All Forum Posts by: Ron Sohn

I have a single family house with tenants who are occupying it on a month to month lease. Recently, there was damage to the drains that will require extensive repair. What are legal concerns in California? Since they are month to month, can I just serve 30 days? I have associates telling me I have to have repair permits and damage exceeding $10k due to CA AB1482. Is this accurate?

So, I bought a duplex 2000 miles away and it has been a cash-cow up until about August. I'm was a genius!!! Well, not so fast. 2020 once again reared it's ugly head and brought me back down to earth. One of the tenants got candles (violation of lease) to close to the drapes... long story short; I have a vacant duplex that has been gutted by fire.

The good: 1. Nobody injured 2. I have insurance 3. It has been winterized 4. It's been boarded up and secured 5. I can float this financially for an extended period.

The bad: 1. Renters weren't paying rent (good?) 2. Tenants renters insurance lapsed. 3. I am unfamiliar with the best way to proceed. 

I immediately called my insurance company and they sent an adjuster out, but now I'm swimming in uncharted waters and the waves are getting BIG! I had the premise secured and boarded up. The Fire Department has been contacted for a report, but they haven't replied yet due to Christmas. I've tried to locate the tenants to get them to claim their possessions or relinquish interest in them, but have not been able to get a hold of them. Also, I've talked to a couple of contractors and public adjusters, but have not signed anything. 

My management company has been good up to now and are helpful, but not to experienced in the area of dealing with how to proceed after a fire. I'm looking for someone who might have a road map or checklist.

The questions I have are:

1.) Should I use a public adjuster?

2.) What obligation do I have to the tenants that I can't get a hold of? How long do I need to secure their belongings?

3.) Should I have contractors go in now or after the adjuster is done with the report?

4.) What are pitfalls to avoid?

5.) If I take the insurance check and sell the shell, how does this effect my taxes?

6.) Please tell me the pain goes away!!!!

I'm no longer a tire kicker! I just signed papers on the sellers counter offer and I should close in two weeks. This property should cash flow just over $200 a door 12 cap and 20% COCR while accounting for 12% vacancy, 7% repairs, 7% capex, and 10% management. Monthly rent is 1.6% of purchase price after $10,000 in improvements.

This all started with "vacuuming my truck" and I'm glad I did it. But now I'm trying to set a business up in such a way to shield myself from personal and professional liability while minimizing my tax consequences. Now I know that asking for tax advice is touchy subject here, and I will perform my own due diligence, but I would like to know how other people have structured their businesses. 

Here are the basics: 

-I live in the tax happy, restrictive, God-forsaken heathen state of California (for the next 10 years).

-The investment property is Indiana.

-All revenues will be re-invested into the business for the first 2-3 years.

-I would like to add one or two properties to my portfolio per year for the next 9 years.

Questions:

1.) Initially, I wanted to setup a "Member" LLC in NV (or WY, or DE with a lawyer resigning as the "memeber" leaving me as the sole shareholder). I would then create another "Manager managed LLC" in Indiana managed by the Member LLC. This would be a costly structure but would protect me from both inside and outside liability while creating anonymity. Ultimately, once I have scaled, I think that the cost of two different LLCs could be absorbed, but with only one property, is it worth it? Is there a modular organizational structure that can expand affordably and offer asset protection?

I found out that as of last year, Indiana is now a "Series LLC" State but I'm somewhat apprehensive about using this structure as there is only 1 year of case law. Can anyone shed light on this type of LLC? As long as my manager collects rent in separate accounts, will each cell truly be isolated from each other?

Since I will not be taking any distributions for the first couple years, what would that do to my CA tax liability? I'm talking to my accountant on Wednesday, but I'd like to go in to her office with some semi-intelligent questions. Thanks for any input.

Hi Larry F. Thanks for the input. From what I gather, the inventory that would cash flow would be value add properties that are in need of cosmetic work. Turn key properties just don't pencil out as good fit investments for me. I have cash, but I also have great credit and credit availability at a low rate. To limit exposure, I was thinking of buying using my Line of Credit, and paying it off with cash: basically acting as my own bank. If you have any recommendations for realtors, managers, or contractors, I would love to hear from you. 

Hi, Like the title says, I am looking for a realtor in the Indianapolis area, who understands the needs of an investor. I have done a fix n' flip, and have a short term vacation rental currently. Now, I am looking to implement the David Greene strategy with out-of-state-long-term-rentals. The type of properties that interest me most would be Class-B, between 2 and 4 units, that are in need of updating that will cash flow at least $150/door. I can go cash or traditional. 

Although David Greene says that I don't need to visit the place, this would be my first out of state deal. It would greatly reduce my apprehension if I saw the properties in person so I'm planning on traveling out there soon. If you are realtor I would love to hear from you. Maybe we can help each other out. Also, if anyone has a good recommendation, I would appreciate it. Can't wait to hear back.

I am interested in Indianapolis! I'll be heading out there to look for property later this month. Looking for multi-family in Class B neighborhoods in need of some rehab. 2-4 units. I can go cash or traditional financing.

Hello, I just finished David Greene's book on Long Distance Real Estate Investing and am now looking at building my core 4 team of Realtor, Lender, Manager, and Contractor. I'm a cash buyer, so the Lender is squared away. I've also found a good realtor who also has an in house manager who have great reviews. This leaves me only with the contractor.

Specifically, I'm just looking at properties that need cosmetic work that can be rehabbed without structural work, but may need roof repair, basic plumbing or cabinet replacement. If you have any references, I would love to have them. I've looked on yelp and angieslist, but I thought I would try here too. Thanks!

Hi, my name is Ron. I have been lurking this site and forums for a few months and the lessons I learned have been of great value. Thanks to all who contribute and share their knowledge. The books, podcast and forums all have given a lot of answers to questions that I didn't even know I had! 

I've been wanting to get into real estate investing for a number of years, but it wasn't until I met a real life investor who owns over 1000 doors that I realized what a wealth building machine this is. I have done a fix and flip, and currently own/manage a short term vacation rental but would like to move into long-term multi-family in the Mid-West. 

With the current appreciation on my home along with saving all my overtime/rental income, I finally have the leverage to get things off the ground. I look forward to jumping in and achieving long-term financial independence. If I have more questions, I'm sure someone on here has an answer. Thanks for having me.