All Forum Posts by: Miguelli Fernandez

Depending on the price of the home and what rent is, you may want to hold back more. If it is a $100K home, then $3K may be enough.  You want it to be enough that they do what is needed to get it back. Also ensure that the home is in the same condition as when you viewed it and put that as a condition of releasing escrow.  Find out what the going rate is for rent, increase it a bit for the shorter term and if they stay over 14 days, have a per day fee that escalates if they stay longer.

They can always get short term rental to stay in and put their stuff in storage.

I would NOT start any work until they are out.  There is too much risk of damaging their belongings and work will be slower as people are working around things. Plus if you are worried about the seller damaging the place, then inviting contractors in to do work is asking for trouble...redoing the roof immediately after closing is completely doable.

1. HELOC/HELOAN Interest Deduction

• You might be able to deduct HELOC/HELOAN interest against rental income if you can trace the loan to the rental purchase. However, this is tricky.
• A conventional loan tied directly to the rental will make the mortgage interest easier to deduct.

2. Where to Form Your LLC

• Ohio LLC - since your rentals are there. It’s cheaper, and you avoid California’s $800 annual franchise tax.
• If you form in California, you’ll pay fees in both states (California and Ohio).

But I would setup an LLC in WY and appoint your Ohio LLC as the manager of the WY LLC and put it all in a land trust. You want to maintain anonymity and protect yourself from liabilities at all times! Real Estate is a very litigious industry especially when dealling with tenants.

@LaTonya Clark I self manage out of state without any real issues and have bought 2 properties sight unseen. HOWEVER, I was very, very familiar with the location of both. One was on the same street as another that I own and the other was in a city that I had spent a lot of time and seriously considered moving to. 

My point, though, is that you're not buying stocks. Purchasing a property in a place that one has zero connection to, no working knowledge of, and is dependent upon strangers with a profit motive to succeed is a terrible idea. 

Every out of state investment that I have purchased was preceded and followed by me spending a lot of time in that market/property. You develop a team by establishing real friendships, relationships, and trust with locals that you get to know in person. When they watch you get your hands dirty, you earn their respect and move on from being faceless, out of state dumb money that they can nickel and dime to death at every turn. 

@Miguelli Fernandez sorry that you became part of a larger conversation. Most of this frustration is born out of the Ohio gang like @Jimmy Lieu who do nothing but spam these forums. Too many people with something to sell make this seem so much easier than it actually is. Make no mistake, you are 1000% on your own when you buy an out of state investment. You have to solve your own problems.

@Travis Timmons

I guess I am one of a few that has the higher power looking out for me. I found a great realtor That did a lot of legwork for me on my first rental and overtime We built a relationship. Now I found another realtor that does the same. And they both have been so good to me and I trust them. I’m on my 6th door. I have them check it out for me, FaceTime me, take pictures and get an inspector in there and it just works out for me. I was not familiar with the area, but this is where you trust a realtors opinions, as they should have an idea of the area and the potential rents and if it’s an A, B or C neighborhood. I have a duplex that I haven’t even seen that. I just bought a month ago. And it was an easy buy because it was already occupied with tenants that wanted to stay.

So that’s my story. I hope it gives someone to spark to realize that it can be done.

 MIguelli,

This is a good thing right now.  You realize that there is a lot you don't know yet and aren't sure how or who to trust.  These are good instincts.  The opposite would be just buying properties because someone told you it was a good deal and penciled out a spreadsheet that convinced you.  It is a good sign that you are skeptical, so don't be frustrated.

My advice at this point is to make a post on BP asking if there are investors or investor groups in the city you live in California that you can meet with in person who have invested in the cities you are interested in buying.  You will get some of the same responses, but look for someone or multi investors you can meet with and buy them a cup of coffee or a beer and ask them to share their successes and failures.  So many investors here are happy to share how they went about investing across the country.  Some will be more active, and some will be passive, but at this point, I would push forward with directly connecting with investors who have nothing to sell and are not collecting referral fees.  

Don't be frustrated, and don't be in a hurry.  Good, smart investments are always available.  It usually takes a bit of time to feel confident in your decision-making.  You will always get conflicting advice on different topics. But it does get easier to decipher the good from the bad and the helpful from the unhelpful.  

Good luck as you go forward. I personally think you're in a great spot because you are asking questions and not just throwing your money around. I hope you make a few connections so you can meet across the table and get the advice you need.

@LaTonya Clark

i totally agree with you - i have out of state rentals myself.  one i self-manage.  i just look for risk in posts - since I don't know the people in person i have to go by what they post, and so here i saw the same thing @Travis Timmons did - 'stacking' risk factors:

-from California

-probably chose Cleveland solely because of the price point and not because of any market knowledge

-asked about borrowing 100% and asked about forming an LLC

-did not indicate anything about strategy

to be very clear - these are fine questions that OP is asking, and out of state investing is a fine strategy.  it's just higher or lower risk depending on who you are and what you're trying to accomplish. and with nothing else to go on, this one seemed on the higher risk side.

Hi Miguelli! If you're investing out-of-state, you should have your core team that you can rely on to answer these questions before making any offers. Your realtor should be able to connect you with their network and help you with these. Happy to connect and answer your questions.

On question 2, why are you forming an LLC? More importantly, what is the goal or expected outcome of forming an LLC?