All Forum Posts by: Rhonda Wilson

There is no one right answer. It depends a lot on your personal situation and your goals. A couple of questions that are extremely relevant: (1) how old are you? (2) how much do you make in earned income - that is from a job? (3) how long do you see yourself continuing to work at your job? (4) how risk averse are you?

If your profile is that you are young, with a good income from a profession that you could see yourself doing for a long period of time, then scaling up is probably your best move. Even if the market goes down, in the long term, it is likely to recover and you are playing the long game. In the long game, you benefit from scale. Scale includes the fact that a lot of tenants are paying down a great big mortgage building up equity for you over a number of years. That is additive with inflation, even if a small percentage, it is on a bigger propertie(s). 

If you are getting close to retirement age, I would not be inclined to leverage overly much. 

Personally, I went too conservative of a strategy years ago. I focused on paying off our home mortgage and then the mortgage of our first multi-family before we branched out. In hindsight, I wish that I had been more aggressive back then. Anyway, we do own a lot more now as I eventually learned the value of leverage and scale!

Good luck!

As far as taxes, it probably depends on your business structure. Who actually owns the buildings and would be paying the management fee? Is it an LLC or partnership? Then, who would receive the management fee as income? I assume that would be you. If that is the case you must remember that the entity that owns the property is a separate entity from you that is acting as the manager. Keep in mind, though, that the owning entity will deduct the management fee but then you will need to claim those fees as income on your 1040.

I've heard a lot of people suggest funny names. I disagree. Our main partnership started 5 years ago to buy a single property. We are about to expand to over twenty doors. The name gets shared a lot with many people such as banks, insurance people, real estate professionals, property managers, attorneys, title companies, etc. Once the name is "Knights of Nee LLC" it can be difficult to change due to 1031 rules, etc. Do you really want to apply for a $1 million loan with a business name that is a joke? Is that the first impression you want to make?

Our company name is "Evergreen Coast Properties LLC"

Using an address is fine. We have one LLC named something like "Warren Avenue Apartments LLC"

You might be surprised how many "no shows" you get if you make appointments for showings. You are much better off doing an open house format. If you have the time, I suggest that you more than one in order to allow people who work different shifts a chance to see the unit. For example, one late afternoon / early evening and another on a weekend. I usually did one on Friday from 5 to 7 and another Saturday from 1-3. Most people were able to make one or the other. 

Definitely you should charge an application fee and state on the application what sorts of things you screen for. For example: "applicants will be screened based on income, credit history, criminal background, eviction record and rental history."  Many people will choose to not fill out an application if they realize that are not qualified and, in the end, it will save you a lot of trouble. 

I see that this thread is a bit old, but I'm also looking for a property management company in Aberdeen. I would appreciate anyone sharing their experience with me.

Welcome to the Greater Seattle Area! It is really a great region and there are a lot of suburbs all around that each have different things to offer. It all depends on your priorities. We settled on the area well south of Seattle down between Auburn, Milton and Federal Way. We actually go in to Tacoma when we want to do something in the big city, but Federal Way and Auburn generally have most everything we need on a regular basis. House prices here are pretty reasonable and a lot of newer subdivisions have been built in recent years so you have a choice between older or newer construction. We wanted a newer home and were able to find that. As others have said, being further from Seattle and Bellevue gets you a lot more home for your money. It also gets you away from some of the worst of the traffic. 

I used to have some rentals in a college town and offered a $15 discount if they brought a printed credit report from Credit Karma since they can get their own report for free. A lot of tech-savvy students and young people would take advantage of that. I would still always run an eviction and criminal report. 

Think of it this way. Imagine yourself 5 or 10 years from now. You are looking back on the decision you made this year to invest (or not). If you invested, do you think that you are likely to be glad that you did? 

This game is rigged in our favor over the long haul. Some people make money quickly. Many of us do it over a long period of time taking advantage of inflation and rents paying down our mortgage.

As long as you buy a property with positive cash flow you should be fine even if the market softens for a while. 

Joe, you seem to be saying that real estate equity has no value which means that ownership of real estate has no value. Basically, you are saying that only cash has value. I think that you are confusing the concept of value with the concept of "medium of exchange." I feel like we are spinning our wheels here. 

I realize that this question was not directed at me, but I'm struck by this question. For our business, equity is the very thing we are trying to build. With equity, we can purchase or trade up to larger properties. With equity, we don't need to borrow as much money and thus have better cash flow. We can borrow against equity to live on or purchase other property. The only downside to equity in real estate (compared to other assets) is that it is not particularly liquid. 

For us, large amounts of equity in a property have driven us to do a 1031 exchange into a larger property and thus increase leverage, cash flow and tax advantages.