All Forum Posts by: Michael J.

Ultimately it may be in your best interest to take care of it and may be required by law depending on the state.

Rats don't squeeze in under a door, not a normal door at least, so I would first make sure that all outside cracks, crevices and holes are filled up, especially in a crawl space to prevent anymore from getting in.

Then, again it really depends on the state laws, but after my due diligence is done sealing up the up the outside and inside of any places a rat could get in I would think about telling the tenant that they can buy rat traps or whatever they want to use to get rid of what's is inside and I will reimburse them the cost with a recipe, I would only do this if I felt comfortable with local laws otherwise I would just hire a pest control person to take care of it. I would hesitate doing my own pest control if I can help it with something like rats. You definitely don't want a situation where someone gets hurt by traps or poison that you place.

If it is more related to the tenants being pigs than a hole on the outside then it may require some education on how to keep things clean and charging them for pest control if local law allows it etc.

The BiggerPockets Summit, oh wait they don't have one anymore :(

The Mr Landlord convention around May every year is a great one to attend that has a focus on rental properties but they still cover other aspects of REI. They have a hall with vendors, maybe 10 or so, each speaker usually has some sort of package they offer but the owner of Mr. Landlord, Jeffrey Taylor, is adamant that the speakers provide good value and learning experiences during their session.

Most speeches are something like 45 minutes of good solid information and advice and 10 minutes of sales pitch. 

They also have roundtable discussions every night for several hours which can be worth the price of admission in and of itself, the speakers or someone that is a expert in an area heads each table and you basically sit around and have a conversation about certain topics and can ask the table head or anyone else there whatever you want. Well worth the cost IMO. I try to go every year and always learn and get motivated.

www.mrlandlord.com

I also like the OREIA summit coming up in November. A little bigger than the MR. Landlord convention and has a broader range of speaker topics. A little more sales pitchy than Mr. LL but still the speakers provide useful info.

https://oreiaconvention.com

One concern with a 401k loan is if you were to get laid off or fired it would have to be paid back immediately or you pay the ~10% or whatever it is penalty plus taxes. It could still be a great option if it is worth the risk. I don't think I would tell my job what I am using it for just because some companies have policies that don't allow employees to work second jobs or run businesses.

How much extra money would you be out if you took the commercial loan and then refi'ed once its liveable?

If it were me I would have to balance out the pros and cons of each method, like if my company has had a really bad year I would be more hesitant to do the 401k loan.

Using a 401k loan can be a useful tool but personally I think of it more as a backup plan if I have a issue with financing.

"We finally agreed to the o orice"

Was that original price as in 75k?

Not allowing a termite inspection would be a big red flag to me. If he wants to force you to sign a contract to buy as is then you can bet there is termite damage. It might still be a-ok if the numbers work but no way would I buy as is without a thorough inspection or a clear clause that gives me a out if the damage is too extensive. My guess is he knows you will find termite damage and use that to lower the offer price, as you should.

I would be extra careful about other aspects of the inspections also, it doesn't sound like this seller is very honest or trustworthy. 

The bottom line is its about the money and if the numbers work. But if it gets to the point that this negotiation is causing you to miss making other deals then IMO I would walk away and focus on a new deal if you can't get it worked out soon with the seller and protect your interests in the process.

If it were me I would have sold it as soon as I moved to another state unless I had local very trusted people like family members or close friends I could pay to take care of issues and there was enough of a market I could rent it out in a month or less. The people I know that are successful with out of state rentals have a lot of units in the area to combine management cost, one offs would be very difficult IMO without someone local I could rely on.

Looking back, if you sold it the day you left and didn't make anything you would be up $70,000+.

Something else to keep in mind is a LLC does not provide absolute protection so you still need to take other measures to protect yourself like insurance, umbrella insurance policy, trusts to help further hide your identity, don't use your name and home address as the registered agent for the LLC. A lot of people suggest not having too many properties in one LLC also.

It may vary by state but a UPS mail box that you rent can be used since it is a street address, not a PO Box, and used as the LLC address. I don't know if I would ask anyone in .gov if a UPS box is ok, I have had people in the same office say yes and no at different times. I have been using a UPS box for years now with no issues. Some people also work out a deal with the attorney or CPA they use to act as a registered agent. There are also people that actually run a business as registered agents and will receive and forward mail to you.

It may seem like overkill especially when you are starting out but if you are successful and have several million in net worth you need to do what you can to protect yourself.

@Arianne L. That’s great to hear about the wholesaling. There is nothing wrong with selling contracts if laws allow it but I like the idea of actually taking ownership and then wholesaling. My main focus has been on rehab and sell but at some point a property is going to come along that would be better to wholesale it. I’ve talked to a few people that buy then wholesale so it’s good to hear others are doing it and succeeding too.

@Arianne L., @Chris Lemire

Awesome, congratulations and thanks for sharing, it helps inspire others and shows what works.

"Golden handcuffs", I love that term and know exactly what you mean, from the perspective of quitting a J.O.B. making more money can delay the process especially if your living expenses match the salary!

If you don't mind I have a few questions...

Is Flip hacking a company or a term like BRRRR referring to a specific method for flipping properties? I haven't heard that term before.

When you say flip where all of them rehab and sell flips or do you have many where you take ownership and then resell them without fixing them up?

For the wholesaling are they traditional as in you get a contract to sell but never take ownership or do you ever buy them and then wholesale them to an investor? Kind of like wholetaling I guess. 

For your team of four how much more volume do you think they can handle before hiring more people? And did you start hiring people ASAP even if it wasn't needed or did you wait until you had no choice if you wanted to grow more due to a lack of time you can put in the business personally?

From your experience so far  option do you think is the best route forward? Buying large multi unit properties under your own name with no or minimal other investors. Or investing with a syndicator as a passive partner? I can definitely see benefits to both routes. One of my main goals is as close to truly passive income as I can get.

A separate account for each property will be a nightmare unless you only plan on buying a few properties. Personal and business 100% separate. And one or a few accounts for each category. Like mentioned use a budgeting software to track what is what if you lump in more than one category to one account.

If the tenant is still in the unit the deposit definitely goes to the new buyer. It is technically not your money and in theory will go back to the tenant when moving or or as we know most likely will go to cover something the tenant broke or didn’t pay.