All Forum Posts by: Jeff L.

I'm in Southern California where the prices are very high right now, and was thinking of a different strategy to offset the costs and make the math work. I live in a town that has many college students and young professionals.

Instead of renting a 3-4 bedroom out to a family, I was thinking about renting out each room and potentially receiving higher total rents.

1) Is this even a viable strategy? Could I really expect to receive higher rents by doing this versus renting to a single family?

2) Do any property management companies take on clients for this type of strategy? Should I manage it on my own?

I'd love to hear from people who have done this. Do you have someone manage it for you? Pros and cons vs renting to a family? What amenities do you supply?

 Oh yea, duh.

So would you say this strategy heavily depends on appreciation?

 Thanks Russell, I don't understand how you arrived at the "walk away" total though.

First example: 405-292 = 113k (you said 185)

Second example: 515-305 = 210k (you said 250)

And that's not including the closing costs when buying or the agent commissions when selling.

I understand that using a 1031 exchange is ideal, but I'm wondering more about how the math works out after owning a house for 5 years or so.

Is the equity you've built in that time really substantial enough to trade up to two houses, or a more expensive house?

I've heard of this strategy where, instead of holding and renting a property for the length of the 30 year mortgage, you only keep it for a few years and then "trade up" to 2 properties or a better property. And you build wealth and your portfolio this way.

Can you explain how this works, preferably with some examples with numbers?

 They won't. You have to move title to your land trust after closing on it. That's what a lot of investors do apparently. The problem is when your lender finds out due to the name changing on your insurance.

I started a related topic about how to avoid alerting the bank through changing your insurance, or if changing your insurance is even necessary.

I'd appreciate it if someone could give me some insight on this: 

https://www.biggerpockets.com/forums/311/topics/26...

This is regarding the LLC + land trust combo, where the property is titled to the land trust, and the land trust's beneficiary is the LLC.

1) Which entity should your insurance policy be on: your LLC, or the land trust?

2) Of the people that have actually had the bank invoke the due on sale clause, most have said the bank was alerted due to the name changing/added on the insurance policy. My own lender even told me this when I asked him.

My question is, is the insurance policy still valid if you keep the policy in your personal name even after changing title? You own the LLC, which owns the land trust, so would the insurance still be binding?

If not, then you're damned either way. You either have the insurance in your LLC's name, risking alerting the bank OR you keep the insurance in your name and risk having the policy be useless.

How do you get around this?

If anyone knows a good asset protection attorney in Southern California, please message me with their contact info. Thank you!

I'm not a finance company though. I'm just an investor creating an LLC to hold my properties in, that's all.