All Forum Posts by: Marco Bario

@Willie Holdman

Beyond purchase, the issues I see have to do with...

...management. You or your LLC can't do any work at the property - including property management. You will need to use 3rd party management and others to perform work at the home.

... further expenses and improvements. When you split up the purchase that way, all subsequent money must be contributed in the same ratio. If the IRA owns 40%, it must pay 40% every time there's an expense. That means it has to have the money.

...accounting. In part because of what I mentioned above, accounting has to be very detailed. Mistakes leading to funds being handled improperly could lead to the IRS blowing up the entire IRA account as a full taxable disbursement.

...liability. My retirement account owns assets such as notes that won't cause it to be sued if someone slips and falls. Direct ownership of real property is different.

@Travis Dumont

I have one. Message me, and I'll be happy to share it.

@Jonn Vidal

For me, that would be the end of offering furnished rentals.

Although - could you provide a separate "furniture lease" with it's own rental agreement? Furniture is personal property, and it's unregulated. 

I'm a new Buildium, but I chose it because a mentor of mine who is an excellent property manager runs her 60+ single-family rentals on the platform and uses it to handle all of her business accounting (including flips and investor disbursements). 

Screening is so important.

I'd rather have a property sit vacant for another 30 days than panic and rent to someone I might regret renting to later. 

Call previous landlords... including two back (the current landlord may be incentivized to lie to get rid of a bad tenant). Visit where they currently live. They'll live that way in your home if they are dirty now. Is their car a mess? Meet their pets and children. Don't accept incomplete applications. The ability to follow directions is an indicator beyond a rent application. 

Set your rent a little below market to attract more applicants. Pick the one that rises to the top. 

@Chad Nassar -

Maybe it's time to develop a network of private investors.

Share what you do with friends, family, and individuals.

I heard a great piece of wisdom last night from two very seasoned investors. Ask what people are earning currently and offer them just a little more. If someone's making 5% in a money market and you offer 12%, they'll wonder what's wrong with the investment. 

But they'll listen if you offer 6% long-term backed by real estate. 

Congratulations on completing your two rehab projects and placing tenants. 

The two year balloon with no extension option is dangerous.
If market conditions in 24 short months cause the property to underperform, rates to be high so that you can't reach DSCR hurdles, or lenders to tighten - you'll be in a pickle.

Talk with the Seller. Build rapport, discover why they’re selling and  problems they’re trying to solve.

Tired of management? Wanting to minimize cap gains? Property needs repairs or updates? 

You can’t craft an offer that solves their problems - one they’re likely to accept - until you understand the problems they’re trying to solve. 

I've done it. I took time to educate my agent... part of that was emphasizing that we'd be able to market to a broader audience, close faster, and sell at a slight premium. 

Also, I use professional underwriting and follow regulations and best practices. I can't emphasize enough that when working with other professionals, your reputation is on the line, and that of the other professionals. 

When I purchase a partial, I take full assignment of the mortgage/deed of trust and endorsement of the note. I want control. For you, as the seller continuing to hold the paper with an investor involved, dips a toe into the realm of making it a security.

Additionally, when I purchase wraps, I instruct the title company to pay off the underlying note at closing. I don't want the responsibility or risk of keeping the underlying in place.