All Forum Posts by: Michael Hill

Quote from @Sofia De Santos:

Thanks so much for the insight, Michael! One last question to that. In Texas, if we were to get sued by our tenant in our rental property that is under our LLC, could the house under the LLC still be subject to being taken away from us in worst case scenario? I am understanding that the house is still an asset at stake even if under an LLC. So what is the major benefit of the LLC?

Yes, that's right. If you were sued by a tenant who was living in a house under an LLC, you could still be at risk of losing that house if the tenant's suit was legitimate and held water. The benefit of the LLC would be to protect all of the other assets that you own outside of that LLC. For example, you would not be at risk of losing any other property that you own outside of that LLC and your own personal money would also be safe. However, if the property was not in an LLC, and the tenant filed a suit against you, then your personal assets such as the money in your bank account could potentially be at risk. Ultimately the LLC isolates you from the property in terms of liability to mitigate your potential losses in a worst case scenario.

Hi @Geovany Espinoza, I would love to chat about real estate sometime. I am also early on in my real estate investing journey and would love to connect with other Houston investors!

Hi @Belinda Arredondo, It sounds like house hacking would be a great option for you based on the info that you provided. I would try to find a property where you can rent out part of it while you live there, such as renting out a room in your house as you mentioned. It could also come in the form of buying a duplex and living in one side while renting out the other. This would allow you to get started in real estate investing with very little money down, as down payments for conventional loans can be as low as 3%. I think that house hacking is a great way to start real estate investing, especially if you don't have a lot of savings that would be needed to rehab a fixer upper if you go the BRRRR route. Also, you could buy a place that is currently livable, but might be dated or still need some repairs, which would allow you fix up the home while you are living in it as you are able to save up money. This way you would still be adding some value to the home, but just not all at once or as much as a BRRRR.

Hi @Sofia De Santos, If you plan on transferring the title of the home into your new LLC, then the lease should be in the name of the LLC. You should also have payments and any other financial transaction related to the property go through a business bank account that is also in the name of the LLC. This is necessary for you to enjoy the liability protection that the LLC offers. It will also make it much easier to track all expenses and payments if you have a bank account dedicated to the LLC, making it easier when you file your taxes at the end of the year.

Hi Isaac, the logic for purchasing a LTR property that does not initially cash flow is that the property will have good future appreciation. It can be really hard to find SFH that will cash flow at all in some markets due to how hot the housing market has been with rising housing prices. It really depends on what your long-term personal investing strategy is, but for me I think it is okay to buy a LTR property that will at least break even on cash flow after taking all of the expenses, cap-ex, vacancy, etc. into consideration. You can still make a lot of money in the long run by buying a property that might have negative cash flow if you buy in the right area, but I just wouldn't want an asset taking money out of my pocket every month and taking money away from my next deals. It would also be a little more risky because then you are relying on price appreciation and rent increases, which even if those are likely, it is not always a guarantee in the short-term. Because of these things, I try to avoid properties that will have negative cash flow, but will not shy away from deals with no initial cash flow if every thing else looks good.

Hi @Brian Carnesecchi, my short answer is that you should talk to a real estate attorney in your area. Now my thoughts on it are that I personally would not want to take the risk, but it really depends on the specific situation. Even if an HOA is dormant or inactive, it can still be revived if the association has recorded covenants on the property. There would always be a small risk that you could be found in violation of the CC&Rs. Also, if your CC&Rs specify a course of action, your neighbors could potentially sue you for violating the CC&Rs if they were unhappy with what you were doing. Definitely talk to a real estate attorney who is familiar with your local laws though, they will be able to help you much more than anyone one this forum.

@Katie Jewell Sorry I couldn't be of any more help. Feel free to message me if you need any advice or help when it comes time for you to sell. Best of luck!

Hi @Taylor Gaylard,

Some people have been saying that the real estate market has been due for a big correction for the last few years. Any of these people who have chosen to sit on the sidelines and wait for prices to decline have missed huge double digit appreciation numbers in almost all real estate markets over the last couple of years. With the current housing shortage, I think it is unlikely that there is a housing crash anytime soon, but I agree that it is always possible no matter how unexpected.

If you find a good deal that has some cashflow, then there is no reason to worry about a crash because you could just ride it out anyway. How would it affect you if you kept collecting rent each month? It is important to account for any unexpected costs that arise and set money aside for vacancy as well, but if you do this and the rent you collect covers all expenses associated with the property, then you have nothing to worry about.

@Katie Jewell Oh I see, I had done the exact same steps to edit my home info so not sure why they don't allow info on some homes to be edited. I think your best bet would be to try submitting a request to the Zillow help center here https://zillow.zendesk.com/hc/... to see if they can do something about it.

Hi Tyler,

I just want to point out that you will have trouble obtaining a mortgage for that small of an amount, so for a property like this you will likely have to consider buying the property with cash or getting a hard money loan, which will carry a higher interest rate. While evaluating whether it would be a good property for a BRRRR, you also need to consider how much money it would take to fix up and what the ARV would be once the rehab is complete.