All Forum Posts by: Mike Smith

I think you do get to write off the expenses, but I'm no CPA either.

From my perspective, the main reason for an LLC is an attempt to limit liablity. Noobdog1, what other major advantages would you get from an LLC? There are actually a number of added costs in terms of both money and time to using an LLC or other corporate structure.

Absolutely true. Many gurus and other experts gloss over the need to follow corporate formalities in order to establish liability protection. This may be out of necessisity as it could be construed as giving legal advice without a law license. My suspsicion is that the vast majority of small LLCs, corps, or other business structures are run in such a way that an attorney with the proper desire and motivation could blow right through them. Following the corporate formalities can be a pain and even seem kind of corny (calling the annual meeting with yourself and/or your spouse, separate bank accounts, etc. ), but it is crucial for protection. Anyone with any questions should consult an attorney on this. Paying for an hour or two of an attorney's advice could prove to be cheap insurance if you are ever sued.

I just had to do this. I checked with my lender and they said it was okay (actually they told me this was the way to do it). It was due to some rule the lender had re making the loan in the name of the business and haveing to charge more. I did verify that it would not cause me any problems with my lender before doing it.

I've come across a property that looks like it would cash flow very well. The sewer information is listed as "lagoon." Anyone familiar with these and could let me know if they pose more than the usual amount of headaches and expense as far as maintenance?

I was pretty amazed with the numbers too, but chalked it up to regional differences in property values vs. rents. I'd say my area is closer to 1% than 2%.

Ryan, I agree that these are good principles. It's more specific advice on executing on these principles I was hoping to get out of the course. I was disappointed to see how much you had to pay to be told these principles and little more. Like I said, this very well may be a different course than the one I looked at.

I'm in the offer process on my first property. The inspeaction reveaved some horizontal foundation cracks near the top of the foundation as well as some mold. I'm not so much worried about the mold as the cracks. I'm getting alot of info that horizontal cracking on the foundation is VERY bad adn costly to fix if need be. There is no evidence of water leakage and the seller is not aware of any.

Anyway, I'm starting to think maybe I should pass on the property, but then I wonder if I'm using the cracks as an excuse. Anyone got any thoughts on horizontal cracks in the foundation. If it helps, the cracks are 1/4" at the widest and are on 2 walls. They are several feet in lenght. An interior door does not open smoothly (scrapes the floor).

This guy is an investor as well as a realtor. He's given me some pretty good advice, but the 1% rule seemed too easy. That's why I was wondering if it is used, as you said, to sift through possibilities before crunching the actual numbers. Thanks for the reply.

In looking at rental properties with a realtor, he mentioned the rule of thumb of looking for something with gross rents of at least 1% of the purchase price. What are your thoughts on this? Do you use this rule? If so, how do you use it?

This seems like an overly simple analysis. Don't you need the expenses, etc. to figure out if the deal is good. I can easily see situations where the rent meets the 1% criteria, but expenses cause negative cash flow or the cost of borrowing ruins the profitabiliy. Maybe the rule is used as screening criteria to help determine if you want to do any further investigation?