All Forum Posts by: Kevin Brown

Originally posted by @Martin Rubio:

Originally posted by @Kevin Brown:

Don't do a series. It's a pain in the butt. Just do a regular LLC and don't be a slum lord and have an umbrella policy

Did you mean one regular LLC per property, or one regular LLC with all the properties you would have in each series on the series LLC ?

I would just do one LLC for all residential properties. Maybe until like 20 or so properties and then do a different one. Then if you do commercial do one LLC for each commercial property separately. I'm not a lawyer just trying to use some common sense.

Originally posted by @Thomas S.:

Get into the building trades. Skilled labourers will always be in high demand and the income will allow you to invest and the opportunity in the future to start you own business if you choose.

Start an apprenticeship and work toward getting licenced. The higher skilled the trade the better. Plumbing, electrical etc. If you decide to get into house flipping your trade background will be a major advantage

 I will disagree with this for two reasons. First, sales forces you to develop the ability to speak to another human being without being weird. Unfortunately, many young people struggle with this and it will hamstring your investing career. People simply won’t trust you. You have to sell yourself always. Secondly, sales is the only profession in which you can give yourself a raise any time you want. All you have to do is hustle and sell more stuff. All other jobs you will be dependent on someone else deciding your worth. In sales you make your worth. 

Having said that, skilled labor skills will always come in handy for a real estate career because you will understand what’s behind the walls and under the slabs. 

I’m personally looking in Killeen and Waco. Killeen is cheaper and is now going to be home to all three branches of the military. Some areas are pretty rough but you can go a couple miles and be good.

I have a Series LLC and it has limitations from an accounting standpoint and with banks. You basically have separate companies that share a tax ID but somehow aren’t the same company. Explain THAT to a bank. So I am going to do away with my Series and run it as one LLC. The ONLY benefit is franchise tax savings. IF you keep everything separate it could be another asset protection. For me it’s just a pain in the butt.

Learn how to properly analyze properties. And then analyze hundreds. Figure out what makes a good deal and a great deal. Stick close to home but maybe a couple hours driving distance. Don’t just look five minutes from your house. Start with small multi family. I started with house and for me it’s a waste of time. You don’t get financially free as quickly as you do with MF.

Sales. Doesn’t matter what kind. Salary plus commission though. Don’t do one of those all commission gigs. Save up enough money to buy a four plex and live in one unit. You can get a cheap mortgage that way and house hack.

Don’t do a series. It’s a pain in the butt. Just do a regular LLC and don’t be a slum lord and have an umbrella policy.

I was in Waco yesterday looking at some multi-family. It’s all about the area. Some parts are pretty rough. Like D class. The area around Bagby Avenue is B class. The cars are nice and the kids looked clean. I sat there for a while and watched them like a creeper. The leases will be up in May and you might not get another signed until September. That’s due to semesters obviously. So your annual vacancy is way more than the 5% you might plan for elsewhere.

Yeah I need to clarify. She didn't ask me to put $5,000 in the PM account, I just did to have some reserves and for $2,800 to replace the furnace in a few months.

So, let me break down how this works.

The PM account is in her name, but per the agreement the cash is my asset. The rent flows into that account, she pays herself 10% of the rent for PM fee, and then if there are any maintenance/repairs to be made. She always lets me know up front before something needs to be done and gets my approval. She also charges 100% of one month's rent as a listing and signing fee. This is taken out of the tenant security deposit (one month's rent), which means I will need to save 1/12th of that security deposit each month to pay the tenant back upon vacating. Also, my mortgage is a private loan and insurance and taxes are not escrowed. So, I have to save for those each month as those are actual planned expenses.

I have my property in an LLC in which I plan to add more properties to in the future. I have the PM account for property administration, and then a business checking account that I planned on moving the profits to each month to save for a future purchase.

I don't need or want any of the cashflow for personal use. It is strictly for growing the business. However, I don't want to keep it in the PM account, I want to keep it in the business checking account just to keep it separate. I'm very compartmentalized in my thinking, maybe a little OCD about it.

So, if I am "saving" each month for vacancy, maintenance, cap ex, etc. at what point do I have enough money "saved" for those items? Twelves month's worth? Six month's worth? If I have $5,000 for "reserves" can I then move any cash over that amount to a "savings" account for growth? Or, since I originally figured $100 cashflow do I just take out $100 each month for savings and keep letting the reserves build?

Again, maybe I am waaaaay over complicating this. 

Ok, so let me try to summarize the advice here.

1. Keep the reserves in my own account and not the PM.

2. Build up to $10k per unit (or whatever makes me feel comfortable)

3. THEN I can take out the excess cashflow and apply it toward future properties.

If I don't have this correct please advise. Thanks again for the replies.