All Forum Posts by: Robert Leonard

Thanks for the input, everyone. I appreciate it.

For me, the cash flow seems okay - not bad by any means, but not great. I'd say it's middle of the road. 

@Tyler Hogan I am not a CPA, so you should consult one before making any decisions, but I have spent 8 years studying and implementing personal finance and stock market investing strategies (investing mainly through retirement accounts). My personal opinion is that you should:

1. Invest AT LEAST up to your companies match in a Roth 401k - you cannot leave free money on the table.

1a. If you have a long time horizon/you won’t be retiring for 20+ years, put it in the most aggressive low-cost fund your plan offers. I currently have an S&P 500 fund through my plan for 0.015%. There might be some other funds that have better “expected returns”, but the fees are over 1%, and that’s just unacceptable for me.

2. Save 6-12 months of expenses in an emergency fund in a high-yield savings account - preferably separate from your day-to-day banking.

3. Contribute as much as your comfortable to your Roth IRA. With a Roth IRA you are able to withdraw ANY and ALL contributions (NOT gains) at ANY time. You cannot withdraw any gains from holding securities/funds, but you can withdraw the contributions penalty free. You can invest some of the money into stocks/funds in your Roth IRA if you find good opportunities, or you can leave it in cash until you find a great real estate investment deal you want to pursue. Once you find the deal, you can withdraw it to use.

If you contribute it, you can always take it out penalty free. If you don’t contribute, it might be too late and you can’t make up for those missed contributions.

If something were to happen and you didn't want to use the money for real estate, at least it's still in a Roth IRA to use for retirement. If oh do continue with real estate, you still have that option.

Hope this helps.

@Eli Rollins That's a good plan, but I would be sure to run a full analysis on it and make sure the numbers truly make sense. Unless you are able to get 12-month leases out of the colleges students, you will have to plan/adjust for the ~3 months that the units will be vacant and the students will be on vacation. I'd also make sure to remember that repairs/vacancy/capex tend to be higher with college students as tenants.

Good luck!

Robert Leonard

https://www.amazon.com/House-Hacking-Investing-Str...

Robert Leonard

@Carlos Suarez Welcome to BP! The issue with your analysis is that you have 435% as your property management fee. Correct this to about 10% and you should get a more clear picture.

Hope this helps.

Robert Leonard

@Philip Claessens What kind of property is this?

Based on your down payment I am assuming it'll be owner-occupied, but even still, the down payment is a bit low - it's less than 3.5% (which is the lowest I've heard of, other than VA loans). Given you're using this as your downpayment amount, I am assuming owner occupancy. If so, why are you budgeting for a property management company?

The repair costs are a bit low. Any new property, even in good condition, could eat through a $500 budget quite quickly. 

Vacancy is a bit low for my personal preference - I usually aim for 8-10%, depending on the area/property.

Robert Leonard

@Mike Craven Welcome to BP!

Are you looking to start with a single-family-home? 

Overall, I think your analysis is very good. The only thing I'd say is that on SFH I would estimate a higher vacancy rate than 8%. I use 8-10% on multifamily properties, but those have other unit's rents to offset a vacant unit. In a single family home, you'll be on the hook for the mortgage if it is vacant, so I would plan to have a decent amount in reserves for this.

Robert Leonard

@Ryan Trollinger Hi Ryan, welcome! I did just want to note, it's BiggerPockets, not BetterPockets.

Anyway, I am happy to have a conversation with you and answer any questions you have. Feel free to shoot me a PM.

Robert Leonard

Hi everyone,

My team and I are purchasing a 3-unit multifamily rental property using a conventional residential 30-year mortgage, but we want the property to be owned by our LLC, not in our personal names. I've called dozens of lenders and they all say that the mortgage must be in our personal names, then we can have an attorney transfer the deed/ownership to the LLC after closing.

Does anyone have any experience doing this? What have you done to protect yourself personally for the period of time between the LLC being on the deed, and you owning it personally? For example, if we purchase the property in our names and rent it out immediately, we may have 1-2 months where the title is in our name prior to it being recorded in the LLC's name. What have you done to protect yourself during that period of time? Obtain a personal liability policy to cover just a few months?

We want to make sure we are personally protected for the short period of time in which the deed is in our personal names.

Thanks for the information.

Robert Leonard