All Forum Posts by: Jim Breedlove

Does anyone know of an insurance agent in the Montgomery County, Texas (Conroe/Spring/The Woodlands) area who can quote insurance on a portfolio of 9 single family homes? The houses are in the name of my LLC, so I suspect I will need a commercial policy? In the past, the houses were insured under my name with LLC listed as an other insured.

I would be interested in seeing the details on the property you have under contract. 

I account for my properties on a cash basis. We created a new legal entity to purchase a small multi- family property. When we closed at the end of may, we received a credit on the HUD-1 for property taxes owed by the seller for Jan through May. My question is around how to account for this credit on the initial journal entry to set up the company and account for the property tax credit. If I book a credit for property taxes payable, it seems that this payable will not clear when I pay the full year taxes at the end of the year. My experience is in accrual based accounting, so I'm struggling with how to handle the property taxes on a cash basis. I would appreciate your thoughts.

In reviewing the Seller's NOI numbers, I noticed there was not an expense line for property management. Apparently, the current owner manages the property himself. Clearly, property management fees should be included in the NOI calculation (I certainly don't want to do manage the place!). After layering in the property management expense, the actual NOI is lower - thus the value of the property should be adjusted down accordingly.

Thanks, Cameron. I'll give Steve a call. 

By the way, I'm always looking to add properties to my rental portfolio. Let me know if you ever come across any SFH's in the Conroe/Spring/Cypress/Klein/Woodlands area - I would be interested in taking a look. I generally buy rentals with the following criteria:

-- distressed 1200 to 1800 sqft; SFH - often in need of repairs. I can buy for cash.

Thanks.

Jim

Can anyone recommend a good CPA in Houston that works with real estate investors? I'm a partner in a partnership that built a small multifamily development, and I'm looking into doing a cost segregation study to accelerate the tax depreciation deductions. I've talked to a couple of CPA's but it was apparent that they were not very familiar with the details of a cost segregation study. Thanks for the help!

I'm looking at a 28 unit multifamily deal in Texas and have a question about validating the owner's numbers. The owner provided a one page income statement for each of the last three years. In order to verify his numbers, I'm planning to ask for copies of bank statements and tax returns. Is it standard practice to request this type of information? What other types of documentation should I request?

Sorry - meant to say HAND address envelopes

I'm looking to hire a student to had address my marketing letters. Is there a general rule of thumb for how much to pay per piece?

I've been checking around with several Texas agents to to get insurance for 8 single family rentals in the name of the LLC that owns the houses. A couple of agents have suggested getting coverage under surplus lines. One of the agents referred to this as "program business". The agent presented a single policy that covered each of the properties (with a $10 million umbrella). When I received the policy (Producer was The Mahoney Group out of Arizona) the "Insured" was listed as Southwest Real Estate Purchasing Group, Inc. and Southwest Real Estate Property Group, LLC. My LLC was listed as an "Additional Named insured".

My Texas agent explained this structure as follows:

Southwest Real Estate Purchasing Group, Inc. and Southwest Real Estate Property Group, LLC are owned by The Mahoney group and are used to conglomerate all properties within the program. This conglomeration allows the ownership entities to be insured under their respective ownership names and reap the benefits of purchase power being grouped with thousands of other homes in the program. The master policy is written to Southwest Real Estate Purchasing Group, Inc. and Southwest Real Estate Property Group, LLC. Each insured within the program carries their own individual limits on their location. None of the limits are shared with other property owners.

Is this a reasonable explanation? Are such policies common? Should I be concerned that that my LLC is listed as an Additional Named Insured, while the Mahoney Group Entities are listed as the Insured? This is all a new concept to me!