All Forum Posts by: Martin W.

@Michael Plaks

Thank you for your response! I know there is a lot of information about LLCs on BP, and that is exactly why I'd like to talk to somebody about my situation. And the same for my tax situation. I'd be very interested to know who I could reach out to for tax/legal advise for rookie investors who do not have an extensive portfolio yet. 

With regards to my perspective on buying professional services, I totally agree with you, and I have no issues getting the appropriate insurance, etc. But for my business I think it's very important that at the end of the line there will be profits and not losses. If my legal and tax expenses are higher than my yearly cashflow, it doesn't make sense to me as I'd be losing money on my investments. Once my portfolio is large enough, then I think it would make sense to work with advisors who charge >$10k, but since my cashflow currently is too low for that, I'd like to know if it'd be possible to get help at an affordable rate for a rookie investor like me. Any recommendation would be very much appreciated!

Thanks! Where do you find an affordable asset protection lawyer? I've checked out Anderson and some other well known ones, but their $19k fee is more than my yearly cashflow ;) So my main question is, what are the options for rookie investors like me (who do not have an extensive portfolio yet) to get advise? Does anybody have any recommendations for who to reach out to for legal/tax advise/help?

@Darius Ogloza, thank you for your response. I'm looking for somebody who can:

• Advise me on structuring my portfolio: do I need one or more LLCs for my properties in Indiana? Or is that not worth it with only 2 (and hopefully soon 3) properties? And if I need LLC(s), then I will need help with setting them up.
• Help me with optimizing my tax return for next year (my wife and I both have a W-2, I also have a 1099 from a side gig, and we have the rental properties).

Any help guiding me towards affordable help would be great!

Thanks,
Martin

Hi investors,

I'm a rookie investor out of California who currently owns two out-of-state single family turnkey rental properties in Indiana. I'm hoping to expand my portfolio this year by one or two more properties. Both my properties are registered on my personal name and I have an umbrella insurance.

Since I'm planning to expand my portfolio, I'm looking for some tax and legal advise (for my 2021 taxes and to evaluate if I should move my properties into LLCs). However, when I look on legal/CPA websites, the pricing would wipe out my cashflow/gains.

What should a rookie investor like me do? Wait until I have enough properties for it to make sense, or are there more affordable ways to get legal and tax help? Any recommendation would be more than welcome!

Thanks,
Martin

Okay thanks, this is very helpful. I will focus on properties with higher rental income.

Thank you! Yes, the problem is that with $35/month repairs and $35/month Capex (and all other numbers quoted above) there is only a $25/month cashflow left. Since these maintenance and Capex numbers are too low, increasing them to 10% as you suggest will result in a negative cashflow. So it seems like it will not be possible to have a $100/month positive cashflow on a $700/month rental income when taking into account all other costs of a property with mortgage.

I appreciate that you take the time to respond to my questions. I'm a newbie and trying to learn here and definitely not trying to be lazy...

Thank you for your response. It will indeed take a very long time before I'd be able to replace a roof with only $35/m Capex. So I will focus more on properties with (potentially) higher rents.

Thank you @Joe Villeneuve, I understand that a low rent income won't cashflow higher. My question is: should I adjust anything in the numbers I am presenting? Am I being too conservative with some of these numbers? There are plenty of properties that rent for $700/month, so none of those are cash flowing?

Hi all,

I'm practicing by running numbers on a diversity of potential properties. When I run my numbers on SFHs with rents >= $900/month my cashflow ends up >$100/month, but when I go down to around $700/month the numbers don't work anymore. I'm trying to get at least $100/month cashflow after expenses.

Here is an example of a property, with my numbers:
Purchase price: $70,000
Rehab: no (turnkey)
Down payment: 20% ($14,000)
Closing costs: $3,500
Mortgage interest rate 5%; loan term 30 years amortizing; monthly payment: $304

Rental income: $700/month (in line with 1% rule)
Property taxes: $96/month (1.65%)
Homeowner's insurance: $50/month
HOA: no
PM: $70/month (10%)
Maintenance: $35/month (5%)
CapEx: $35/month (5%)
Vacancy rate: $56/month (8%)
PM vacancy renewal: $29/month (50% of one month rent)

Total cashflow: $25/month

What am I doing wrong? Or is the 2% really needed for properties of $70k and lower to make it work?

Thank you,
Martin