for each property?

Big difference. Scenario: Property cost $70k including rehab ($12k); ARV when done at $100k

Mortgage: The lender will give you (on a good day) 80% of your cost to buy ~ $46,400, and then you need cash for the rest and rehab~$23,600. You now have spent $23,600 and have $30k untapped equity (dormant value).

REFI: You buy/rehab with all cash ~ $70k, then refi based on 75% of the ARV ~ $75,000, and recover all of your cash...plus, an additional $5,000...and only have $25k in dead cash.

....and, it's usually easier to get a refi with seasoning, than it is to get the initial loan to buy/rehab on a NOO.

Thank you for explaining this to me Joe. So, it's usually better only in situations where you rehab it?

No, it's better in all situations.

In your scenario, if you took out the rehab component:

Mortgage: 46,400 (80%), cash 11,600

REFI: 43,500 (75%), cash 14,500

What am I missing? Thank you for bearing with me. I'm a newbie to this stuff.

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All Forum Posts by: Jeff L.

Jeff L. has started 51 posts and replied 108 times.

Post: Orange County, CA - looking for REInvestor-friendly attorney

Post: Finding out which utilities the landlord pays?

Post: What are some easy ways to estimate costs when analyzing B&H properties?

Post: What are some easy ways to estimate costs when analyzing B&H properties?

Post: How exactly do umbrella insurance policies work?

Post: What type of insurance am I supposed to get for a buy and hold rental property?

Post: What type of insurance am I supposed to get for a buy and hold rental property?

Post: How exactly do umbrella insurance policies work?

Post: Do I need a fax machine?

Post: Buy & hold