All Forum Posts by: Pete Harper

Using your numbers at $190/sqrft for 2000 that's $380k. To cash flow you'd need to rent for $3500+ a month. Sounds a bit lean to me  

Have you priced out new construction for comparison? Classic Make vs Buy. 

Quote from @Allan Smith:

A good attorney could likely show that the llc isn't truly operating as a separate entity and thus crack open lawsuit to personal assets or insurance. 

llcs are kind of a waste of money, insurance policy largely does the same thing. In my state the llc taxes are massive. Not worth it.

I hear this same sentiment often quoted but have never heard or met anyone with first hand experience. Recently on BP they interviewed a risk mitigation lawyer. He highly recommended having an LLC for asset protection. The combination of an LLC and good liability insurance was the best protection. In my state there is no added cost to maintain an LLC and no state taxes. There are some federal tax advantages that more than make up for the LLC cost. 

I'm looking for advice on liability insurance coverage.  I've posed the same to my insurance broker, seeking a second opinion.  

I currently own a duplex. I first purchase the property in my own name and signed for the mortgage. We were just starting out and I didn't have a credit history in the LLC name. I was able to get better financing terms using my own personal credit. The loan is conventional FHA. About 9 months after closing I was able to transfer title for the property into the LLC. However I could not transfer the loan without refinancing. This leaves me with the property held in LLC name with property insurance and a Million dollar umbrella policy in LLC name. My question is do I carry direct liability exposure from the loan being in my personal name? Can I be sued directly without the LLC to buffer? I carry a Million dollar umbrella policy in my personal name. Will that cover me in the case that I'm sued?

Suggestions on better liabilty coverage?

I just wanted to give an update on my latest search.  After watching the crazy prices and bidding wars in Killeen-Temple I decided to look elsewhere.  Killeen-Temple just didn't feel right.  Only time will tell if I'm right of wrong.

You might ask where did I go?  I just put a property under contract in Conroe, TX.  Here is my reasons why; Conroe is a rabidly growing suburb of Houston.  The population has about doubled in the last 10 years.  Conroe was the fastest growing city in the USA 2015-2016.  Population is predicted to continue to grow as Houston expands Northward.  Conroe has a more diversified economy. I'm concerned with Killeen's dependence on Ft Hood.  Rents are higher for a given price point.  I was able to land a 0.9% deal while in Killeen everything was closer to 0.5-0.6%.  Two years ago you could find 1+% deals in Killeen but prices have out grown the rental market.  A 2BR/1BA that rents for $750 in Killeen is getting $950 in Conroe.

Quote from @Damilare Wusu:

I live in Dallas and may have a 4 unit multifamily to close on soon that has 3 units rented and I would plan to live in one. Thoughts for the area? Is it stagnant? On the rise? Not familiar with the area. Thanks!

Welcome to small town East Texas. I don't have property in Anderson but can comment of rural East Texas. Population and job growth are pretty stagnant. That being said we have seen strong demand for C-class properties. Rents are slightly above similar properties in larger markets. Limited supply keeps prices high. Good solid cash flow but not tremendous appreciation potential. 

Quote from @Andrew Frowiss:

Hi Leslie,

I would recommend looking into Killeen TX. Austin is a really good rental market, but it's not really a cash flow city anymore and is more of an appreciation play. Killeen is a little more north of Austin and it still has properties that cash flow and give decent appreciation while having much lower purchase prices. You could get a triplex or a quadplex for the same cost of a single family in Austin. A lot of my clients are buying there now instead of Austin.

That was all true a year or two ago. IMO Killeen is currently overheated. See discussion on Killeen-Temple feels like a bubble. 

Quote from @Leslie Monroy:

Thank you so much! Will definitely look at Killeen.  Would welcome any recommendations for property management companies and contractors for the area.

I would like to give a shout out to Isbell PM in Killeen. 

I would not recommend Armadillo. 

Quote from @Alfonso J.:

HI @Pete Harper,

On multifamily you can get up to 80% leverage. Why not maximize your leverage and diversify your liquidity and get multiple properties instead of putting it all into one?

I don't like to carry a lot of leverage. My strategy is to buy properties with mostly cash that cashflow. I use the cashflow to drive appreciation organically. Properties pay for their own renovations as I turn over tenants. After the property is fixed up I refinance and pull all my equity out and buy another one. Classic BRRRR If I leverage at 80% I'm stuck once my capital is used up. This doesn't scale. BRRRR scales infinitely.

Quote from @Dan Kerch:

@Pete Harper Are looking to do any renovations or just finance? 

 Just financing.  I like to set this up so the properties self-pay for renovations with cash flow.  Its a bit slower but properties grow organically.

We are looking for financing for a 10 unit apartment complex in Conroe, TX. We will be doing a 1031 exchange and will be putting a substantial down payment. $700k on $1.1M property. Financing will be held in LLC. Property will provide positive cashflow after debt service.