All Forum Posts by: Stephen D.

@Christopher B.

When you're starting out, to me it makes sense to have a separate site for each type of business.  The rationale is that you want people to know you specialize in that particular niche and want the website visitor to know that.  Also, from a SEO perspective, as you optimize your site for just that specific function and add gobs of content you will see an improvement in search rankings.

Here's another way to look at it - let's say you need a plumber and you have the option of calling a plumber or a GC.  Whom do you call instinctively?  The plumber.  Even though the GC may be able to do the same work and charge less for the work, your 1st thought is to call the plumber.  The guy that specializes in what you need.

Next, let's look at Property Management for your rentals - do you want your tenants to know you work or manage a conglomerate that manages every aspect of real estate and have a bigger target on your back or just a Property Management company?  Taking this a step further - would you hire a firm that specializes in PM to manage your property or a soup-to-nuts real estate firm.  As you get bigger, you can change your strategy to suit your needs.  

The discussion gets a bit murky when you get to home buying and selling.  There's no right or wrong way but if there's a choice and the expense is low, try it one way for a few years and if it's not working, change it. 

Off the top of your head, how many real estate companies can you name that do it all under one roof?  That's also a clue.

Bill's points are valid too but to me at some point branding will become important as well but you have to decide if that's across all your companies or for each company.   

BTW, there are many more pros and cons but was trying to keep this short.  Alternatively, you can try both sets of strategies and see what works better for you and just keep what's working.

Stephen

@Brandon Hall

If you re-read my post, I asked the OP to double-check. The OP replied that he had and taking a loan was not possible through his plan.

@Edward Stephens

Here's a mental exercise that I think definitely requires an Accountant's help + maybe a Mortgage Broker.

Let's say you decide to take money out of the 401K as a hardship and pay the taxes and penalty. Going with this approach might cause you to lose out on possible stock market gains but that in my opinion is a one-sided view. You will also, hopefully, get cashflow by renting out the other part of the duplex which in-turn will (guessing) lower your monthly payment (save money relative to the rent you're paying today, let's hope), depreciation that can be written off, ability to itemize deductions and interest and hopefully build equity. Things that you may not be doing today. I've heard from some of the investors we work with that these "deduction benefits" are sufficient to drop their tax rates from a marginal 33% to step down to much lower rates and it sounds like your income might be close to that mark.  Net-Net, there are pros and cons to everything but will require you to run through a couple of objective scenarios with your accountant before pulling the right trigger(s).  The other thing to watch out for is your CTP (Capacity to Pay) for the 2nd house.  This will require some financial math between your CPA and Mortgage Broker so that buying one doesn't preclude you from buying the next.

Stephen

@Edward Stephens

I believe many 401K plans allow for general purpose loans as well, in addition to a loan to purchase your primary home.  The payback period is usually different for a primary home purchase vs. a general purpose loan.  Also, these loans come without a penalty clause.  It would be worth your time (and money) to double check your plan details.   

Stephen

@Jason James

Great thread.  Would like to hear if you have an update for us.

Not sure if the BTU comparison is accurate... Generally, a tankless only activates all 150,000 BTUs when the hot water faucet is turned on.  Otherwise there's minimal energy usage as opposed to a tank design that's trying to keep water in the tank at a set temperature.  I would check the energy usage on both models and then make the determination.  Also, if saving space is a factor, tankless would be preferable but they are definitely more expensive. 

Stephen

 Another good follow-up system is Podio.  Issue is that it's too flexible and you have to be careful not to go crazy with it.  Also helps in managing workflow.

Welcome.  I really appreciated your blog post.  Thanks.

@Account Closed

That strategy generally works well in an appreciating market. But with every market and sub-market, there are ups and downs so while it looks good on paper, real-world experience may be different. Just something to consider. There may be other ways to increase velocity e.g., HML, Note Investing, etc.

I'll be the 1st to admit I don't know all the legal protections provided by a LLC in my state but to me it's like getting a car alarm. If there are 2 cars on the street one with an alarm and one without, the simpler option for a crook is to break into the car without the alarm. It has a lower risk threshold relative to the car with the alarm. Same with a tenant looking to sue. If the tenant or lawyer can get all of the necessary asset information easily, the decision to sue or not is easier. However, if it's difficult to get a full accounting of the owner/landlord's assets then my guess is that the chances of a lawsuit are generally expected to be lower. Let's face it, will there be some tenants that will sue regardless because they believe they have been wronged? Yes! Will some lawyers take on cases with a slim chance of prevailing? Yes! There doesn't have to be a rhyme of reason, it just happens. I care less about "piercing the viel," the DoS clause, etc due to my personal situation.  As long as you can erect hurdles that make it harder for someone to decide to sue, that's really the bottom line.  It won't offer all the protection but at least you've tried.  Similarly, insurance is also a type of protection.  Corporate structures and Insurance both serve a purpose, to protect the individual.  

Peace :)

@Steve Olafson

Thanks for posting the article.