All Forum Posts by: Jason H.

@Steven Eastman If you are in the residential 1-4 space, you and tons of other small time investors have gotten by with just a good insurance policy in place.  Good tenant screenings and timely responses to maintenance calls should help you get out of potential hot water if a "professional" tenant wants to cause trouble.  I have been hearing a bit about "umbrella" policies that covers all your properties, but have not done enough research to give you suggestions on that.  

On the management side of things, if you are self managing, you can use Quickbooks which alot of investors seem to use, if you are using a PM, then definitely keep your own records and constantly monitor your cash-in and cash-out as well as the accuracy of your owner disbursements from your PM.

@Avery Carl For all the commercial retail amenities that families and guests would be looking for...you really can't go wrong with that location!

I posted this response below in another discussion related to Section 8 and thought it might be helpful to you as you consider whether or not to engage the program.

I may represent the minority viewpoint in this discussion, but if you are not in a rush to get a tenant, I would hesitate before going the Section 8 route. I have been there and no way will you be getting me back into the program. I will copy a response below that I gave to another investor in another discussion as to why I do not recommend it. Like I said, I may be the only one who feels this way based on my specific experience with the program and the program rules in ATL may likely be different where my properties are. I know you’re going to get a gamut of experiences from different people, so I just wanted to give you mine, since it was not a positive experience whatsoever.

“I do not recommend going the Section 8 route whatsoever, from a short or long term perspective. I know there are is a handful of investors who swear by it, but they are probably in a different market. In PGH, it’s not worth your time. There are so many hoops you need to jump through and so many inspections you need to pass in order to get paid by the program. You need to spend a lot of money to get your property in compliance with what the program deems as safe and habitable conditions (which is beyond what any normal investor would think is reasonable). There are annual inspections and if tenants damage your property and cause you to fail the inspection, they will immediately stop your rent payments until YOU fix them to a satisfactory level. And even upon re-inspection, there is nothing preventing them from nitpicking and giving you a new list of issues you need to fix, thus putting you in a never ending cycle of repairing the property and chasing your rent payments that you will likely never get. If your property is not in compliance, the tenant also has the right not to pay their portion of the rent to you as well. So they end up living there for free. It’s not worth the headache. Just put your property up on the open market and find yourself a great PM.“

@Steven Eastman  I think your question is dependent on the space you're in (commercial versus residential 1-4 units) but overall I agree with @Enrique Huerta as I also keep separate accounts for all properties.  This will be much cleaner accounting for the short and long term ownership of a property.  Keep all your cashflow in each account and if these are newly acquired properties, keep all the accumulated cashflow in there as reserves for capex and vacancy (assuming you have debt service on them)

As for the LLC question (which has been an age old point of contention among small time investors- risk vs. cost), unless you purchased them all cash or have a commercial portfolio loan on them, I don't see how you can have an LLC entity holding them if you have conventional agency debt on them. Typically residential loans will not let you purchase with an LLC, unless you're talking about doing a quit claim/transfer into an LLC after the purchase (which then you need to consider the transfer taxes which can be really high...2+% sometimes). And if you are talking about residential properties under 5 units...remember how much the accountant will charge you for an LLC tax filing when it comes time each year for each property - that's all coming from your cash flow. Some investors swear by it, some investors, mainly mom and pop, will never have any problems over many decades of ownership. But again it's all about your own comfort level and insurance policies you currently have in place.

@Melissa Uppelschoten I may represent the minority viewpoint in this discussion, but if you are not in a rush to get a tenant, I would hesitate before going the Section 8 route.  I have been there and no way will you be getting me back into the program.  I will copy a response below that I gave to another investor in another discussion as to why I do not recommend it.  Like I said, I may be the only one who feels this way based on my specific experience with the program and the program rules in ATL may likely be different where my properties are.  I know you’re going to get a gamut of experiences from different people, so I just wanted to give you mine, since it was not a positive experience whatsoever.  

“I do not recommend going the Section 8 route whatsoever, from a short or long term perspective. I know there are is a handful of investors who swear by it, but they are probably in a different market. In PGH, it’s not worth your time. There are so many hoops you need to jump through and so many inspections you need to pass in order to get paid by the program. You need to spend a lot of money to get your property in compliance with what the program deems as safe and habitable conditions (which is beyond what any normal investor would think is reasonable). There are annual inspections and if tenants damage your property and cause you to fail the inspection, they will immediately stop your rent payments until YOU fix them to a satisfactory level. And even upon re-inspection, there is nothing preventing them from nitpicking and giving you a new list of issues you need to fix, thus putting you in a never ending cycle of repairing the property and chasing your rent payments that you will likely never get. If your property is not in compliance, the tenant also has the right not to pay their portion of the rent to you as well. So they end up living there for free. It’s not worth the headache. Just put your property up on the open market and find yourself a great PM.“

@Amy H. But having said that, you’ve chosen one the most beautiful places to telework!

@Amy H. Avery’s assessment and description is spot on regarding those three areas.  I will add that 30A is very much a high-end “family-oriented” stretch along the panhandle and most of all the properties you will encounter are large 3-5BR single family homes geared towards multiple families sharing a house for a week, with the peak being the July 4th weekend to before school starts at the end of August.  There are smaller condos and apartments but because they are located south of 30A, they will all be asking for a premium.  Regarding transportation, without a doubt, you will need a car to get around the area, especially for dining and grocery shopping.  Can’t really Uber there. The only “walkable” grocery store (Publix) is on the eastern border of Seaside and the only properties within walking distance there are large single-family houses in Watercolor that are all outside of your budget.

I would recommend looking into Destin, specifically the Crystal Beach area as you will find all the amenities you’re looking for around Destin Commons. Most everything is “walkable” in that area.  There are a lot of 1BR apts along Scenic Hwy 98, but if you want a better deal, you will have to take one without a view or one in older condition.

@Ryan Jenkins I’m sure you plan to use this during the off season with your family...but for all the reasons given here for looking into Destin/30A/Panama City Beach...I just have two...the sand and the water!  Hands down the best you’ll see in the continental US.

@Shai Flax. From one investor to another, there are a few other things you need to watch out for that others fail or don’t bother to mention:

(1) Section 8 has limits on rent that they can pay for certain property types in certain areas.  You will have to research and check the maximum they will pay for a 1BR, 2BR, etc.  These maximums may not work for your numbers.  They’ve been changing every so often and the limits are only getting lower, not higher.

(2) Watch out for those pesky taxes in PGH...they’re high but make sure you budget for it in your numbers.  Don’t be surprised to see anywhere from $200-300/month per door for all three taxes (county, muni, school) depending on property type.

(3) Always check how much the current assessed value is on a property that you’re wanting to buy.  If there is a huge spread between current assessed value and your purchase price, beware that you might trigger a reassessment in taxes...and the numbers you used didn’t take this into consideration.  Typical scenarios like this might happen when you have a seller who has owned a property for generations and the last assessed value and hasn’t caught up to the current market selling prices.  Allegheny County has a website that shows this information but it won’t show you the total three taxes paid...only the county taxes, which are low in comparison.  School board tax in certain areas is a killer, but if you account for these numbers and can still make your numbers work, you should be fine.

What area are you looking at BTW? @Shai Flax