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Bonnie. I am assuming what he does is purchase the property in his name, then do a Quit Claim Deed to transfer the property to the company. While this does give hime liability protection, if there is a problem with the financing, it is all on him.

when you purchase a property, you should be able to purchase in your name, then do a Quit Claim Deed to transfer title to your Company. This will give you the protection you are looking for as far as liability goes, but certainly if anything happens as far as the mortgage goes, it is all on you.

In many areas, the slowdown is not just new home sales. You can look to the Board of Realtors to get specifics, but inventory is definatly up. Is Real Estate doomed? Absolutly not! You do need to watch your investments, but there are a number of reasons the rise in interest rates is good for the investor. One being that there will be many more foreclosures(good deals, and more tenants) the other is that while rates were so low many people that couldnt buy before were able to purchase, and left the rental market. Leaving the bottom of the barrel tenants in the rental pool. Good things ahead. my personal prediction is that around 2009 we will start to see appreciation rates take off again. but until then, look for the deals and be ready for the surge.

thats quite the run on sentance. I read it three times, and can not understand what you are saying.

Section 8 problems do not just stem from the tenants. I have seen Section 8 literally ruin investors. Here is what happened. a small develpment of 30 4-plexs owned by different investors. 95% of tenants were section 8. Owners want to improve the buildings and talk to the city about possible grants, or low cost loans. City walks in demands many repairs and upgrades totaling 25k per building, and Section 8 refuses to pay rent until items are completed. At the same time section 8 reduces rent by $375 per unit. Wow what just happened to the value of that building? 2 years later 17 of the 30 buildings forclosed, and the other 13 buildings accrude 50-100k in loses.

As a side note, section 8 is only required to pay if the tenant is living there. if the tenant just up and leaves without proper notice, section 8 is not required to pay anything. You could always go after the tenant, but you'll spend a dime trying to chase a nickle.

My point is that there is no easy money, and be aware of your risks.

I agree completely that you need to take care of problems as they arise. But are you suggesting not to form a company, or companies?

Yes, you should incorporate. Most likely with at least 2 companies. I know many investors who never incorportated and never had probelms, but you do not want to be one of the guys who gets sued, and loses everything.

Just to throw my 2 cents in.. You do not get all the benefits as you would a corportation. You do get asset protection much the same as you would with a corporation, but the there are many benefits of a corporation. Generally speaking is a Corporation best for a property owner? NO. But all business entities have their own advantages. An LLC has the lease regulations, and requirments. It is most likely your best bet. A good rule of thumb is to keep about 3 properties or so in each LLC. The reason you may want to keep this limit, is that if all your properties are in one LLC, and you get sued, they can go after the assets of all assets in that Company. I know some investors who will form a new LLC for every property. This may be a little excessive, but they are well protected. Another thought is if you have 2 $100k properties, and a $1,000,000 property, you probably want to keep the big gun in a separate company.

No, your credit line will not increase. I tried expaining that your credit score will probably go down when you initially purchase. You now have new debt, and have not established it. Yes, Roanimare limits are centered around credit scores. I have seen someone with 800 credit scores have a building forclosed, and many credit cards closed his accounts even though he never missed a payment to them.

Looks like you got your numbers correct. Except the cap right, wich you just added an extra zero it is 8.87%. Also, the cash on cash return is 9.82%.
Maybe I see things differently than most, but it seems like a decent investment to me.