All Forum Posts by: John Mireles

Rather than leave the valuation up to an appraiser, I'd bring in two to three real estate agents familiar with your area. Let them know that you're thinking of selling and would like to know what price they put on the property. I did that with a rental property I owned. Two came in fairly high and one came in way low. I ended up selling it to my tenant at a discounted rate from the upper end. The agent's cut would have been over $40,000 so that gave me some wiggle room to lower my price to the tenant. We both ended up winning since we both ended up saving some money.

Originally posted by Don Konipol:

If you don't mind a little commute, a lack of municipal services such as police or fire protection, boarded up properties as neighbors, and have a well stocked arsenal of firearms, there are some neighborhoods in Detroit where you can have your pick of properties meeting the 2% rule!

Classic!

I haven't checked out all of the details of your math, but I'm having a hard time seeing how you can take $50,000 using a "buy and hold" strategy to create a revenue stream sufficient to make a living off of within five years - especially if you're living in high-priced Los Angeles. You're going to need some significant cash coming in to be able to buy properties and I don't see where you have that laid out in your mini-business plan.

More realistically, you'll create a nice little nest egg to augment your existing income and then in 10 to 20 years live off of your real estate investments (sooner if the market goes through another bubble and you're able to sell, later if it doesn't).

The other option is to fix and flip so that you can cash out and use the cash to keep building your investment capital. That's not my area of expertise though so I'll let others speak to that.

Originally posted by Nate Wong:

Does the LLC protect the seller from non-disclosures?
Recently my investor friend being for water intrusion to the garage which he has no knowalege of.

An LLC is just a legal form used to organize your business. Unlike a sole proprietorship, it's not you actually conducting business, it's the LLC. So if there's a lawsuit, it's the LLC that is on the hook, not you personally.

Now there's ways to get around this and you can bet that a plaintiff's attorney will try every trick in the book. Gross Negligence and Fraud on the part of the LLC owner are two such ways.

So in the case of nondisclosure, the question becomes one of did you forget to disclose or not know about the situation? or did you actually know about the situation but take steps to hide it from the seller?

The first case would be simple negligence and thus not trigger a piercing of the LLC. The second case would likely be considered fraud - which would then put your personal assets at risk.

Keep in mind that plaintiff's attorneys don't play nice. They will always include causes of action and allegations so that, if a judgment is made in their favor, they will put the LLC owner personally on the hook. There's no absolutes in this business. LLC is a just another layer of protection that may or may not be helpful. If you have no assets to protect, then an LLC may not mean that much to you. As your net worth grows, it definitely becomes something to consider.

It all depends on your loan. I recently purchased a Homepath property using an owner occupant FHA loan. The note says that I must intend to live in the property for one year and actually live in the property for at least six months. Basically, after six months, I can rent the property to a third party.

What the lender and Fannie Mae want to see is that you've actually moved into the property. They want the mortgage statement to go to the house and they want to see utilities established in your name for the property. I wanted the bills to go to my office so that my bookkeeper could pay them but both the escrow and loan people shut that idea down.

John

Originally posted by J Scott:

2. If there is negligence on your part (i.e., you did something that you really should have known better that resulted in damage/injury), a judge could allow damages against you personally.

Simple negligence is not sufficient to open an LLC member to liability. Virtually all claims for damages will include negligence so if that were the case, there would be no point to LLC's. What's necessary (with regard to the tort of negligence) is Gross Negligence which is a wanton disregard for the safety and care of others. Basically, it's creating a situation where you know that someone is going to get hurt. Driving your car on a sidewalk or playing with fireworks in the middle of the crowd are two examples that come to mind.

In a home transaction, you might be found grossly negligent if your contractor told you what the code was for wiring under the house and the fact that doing it another way might start a fire but you go ahead and do it another way to save money. If the house then catches fire, you can bet that Gross Negligence will listed as a cause of action on the lawsuit.

Most people won't consider any ad that doesn't have photos. Craigslist even has an option where the viewer is shown only listings with photos. The number one thing you can do to increase your exposure is to add some nice, sharp photos that showcase your property. Listing a property without photos is like trying to play ping pong with one arm tied to a leg. It can be done, but why?

I don't care what business you're in, but if you expect people to buy from you, you've got to have something that people want and that they can't get anywhere else - not at the same price anyway. So my question to you is, are your properties truly special? Or can they just go down the street to find the same or better deal?

Then there's the marketing. I know nothing about wholesaling. Zero. But I do know quite a bit about establishing a brand - and my guess is that your brand is a big zero in your market. Any brand essentially boils down to a promise. It's a set of values that the client buys into with the promise that they'll get something predictable in return.

Do people associate your name with expert real estate investing? If not, they should be. Where's your blog where you write about your adventures in real estate investing? Your Constant Contact email newsletter? Your Facebook business page? Your Twitter feed? Are you active in your investing community? In the local Business Districts? You need to create your brand and get people interested in investing in you. Once they're interested in you, your properties will move faster than you ever dreamed.

Originally posted by Arjun K.:

I enjoyed your photos/style. One day when I make my billions you can take a portrait of my family :) Were the climbing shots taken in Joshua tree?

You don't need to be a billionaire to be photographed by me! (Though it doesn't hurt.) I actually photograph all kinds of people - most of my clients are pretty normal people.

The climbing shots were taken in Joshua Tree, Yosemite and, believe it or not, in New York's Central Park.

I've been a BP member for a few months now but have just recently started posting and reading some of the great posts here. I've bought and sold various properties going back nearly 20 years now. I own a couple of commercial properties along with some residential. I really enjoy the process of transforming a ho-hum property into something that people will love.

I'm a photographer by trade - I've shot for ad agencies around the country, traveled from Japan to Jamaica for weddings and have billionaires among my portrait clients. You can see some of my work at http://www.johnmireles.com. (Popular Photography magazine is running a little interview with me in their next issue if you care to pick it up at the newsstand.) As someone who's finely attuned to visual impact, I try hard to create an aspirational experience either for the renter or buyer. I want to create a space that the client dreams about living in. Not necessarily over the top, but something that just feels right. In any event, I won't settle for boring.

At this point, I'm looking to become more involved with REI. I'm young enough where it's still fun doing the work but old enough where I need to be thinking about what I'll be doing when I don't feel like doing my day job anymore.