All Forum Posts by: Keith A.

Makes sense. Thank you for the replies. We will start slow and make sure we are getting the returns we expect. We're hoping to network so that others will help us locate deals and we can pay them a good finders fee.

My brother and I are ready to begin buying property as passive investors with a goal of achieving a minimum CoC return of 15%. Looking for SFH and multi-family 1-4 units. We are looking to use property management and other outside resources to help. Eventually we would like to do this full time but want to get things going for a few years before then.

We also have enough money to buy properties cash and then do cash out refi's later on as needed.

My question is how to find the people to help locate deals for us. Would we look for local wholesalers and real estate agents giving them our criteria?

We are in South Florida (willing to invest outside of this area if deals are better elsewhere) and any help in this area is appreciated.

@Tim, thank you for the insight into this scenario. I'll definitely check into the sub-metering as it seems to benefit everyone and make things more predictable.

I'll have to check on the sub-metering but I see your point as that variable can erode the cashflow. Good point on checking those bills over a 24 month period and look for any spikes or trends up.

Thank you for the information as I can add it to the due diligence process.

Thank you for the quick responses.

The range looks to be in the 750 to 850 for this size unit in the area. The LL pays water/trash.

I'm not sure about the inspection as I haven't got that far to inspect but not knowing much about section 8 I will have to research this.

For the expenses I am counting those percentages and using 50% of the lower income number to see if it is worth pursuing. I like to be conservative with things to avoid surprises.

I'm looking at a multi-family deal involving 4 units. All units are rented but one of them is rented much higher at section 8. Three are about $800 per month and the section 8 is at about $1000.

When doing the income analysis should I include that section 8 unit at it's rented price or assume it would rent normally at the $800? Logically it would make sense to use the normal rented price in case of a vacancy but thought to ask in case there is a common practice in this situation.

I'm trying to go after minimum 15% CoC returns so this would affect the price.

Thanks for the replies. It sounds like a commercial umbrella will need to be added long term.

I've been looking and getting quotes on personal umbrella insurance and noticed that they have limits on the number of properties that can be added. One had 3 and the other had 6. We are looking to find one which has the ability to include many more.

The properties themselves would be in an LLC but my understanding is that the personal umbrella should include them for protection. Maybe I'm wrong in this thinking.

Am I missing something here and do you have any recommendations on companies that do umbrella policies for investors holding properties?

Thanks Bill for the response. So in essence I could have 5 entities with properties of one or two in each and then use a single PM entity for them.

Yes I will be speaking to an attorney about the details but wanted to get my head around the concept.

It looks like in Florida you can use different accounts for deposits but if it has interest then you have to pay the tenant a percentage of the return.

Thanks Will for the explanation. I also did some deeper searches and found more information so my understanding is below.

One LLC would be created for the PM. It would handle income/expenses and the leases would be in its name. It would make regular payments to the holding LLC and have a contract between them. It would have two bank accounts, one checking for normal operations and a savings account to hold deposits.

A second LLC for holding the property. It would have a bank account associated and handle payments from the PM LLC, debt service and capex.

This makes sense to me if I am correct in my understanding but I have a couple questions if this is the strategy.

Can you use one LLC for the PM for multiple holding LLCs to keep the LLC count down and still be protected or is this considered commingling?

Last, does both type of LLCs (Holding and PM) use the same multi-
member structure?

I really appreciate all the replies and insight.