All Forum Posts by: Michael G.

Any other comments or advice? I am interested in hearing what others have to say.

I see this as our second phase to our real estate investing career and, while we have a lot of experience with SFH's and small muti-unit properties the idea of partnering on larger projects is new to me.

Thanks in advance for any advice.

Thanks Rusty

To be clear, I would be part of the investor LLC / LP. 2 investors would provide $50k each, I would provide another $50k myself. I am 50% owner of the holding LLC. I am not talking about using my of my IRA money, this is an investment out of my own personal savings.

So, a while back I posted a question about having multiple investors all making small investments to my LLC. That sounds like it's really hard to set up because of the SEC rules.

I have a different idea I wanted to see if anyone could help me with.....

I have 2 people that are willing to invest about $50k each and I would bring $50k to the table as well.

The goal of this partnership is to use that money to either directly purchase rehab properties or as money to bring to the table for lager property deals (to make up the 20% skin in the game that lenders need for a mortgage commitment).

My business partner and I already have an LLC that manages our existing properties. We want to keep using this LLC as the main entity.

We are thinking of creating a separate LLC or LP as the investor entity that would provide funding (and that would probably be a second position lean holder on the property).

The main entity would be the property owner and would pay the investor entity x% interest (probably like 11% or so). The main entity would pay off the monies used in 2 years and then the investors would be off the property (probably would require and closing).

1. Is this common?

2. Is this legal (I guess that is tied to #1 above)?

3. What is the best way to set this up? We are going to talk to our lawyer about this but, if this is common, what are some general things we should keep in mind?

Thanks

I should start another thread because I have been wondering about this for a while... but I will post here.

I am like a lot of folks on this thread, I don't need to be mega rich. I make really good money now (according to the article most people would already call me "rich" I guess) and I really like my career.

But I do really look forward to the day where I can work on my own schedule.

My business partner and I have enough properties right now to get by in retirement (about 20 years away) but that isn't my goal.

I read a lot of stuff on this forum and it seems like most people are using real estate investing for retirement income not as a "career replacement."

I hear people talk / dream about real estate as their only source of income but does it actually happen? Are regular everyday folks out there really doing JUST property investing with long term buy and hold properties as a career or is that a pipe dream?

I think it is possible to do but I only know a few folks who are doing it.

Funny story....

But I have to reply to the rabies comments. Squirrels are not typically known to be a carrier but they CAN be and you should be EXTREMELY worried about that.

Animals that display behavior like you are describing are exhibiting the classic signs of rabies. Let me repeat that, these are the C. L. A. S. S. I. C. rabies characteristics.

While everyone is having a good chuckle I want to point out that rabies is COMPLETELY fatal to humans unless you catch it very early. You are joking about foaming at the mouth, when it gets to that point you are already dead.

I am not your doctor or part of your family but if you don't go see a professional about this you are crazy. It could be nothing in which case you are out the doctor's visit. On the other hand if you don't do something you could die a really really unpleasant death, it's that simple.

Good luck with rehab and remember your health is MUCH more important.

I couldn't disagree more but we are probably dealing with different types of tenants.

We paint our properties a really light blue with white trim, it looks GREAT and it let's us stand out from all the "all white" properties out there. It let's us get many inquires on our listings (CL mostly).

Again, it depends on the people you are looking for but we are going for a little more advanced tenants not lower rent types.

To the OP, based on our business model our places usually move really quickly so renting during the Winter doesn't seem to be a problem but as others said, from Thanksgiving to the new year is a little tricky.

Something to keep in mind that our real Estate agent brings up often. People that are moving during the winter have a reason to move.

That reason could bad, like they got kicked out of their last place. Or that reason could be good like they just got a new job.

Either way, people don't usually want to go out ticking ties when it's cold out so they tend to be really looking for a new place.

I use Google Voice as well, always goes to Voice Mail.

If they don't leave a voice mail don't want to deal with the phone call I would have gotten anyway. If they do leave a voice mail I can tell which people I am going to call back based on how they represent themselves.

EXACTLY!

I would only add that they also picked you. You picked each other for various reasons. If a bad tenant picked your home to live in then I think it would be prudent to ask yourself why.

As Craig said, if you choose to invest in bad areas because you want a higher rate of return etc. then you should expect to get more hassles....

But EVEN with the people who are slow paying regardless of the area, do you honestly think treating them like a pay check is going to help matters?

Send the d*** card folks.

:D

Anyway, as far as gifts go. I hear people saying "that's all fine as long as you don't have a lot of tenants" or some such. It's a card people, maybe with a box of candy.

My business partner and make $200 a door on average for our long term rental properties, a $25 gift is like .01% of the profits we make over the course of a year on any given unit.

???

Is money that big of a deal?

I am a strong believe in the "you get what you expect" philosophy in life. Ever wonder why the most crusty old landlords have the worst attitudes about tenants yet end up with the worst ones?

Much of it comes down to their viewpoint, that negative "the tenants should get the back of my hand" vibe just shows in every action they take. It should come as no surprise that they get the tenants who will take any property because they just got kicked out of their last one.

Give a card, treat people like people, it will go a long way to making you happier and creating wealth.

Put it another way, everything you do this (or any business) is about sales. Never forget that. When you sell something you never close the deal based on "features" or "benefits" you close the deal on emotions. Where someone decides to live is a very personal and emotional thing.

Funny, you can say I am crazy but we have VERY low vacancy rates and an EXTREMELY low late payment % on our properties. If you are having a lot of problems with your tenants you might want to take a minute for some self reflection.

Well, I got an email back from from the attorney and upon further review as they say... he recommended another attorney more experienced in that area of business law.

I couple of notes from his reply.

- Pooling investors is technically is a security (doesn't matter the number) and requires a registered offering

- Disclosures and audits must be preformed for the state

- Our outside investors can form their own LLC which could loan to our property group but we can't be controlling members of that investor LLC

I didn't mention trying a private placement, that might still be a possibility. I am going to see what the other attorney has to say, I guess we will see.