All Forum Posts by: Mark Trebor

For trivial things like you pointed out, we do exactly that and say thank you for the observation we will place that on our to do list and will address it at a later date.  And we do address the issue but its always at a later date when its convenient for us, most of the time they are happy just being acknowledged.

Get 10,000 $1 bills?

Is your question how fast you should run from the deal? or is there a secret stash of gold in the backyard that is not showing in your analysis?

Hi Anthony,

I started my real estate adventure with a total of 4 like minded people, 1 long time friend and 2 relatively new co-workers.

We all graduated from college at the same time but different schools and all wound up working together.  We quickly realized that working for the "man" our entire life did not sound all that appealing.  We started an investment club, We started with each putting in $500 and then $100/mnth eventually we bumped that up to $150/mnth.  After 7 years we had enough money to put a down payment on our first house. That was 12 years ago!  Since buying our first house, one partner was bought out, we learned his heart was not in it, but he was a good guy.  There are now just three of us and we have around 5M in property our initial investments have been paid back and we have positive cash flow each month so we have no personally money in the company any more and we get a pay check I still have my W-2 job but the second pay check makes life a little easier.  So the moral of the story find some like minded people and see how well you work together take that time to plan for the future who has what strengths and weaknesses and do your goals align.  Or you can just mortgage everything and jump head first and see what happens.  I do believe there is some merit to that approach as well, the biggest obstacle is your first deal. After buying 3 or 4 houses you just ask where to sign and its no big deal.  We don't even look at the houses with our own eyes anymore, the realtor goes through videos them shares them with us we discuss the offer price and we either get the house or we don't.  No emotional attachment to the deal, the house has to make money or we walk.  Good luck.

How are your closing costs so low?  Is this a single family or a multi family property?  Why do predict rent will increase but your expenses will not?

@Jerry Akop - you will need to clarify, "if I do an LLC" if you are saying you have a mortgage in your name and you plan on changing title from you to an LLC via a quit claim deed then your bank is correct, they "can" call the note, will they? As long as you are paying they probably will not, in the current climate getting called is probably not a big deal, you could probably easily get another loan, 5 years down the line when things get rattled and banks start holding tight, you might not like a called loan so much.

If this is new issue mortgage with a bank and you are an LLC, then no the bank most likely would not have a call provision written into their mortgage, and you most likely would be a commercial lender at this point. So the devil is in the detail.

I had a lawyer tell me once that if you have a mortgage in your name but you wish it was in an LLC to protect from say something bad happening on your property to go ahead and fill out the quit claim deed have it notarized and just keep it in a safe place do not file it with the county. In the event somebody were to die on your property and the people wanted to sue you the quit claim deed acts as a legal document that officially transfers ownership to the LLC on the date of it being signed and notarized. You can file it whenever you want.... But if you have done something negligent that harms your tenants your screwed LLC, Partnership or held personally, negligence is negligence and they will get you if they have a good lawyer.

I personally own some houses in an LLP and some personally, I just have very large Liability coverage and an Umbrella policy that extends to my rentals as well.

Disclaimer I am not a lawyer or an accountant... just sharing conversations I have had with people claiming to be lawyers and accountants. 

@Derek Mckenzie We have an LLP, we discuss everything and usually come to consensus. There are only three of us now so that makes things easier with 4 their was often a 2:2 split but from the very beginning we agreed that 2 people could not force the other 2 to buy a house, when it came to buying the house everybody had to agree. Where we run into problems/disagreements the most is maintenance. Defining what is good enough and what is necessary is tough, but after almost 20 years we know each other pretty well and we know who likes new windows and who just wants to replace a broken window pane, who thinks a $10 gasket on an exterior door will last a couple of years and who wants to spend $1000 having a door professionally installed. We basically have some unwritten understanding that everybody in the group gets something they like every once in awhile. I think the biggest thing is if you bring people together you need to be like minded. If somebody wants to only do the accounting and 2 people want to do the dirty work, eventually somebody is going to feel taken advantage of so do your best to split the work out evenly. We have a quarterly meeting where everybody gets a chance to vent their frustrations with what has happened in the previous 3 months. We talk about finances, budgets, goals for the upcoming year and problems we see on the horizon. Good luck

@Scott Rogers - Working with friends was/is an experience.  After owning 3 houses with 4 guys we parted with one partner that was more interested in what we are going to eat for lunch then working on the house.  But we bought him out per our partnership agreement.  I think he's happier and I know I am.  He was more of a co-worker then a friend so breaking that connection was not as hard.  So now we're down to three guys and we still have struggles, but there has been more positive experiences then bad experiences.  Making money each month has helped us appreciate all that we have done over the past 19 years.

Do you have any like minded close friends that would be interested?  I got my start with three friends tossing in $100/mnth into a joint account that we invested in the stock market.  We did that for 7 years got a little lucky on the timing when we decided to sell our stocks and buy houses.  That 7 years allowed us to grow together and learn how each of us thinks about money.  We bought our first house in 2007 and well the rest is history now we have around 5M in property.

I probably can't help much more on the ARV front, when I fix up a rental that has been neglected for years. I do not factor in the ARV all that often, there have only been 3 houses that I have fixed up and then refinanced. I am more of a buy and hold use the cash I generate to fix up houses and pay myself. I did have one house that I bought for 85K dumped 55K into and then refinanced with the local bank and it appraised for 180K so I got a check for ~40K with a 70% LTV. But as i was doing that project I new I would refi and cash out but the house was so bad that new siding, new roof, new windows and a complete refreshed interior was going to increase its value dramatically. The best you can do is look for sales near year and I stress sales near you, not zillow "estimated value" which is complete garbage. Sorry I can't be of more assistance, I think asking your realtor buddies for advice is a good starting point as well. They will let you know the difference between an all white kitchen with marble countertops vs. golden oak kitchen with formica counter tops.