All Forum Posts by: Matt W.

Hi BP, 

A few years ago, when first getting serious about investing, I had the time and opportunity so I got my North Carolina real estate license.  Since then, as I have learned more, I have determined that having a license isn't necessary for the type of investing I want to do. I also do not think the lifestyle of a professional full time agent will ever work for my family and me, so I do not plan on ever jumping in with both feet as would be required to be a successful "conventional" agent. 

The fees just to maintain the license are only @$50/year, so that is not a deciding factor. I plan in the future to just use a skilled and experienced investor-minded agent and gladly pay their commission.  

I've heard there are additional liability issues if you are licensed, but it sounds like those issues usually involve defrauding or taking advantage of a seller and concealing the fact that you are an agent. I will always conduct myself with integrity and honesty, so I would not hide the fact that I am licensed.  I also put that fact in writing on all my contracts and leases and have the other party sign to acknowledge. 

The only advantage I can foresee is one day in the future, when I am experienced enough to buy without using an agent (assuming I find the deal myself), is I could pay myself a commission to either use towards a down payment or just keep. 

Any licensed investors out there that aren't part of a bigger brokerage/agency? Let me know your thoughts!

Thanks!

Hi William, what credit union did you use?

Thanks

 Hi Nicholas, 

I have a question about a long term strategy for my wife and I buying investments. Broad strokes, she is an MD and has high W-2 earnings, I am a stay at home dad and have very little paper income. Our plan is to have my wife buy and own the properties using her income to qualify, then set up an LLC in my name that manages the properties and collects the rent. The goal being that after a few properties, I now have enough income, via the management LLC, to qualify for loans.

From a tax perspective, does this make sense? Can my wife own the properties and claim all the tax deductions while all the income goes to another entity? I understand that when we file jointly, the IRS sees that income again, but now it is "mine/the LLC's" which is a whole other set of rules.

I hope that makes sense and thank you for this years long advice column!

Matt

Anna, I don't think I understand what "We were told it wouldn't make sense for our real estate (my spouse) to ever make enough money to purchase homes" means? Could you pleas elaborate?

And Mr. Mom is just a colloquialism, not an insult!  

Thanks.

Hi BP, 

First a little background on my situation: I am married with two young boys, ages 2 and 4. My wife is an MD and earns $200k+/year.  When we had kids, I was working as a traveling nuclear reactor technician and would live on the road for 7 months out of the year, and although the money was good, hers was much better so it made sense for me to stay home and be Mr. Mom. My wife has great income but no real interest in being actively involved in RE investing.  I now have very little income but want to focus all my energy on building a rental portfolio to eventually replace her income. We both have 800+ credit. 

Our long term plan is to own many single family and small multi family rentals, hopefully purchased and financed using the BRRRR method. We currently only own one single family rental, it's doing fine, but we realized we need to have a plan moving forward if we want to own 30+ one day.

All that said, my question is this: What is the best structure for buying homes using my wife's income to qualify for financing, but another entity to own and collect rent?  The long term goal is to continue buying houses after my wife hits the 10 mortgage limit and also to free up her credit. 

For example, a local lender (who specializes in delayed closing loans specifically used by BRRRR investors) suggested I do this: 1.) Use our cash to fund a purchase and rehab. 2.) Refinance using my wife's income and credit. 3.) I form an LLC in my name to collect rent and act as a property management company. 4.) After doing this 10 times, now the income I receive from the LLC is high enough to allow me to qualify for loans, so we could either do 10 more in my name or repackage the mortgages in my wife's name into a commercial loan.

Am I missing anything in this plan?  Is this efficient or does it even make sense?! I think it sounds like a good plan but I'm hoping some professionals and more experienced investors can give me advice! 

Possibly my wife should "own" the properties in an LLC for liability reasons, but still have it managed by my LLC? Of course my wife gets hammered with taxes, so I'm hoping she gets most of the tax deductions to offset that, ie she gets all the paper losses but I get all the income? If it matters, we file taxes married/jointly.

I know that was long winded and I hope it made sense, thanks for reading!

Matt

@Bruce Martin

Nice deal, thanks for sharing!

I’ve started to look seriously at Fayetteville and Jacksonville, NC as potential BRRRRs because there are cheap SFHs available that would rent well with the big military presence in the areas.

What is it renting for?

Thanks Maria, that is a great tip! I would like to focus on quick turnaround jobs that investors need, like wall and cabinet repair, light plumbing and electrical, and rental make ready. I also work part time for a property management company that mostly does beach house rentals.  They give me some work for longer jobs that would take too long for the other maintenance guys to do, such as painting or deck repairs. 

I imagine on-call pricing working something like to show up is $50 which includes the first hour, and each hour after that is $30.  I know this pricing is much cheaper than what the property management company charges. 

Hi BP,

I am a new investor and just started my own one-man handyman service last week.  I just got my $1 million insurance policy and am ready to get started!

I am looking for tips and advice from seasoned landlords about how they found a good handyman, problems they have with bad ones in the past so I can avoid repeating those mistakes, and how I can be a valuable member of someone's team.

So far I have only given out flyers at this month's REIA meeting, which was poorly attended due to COVID 19. Sometimes when I search the local GIS and discover a certain investor owns many properties in an area, I will look them up. Is it appropriate or creepy to contact them and say "Hi, I wanted to let you know I am a new handyman in your area. I admire your portfolio and would love to help you manage it."....?

I have never hired a handyman for my own properties, so I don't even know how pricing works.  Are you charged a flat fee just for them to show up and assess the problem? Is it an extra fee if it is the proverbial toilet overflowing at 2 am?  

While I enjoy fixing and building things, more importantly I consider this a way to build a network of like minded investors and provide them with value so in the future I can focus more on investing and less on swinging a hammer and plunging a toilet. 

Thanks!

Thanks for all the detailed replies.  Sounds like the possible benefits are far outweighed by the potential risks and I will definitely get the permits the first time!

Thanks everyone for your advice, 

Sounds like a unanimous verdict to get permits, so that's what I'll do!