All Forum Posts by: Pat Alford

Are these all tenants in the same unit and under the same lease? If so, I don’t believe you are responsible for their safety, no more than it would be your fault if a husband beat his wife in your rental house. If one tenant is threatening another person, the threatened person should call the police. The police would get to the bottom of the situation and may issue a restraining order, which would prevent him from returning to the house. Easier than an eviction, and keeps you out of a type of domestic dispute, which are explosive at times.

What can the land be used for? Is it open farm land, wooded or hilly? A big consideration will be if it flooded last Spring, there was major flooding along the Ouchita last year. Some land in Arkansas is still below $1k per acre, but in that area, I am not sure about the averages.

I would add 4, don’t invest money and time in an area where activist with there own agendas and no money involved can screw things up. Makes me glad I moved out of an unfriendly capitalist state like Oregon and moved back south.

I am also planning to get my real estate license. Mainly so that we can look at a bunch of properties without having to drag another agent along. Especially early on when we are looking to see what is available.

Edward, thanks for the reply. And yes that was helpful.

I would love to know the answer from people with experience. If you lived in Central Arkansas, where house prices and taxes are lower than average. Would it be better to use the money for 20% down payments of 4-6 houses? Or buy smaller houses for cash, and then refinance, and repeat as often as possible? Or buy one house and rent it for a large cash flow? In my limited opinion, these are the obvious options. But I would like to know what people with more experience think. My goals are to use real estate for my retirement, with rental properties. For the next 5 years or so, I’d rather have tax deductions than extra income. Also a bonus question. If you earned about $100,000 more than you planned in 2017, how would you invest to best limit your tax liability?

For a new investor looking to buy and hold rental property, what legal entity would you recommend? We currently own our home and have two separate businesses. A cabinet painting business ran as a cash based sole-proprietor and I’m an insurance adjuster operating out of an S-Corp.

It will depend on the insurance carrier, and more importantly how long the leak has been going. This is sometimes difficult to determine, but if there are rotten boards, then it’s been awhile. Most insurance policies cover “Sudden and Accidental Discharge of Water”, but most exclude “Repeated and Continuous Leaks”. The easiest way to understand this, is that insurance covers events (like Hurricane Matthew or a pipe break or tree falling) and not processes (like tree growing into the side of the house, rot caused by a missing section of shingles, or an undetected water leak). All rental policies are NOT created equally. MetLife seems to have a more generous view of “unseen” damage, and will often cover claims that 95% of other companies would deny outright. I am not affiliated with any specific insurance company, but I am an independent insurance adjuster and deal with the claims side for a living. However, I cannot give any insight into premium increases or renew ability issues.

Typically a DP-3 (Dwelling Policy) will be the closest to your HO-3 (Homeowners) Policy and a DP-1 will be a “named peril” policy. The DP-1 will be the cheapest and also have the most holes in your coverage. Also nothing in Utah will cover flood except a policy from the NFIP/government. You should always put a recommendation in your lease, that tenants get their own rental policy, because your policy will NOT cover their stuff. For many tenants adding a rental policy may actually drop their overall insurance cost if they already have car insurance, due to the bundling discounts.

I would want to know the age of the dependent, and if the applicant has full or partial custody. If the dependent is 17 years old, they may be planning to move out (along with your hopes of collecting rents) in a year or less. If the applicant has only partial custody, they may also only have partial access to the SSI money.