All Forum Posts by: Roger Laughary

No offense to those that live in the outbound states, but I’m not sure if you could pay me enough to live in most of them.

I don’t see why this would be any more of a liability than many properties with stairways. Many homes have stairways with no doors on the top or bottom. I wouldn’t worry about this one at all. If someone has small children, they need to expect to buy baby gates. It’s just part of having kids.

I'd have to talk to a lawyer on this one. One that is familiar with rental properties and possibly one that owns several. 

@Davidson Francois there are several benefits to LLC's for buy and holds. If you don't have many mortgages, I would suggest getting loans in your personal name and doing a quit claim deed into an LLC for liability purposes (like if you got sued by the tenant) after you close. The reason for this is that you generally get loans that cash flow best for buy and holds, like 30 year fixed loans if you do them in your name instead of commercial (LLC).Deeding into your LLC name protects you from liability. The LLC could go bankrupt and you wouldn't in an extreme case. (Some may say that this is risky because the bank can call the note if they find out you did this, but they won't unless you don't make payments. Make on time payments.) I believe the limit of personal mortgages is 10 now. Or, if the property is more than 4 units you have to go commercial.

Commercial loans often times are more money down and for shorter terms and a slightly higher rate. You would most likely still have to be a personal guarantor for the loans too.Later, once you run out of personal mortgage loans and get a commercial loan and apply as your LLC for a loan, the terms aren't as good from a cash flow basis, but they don't show on your personal credit. In many cases you still have to be a personal guarantor.

Make sense? Hope this helps. 

The tax bill is great if you have a pass through entity such as an LLC. Get one. Super cheap. Deed your properties over to them that generate income and reap the benefits if I were you. If you don't listen to Real Estate News for Investors by Kathy Fettke podcast, go listen to her most recent podcasts regarding this. She gives very good general overviews of the bill that ended up passing after it was revised, which is very good for real estate investors who have pass through entities such as these. Hope this helps.

@Logan Hill As far as live-in flipping is concerned, I would highly recommend you aim to be within 15-25% of your target ARV listing price to your median home price locally. This means that you wouldn't want to go more than about $225k (ideally $200k) if possible on a selling ARV price, or lower than around $160k(theoretically) to hit the best possible profit margin and days on market targets. Our median home price in Wichita is about $125k which is right around or slightly less than what I would expect my ARV to be here on a flip. I would look for distressed properties that you would need to budget around $15k-$25k on on for repairs to sell at the ARV and make a decent profit. My very first property was a live-in flip when the median home price was about $100k maybe(?) here in town. I bought a property in need of repair for $73k, put about $7k into it plus sweat equity over 2 years, and sold it for $108k literally 25 months into owning it. Zero capital gains taxes. Also sold it for sale by owner because of the pricepoint. Zero commissions. There are many ways to do what you're wanting to do, but this model has been profitable for me. Hope this helps.
 

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@Shane H. good for you. It sounds like it hasn't been easy but I can tell you care about the people there as well, which it seems this type of thing would take good leadership because of all of the people involved. I've done some surface level research as to the cash investment, expected cash flow and broad view of operations and I'm intrigued. I believe there will be more of a need for this service in the future. 

Couple questions if you don't mind:

What resources have you used to gain information on the business operation aspects of it (ie: Medical billing, staff compliance, etc.?)

How did you end up in Topeka doing this or how did you come across this deal?

Thanks for the input. 

I’ve done live-in flips and am happy to answer any questions you may have about that. I also do buy and holds now. Not the guy for wholesale advice but am interested to learn a little more about that also. The trick wit live-in flips is to know your market, buy a property that needs much repair that you can fix up and sell at an after repair value that is very profitable. What’s your median house price where you live?

Bed bugs seem to have really escalated lately in Wichita. I seem to hear more about them as months go by. One of my pest control friends was recently commenting to me about them. I would recommend speaking with a pest control person on something like bed bugs or roaches. These are things that have to be done right in order to rid the residence of them and keep them gone. They will continue to haunt you if you don't treat them properly the first time. I have a couple recommendations if you need one. 

Funny thing, I didn't realize my father-in-law got a contract to build a group home about the time I posted this, over behind Hobby Lobby in West Wichita, so was able to see the build from the start and gain a lot more information on the ins and outs. Seems to be good for all parties if it's developed and managed properly. He's working on another one so I plan to be closely involved.