All Forum Posts by: John Morgan

@Ronald Rohde

I now wish I knew all this before I decided to form an LLC. I obviously wouldn't have formed one. Most landlords I know said they have LLCs so I figured I better get one. They must have all their properties paid off I assume. I'm in a serious pickle now it sounds by having the title and mortgages in my name. What a mess! I wish my attorney who did all this for me gave me a heads up what I was getting myself into. He didn't mention any of this to me. My fault for not researching this more. I didn't realize there was way more to it.

What are my options at this point. Can I switch them back to my name and not tell the banks? I’m worried if the banks find out they’ll make me either sell them or drop the loan all together. Can they do this? 

How do I change the title on one that is paid off? You mentioned this needs to be done as well since it’s in our name when we originally bought it. 

Thanks for all the advice guys!

I formed an LLC for our six properties mid way through 2018. My property manager for my one out of state property wants to know if I will be filing my taxes under my name for 2018 (like they've been doing for the last few years) or my newly created LLC. Does it matter since my LLC is new? Just trying to keep things simple. I just notified them today of the LLC and haven't sent them my W9 form yet. I didn't realize I needed to send them a W9 form until now.

Also, is it ok for my tenants to continue to make out their monthly rent checks to my name, or do they need to fill them out to my LLC? I plan on opening up a separate business banking account to keep everything separated. In the past I combined all my real estate transactions. But now that I've grown to 6 properties I decided to do the LLC and keep everything separate from my personal finances.

Also, I have mortgages on a couple of these properties and didn't notify my bank that I put them under my newly created LLC. I didn't realize I was supposed to when I got the LLC. Is this going to be a problem? I currently don't do an escrow account with them so I assume they won't ever know. But if I decide to sell them before their mortgages are paid off, will this be a problem since the mortgage is under my name vs the LLC?

My wife is the same way. It causes major friction in our marriage when I started RE investing 4 years ago. She was cool with just one property. It became a passion for me. So I snagged more properties. When I bought 4 SFHs last year she about lost it. The kids were even on her side and got upset with me because of what I was doing. I told them we were netting $2,500/month from them. She didn’t care. All she would bring up was all the $ we kept pouring into them when things broke. And 2017 was an awful year for us. Spent over 70k on 3 HVACs, four foundation repairs etc. And any time I got a text or phone call from a tenant, she was upset because my “hobby” was taking away our time together. Yes, even a 2 min phone chat with a tenant drove her nuts.

So here’s what I’ve done to cool her off. I don’t tell her about things breaking down at the rentals. I pay people to fix anything that breaks. I try not to ever spend time driving over to them so I’m always home. And the one tenant that pays me $1,200/month in cash, I leave that $ in our money envelope so she always sees cash available and feels like we’re not losing all our money. I’ve snagged 6 properties and would love to get 4 more before I retire. But I need to ease into the next ones to keep mama happy. Maybe buy only one per year.

I look at real estate like the stock market. It’s impossible to time it..no matter how much all the experts on here act like they know. But if you dollar cost average real estate over the years, you’ll be just fine. So I slowly buy properties in good times or bad. It all works out over time. I know a few people who said real estate was way over priced in 2015 and they were waiting on the sidelines for the next recession to buy. I’m glad I didn’t listen to their advice to wait back then! I kept slowly buying and all my property values have sky rocketed.

@Aaron Wade Nice work. Keep buying more is my advice. I started buying SFHs four years ago. I now have 6 buy and hold properties. I’m lazy and would rather spend my time and life with my family..not running around trying to make an extra buck in real estate. Two of my properties had tenants in place cash flowing about $250/month so I didn’t have to lift a finger. That was so nice. My last property needed a lot of rehab work..which has been a hassle. Sure I’ll be cash flowing a lot more when it’s all said and done, but if I could do it over again I would have rather bought a turn key property instead of this cheap deal. I try and keep things simple and maximize my time with my family. Cash flowing from day one with a turn key property will most likely be more than enough for some of us. And your family will thank you.

@Garmeon Y. I’ve done this twice before..just texting. They sent me their paycheck via email, then I had one brief phone conversation and I was good to go. They are my two best tenants and I’d do it again. My worst tenant was one I met with face to face. She was dressed professionally, very personable, drove a nice new car, had a masters degree, and even had her nanny with her. Her back ground checks came out good. She volunteered at places, worked with special needs kids, the whole nine yards. That one cost me over 6k due evicting her and damage to the house. So I’m fine with not meeting someone face to face because I’ve been burned by being deceived by people who seemed to be the perfect fit.

@Andres Aguero $500/month positive cash flow sounds a little optimistic, unless you pay cash for them or put down a monster down payment. I’m cash flowing about $500 on one of my SFHs, but I put 60% down on it. And paid cash for another one which cash flows about $1,500/month. Another one I just bought cash flows about $1,000/month but I paid 95k cash for that one. My three other properties are cheaper homes worth about 150k each and cash flow about $300/month. I put 20% down and have 15 year mortgages. You can probably do better than what I found, but I don’t come across many people finding great deals that cash flow $500/month with only 20% down. I do find that you get a much better return on your investments with cheaper homes vs the nicer more expensive ones. Demand is huge for them and my tenants all seem to be lifers that won’t ever move up or afford to buy a home. They all seem pay check to paycheck kind of people. The yards aren’t as nice, but that’s ok with me. It’s not a beauty contest with my rentals in those types of neighborhoods. All I care about is having long term happy tenants who pay me on time and watching that mortgage dwindle away over the years! Good luck with your RE adventure. And I hope you find some great deals.

Great discussion and info everyone! Just curious, has anyone been audited? If so, what was your experience like? I’ve only been a landlord for 4 years and haven’t heard of anyone I know getting audited.

@Chris DeMello I would propose that offer to him. But in reality all he wants I’m guessing is cash so he can bail on that thing sooner than later. Your honest offer sounds like you’ve spent a lot of time and effort trying to make it work for both of you. Therefore, I bet he respects your situation and would be more likely to play ball with you than some other low baller looking to get rich off his property. When you offer him 240k cash after this proposal, I bet he jumps at that. Less headaches for him and a quick transaction with someone he now respects. Don’t go a penny higher than 240k though. He’ll probably try and milk another 5-10k out of you. Good luck!

@Kyle Hern I listed two of my properties on Zillow for rent before I closed and owned the properties. They post pictures and your description of the property for free on Zillow and other sister sites Zillow works with like Trulia. My phone rang non stop with both of there properties the day I listed them (a couple weeks before closing). I made appointments with prospective tenants the second I closed and received the keys. Both tenants moved in the next day and it saved me from turning on all the utilities under my name. And I didn’t have any tedious cleaning or yard work to do. It was very seamless thanks to Zillow!