All Forum Posts by: Phil Clark

Hello everyone- I am thinking about putting each of my 6 properties into individual LLC's in Illinois. With the LLC's, I will have to open up separate bank accounts for each. That will likely require me to use QuickBooks to keep track of everything. 

Does anyone have any advice on going this route? 

I'm not sure I'm making the right business decision. Thanks for any/all advice!!

-Danny

You might want to follow the "Deep Dive" series we're doing on our BiggerPockets blog about Metro Detroit cities, City of Detroit Neighborhoods and comparing Metro Detroit to other hotspots investors usually consider:

https://www.biggerpockets.com/...

That area is going to be a higher risk. The 48025 zip is in the city-proper so coverage will be much more expensive than in the suburbs.

Give Insurance One on Northwestern Highway a call.  I'm sure they can give you a quote.

Hello!

I recently bought my house (new construction) for 260k and the floor plan is now selling for 330+. I REALLY want to get into real estate investing. I'm thinking section 8 or STR. I'm thinking a HELOC could be my best route to get started. I'm thinking Heloc into a BRRRR Strategy and would love to talk to someone more knowledgeable than myself and that may have experience with this. My thinking could be way off! Not sure!

Zack

You are not even close to ready to invest OOS with that game plan. Using formulas and numbers is the best way to lose all of your money on your first deal because the numbers and percentages NEVER apply the same to all markets. When you say "Looking for best deal and not in a specific market" that just opens you up to every snake oil/area salesman out there. You have to be way better researched than that. You have to buy on-market so you need to decide on areas yourself and then find an investor-friendly agent in the area who can help. Or you can do what I always suggest and make a list of every place you've ever lived outside of CA and then a list of where your closest family and friends live and see if those markets have deals that will work with your financing. That way you have a competitive advantage of knowledge or boots on the ground rather than just saying you will invest anywhere a deal fits, that's a bad recipe.

Some things to think about:

Your biggest question shouldn't be WHERE to invest, but HOW you will invest!

Many OOS investors set themselves up for failure because they don't truly take the time to understand:

1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.

2) The Class of the PROPERTY they are buying - which is relative to the overall area.

3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.

4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.

5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.

6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.

7) That OOS property Class rankings are often different than the Class ranking of the local market they live.

8) Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.

9) Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.

10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.

11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.

https://www.biggerpockets.com/forums/776/topics/960183-what-they-dont-tell-you-about-cheap-rental-properties?highlight_post=5562799&page=3#p5562799

Also, SERIOUSLY consider - do you really have the time to be a DIY landlord or should you hire a PMC?

We think the Midwest is a GREAT place for OOS investors to consider!

YES, we may be a little biased, but check out our blog here on BP comparing Detroit to other cities and Deep Dives on Metro Detroit cities & neighborhoods: https://www.biggerpockets.com/...

Good luck with whatever you decide😊