All Forum Posts by: Jeff Sims

Congrats Dave!  I followed a similar path and 4 years ago was able to walk away from an increasingly frustrating banking career and have never looked back.  Funny how when your passion aligns with your hopes and dreams they have a way of coming true.  

I'm a DIY'er!  Like many posts have mentioned it's not glamorous and won't get us a show on HGTV but there is nothing more satisfying than planning the work/working the plan and seeing the results of your hard work.  I call my rental houses "bullet proof cream puffs" which they are when I'm done with them.  I mostly do the all turn work (except for major plumbing/electrical, roofing, HVAC) and also have a W2 handling the accounting for a property management company.  When I have a vacancy, my wife will let me work one night a week and all weekend until it's done which usually takes a month or so.  Funny thing, when I'm working on a house my mind is clear and time stands still - I think they call that "nirvana".   

Got a few:

Plan the work then work the plan.

In order to be successful you only have to work half a day.  What you do with the other half is up to you.

While you might not realize it at the time, there are only a handful of life changing moments in a person's life.

There is no substitute for hard work.

Write down your goals, they have a way of coming true.

Rich and wealthy are not the same.  Being rich lasts a day.  Being wealthy lasts a lifetime.

Hard to believe that I started this post over 5 years ago and after 475 replies later, I thought it appropriate to offer an update.  We now have two 16+ year old drivers under our roof so I passed on two 2000 Jeep Grand Cherokees for them to drive, which left me with the need to buy a vehicle for myself.  After searching for several months, I bought a practically new 2011 Acura MDX a few weeks ago.  130k miles for $13k with all the bells and whistles.  With a roof rack and the back seats folded down it can haul more stuff than my Jeep ever did and I smile every time I get behind the wheel.

I owned 1 SFR when we got married (13 years ago) and I don't remember how we discussed it but I guess she trusted my financial/investment judgment.

The next few rentals, I would show her the rental checks coming in and shout out "the future looks bright". After a few years and several more rental properties, I began giving her a "bonus" with a month's positive cash flow in cash from our most recent purchase.

Now the "bonus" is a month's rental income from our most recent purchase. I can tell when she's running low on her mad money because she'll ask if I'm looking to buy any more properties. It's a win-win!

Good question Kevin. For most people, the reason for creating an LLC is to provide liability protection although "piercing the LLC veil" by a prosecuting attorney is a whole different discussion altogether.

As for the financing, a bank generally sees an LLC as a shell entity and the members are the face and strength behind the deal. Can you get a commercial loan to an LLC without having to give a personal guaranty? Possibly if you ask enough bankers around town but in my experience 99% of all loans include a personal guaranty. It's just an industry norm.

Kevin -

As a commercial lender and a SFR real estate investor, I'd like to weigh in on the topic. If you purchase the property in the name of the LLC, you will not be able to get a conventional mortgage loan (30 year fixed rate). You could purchase the property in your names personally and get a conventional mortgage loan then quit claim it to the LLC the next day although banks generally frown upon this. You should be able to get a commercial loan from an area bank with the LLC as the buyer/owner and the members being personal guarantors. The rates aren't as good as conventional mortgage rates (5 year term around 5-6% with a 15 year amortization) but the closing costs should come in a bit cheaper.

With a commercial loan, you will not need to provide a full blown business plan. The bank will look at the members/guarantors financials to provide the strength for the deal and look specifically at the collateral to ensure adequate loan to value and debt service coverage. I often approve a deal for the members/guarantors on a purchase before they even have an LLC established.

Hope this helps - Jeff.

No prison sentence for a car payment Brian. I created this post for fun and to get a pulse on the financial mentality of fellow RE investors. That you have been successful in the car care franchise and restaurant has blessed you with I imagine, significant amounts of cash to allow you to purchase a stable full of nice vehicles. Congrats and enjoy the fruits of your labor.

For me it's more economics - I really can't afford $500, $1000, $1500 monthly car payments and stay in the black. Would I like to own a fancy new car that can outrun anything around - absolutely. I'm just not there yet. So what motivates me? For me it's the ability to have the financial freedom to do whatever I want with my time (family, travel, volunteer for a worthy cause, etc.) and know that the passive income from RE is funding my lifestyle for the rest of my life.

You're the carpe diem guy - live for the day! Nothing wrong with that. I actually take pride in my modest choice of vehicles and think it sets a good example for my family (with 2 kids 11 and 13) to live within our means. Trying to keep up and get ahead of the Joneses - not my thing. Counting my Benjamins rolling in 24/7 - that's what motivates me.

Sounds like we have alot in common Brandon. My wife drives a 2008 Honda Odssey (2 kids - 11 and 13). She fought the mini-van mom for the longest time but is a believer now.

In a couple years I'll get her something newer and turn the Odssey into my "work van". So what is my vehicular motivation - I have a pic of a red 1967 Mustang convertible taped to my desktop screen. One of these days...

Love all the posts. I have noticed a common theme in the responses that are both refreshing and reassuring. When I see all my co-workers buying new cars and stuff I just shake my head. Guess it's the consumer versus investor mentality.

You and me - we're a band of brothers in the rental property business but have the wisdom and passion to realize that financial freedom can come long before anyone else thinks is possible.

My personal favorite. A fellow BP member, Mr. Long from LA had a recent post about putting a license plate on his car. What would it say "MY OTHER CAR IS AN APARTMENT BUILDING". Priceless.