All Forum Posts by: Scott Mac

Figure out what it takes (for you) to get an 800 rating and shoot for that. 

Spend the time you need to spend to understand how the credit rating system works.

If you do it right your credit rating will go up.

Also keep an eye on your debt to income ratio because lenders look at this when granting credit.

Good Luck!

Hi Anthony,

Before using the credit card, read Rich Dad Poor Dad if you haven't already, and skim the internet about how to get a good credit rating.

Good Luck!

Hi Nikki,

Go to Real Estate meetups in the area and just ask a lot of questions and make some new friends.

San Antonio is a GREAT town. Lots of good restaurants, good people, and the river walk.

Good Luck!

Hi Tomiko,

The $49 thing doesn't represent the whole cost of getting set up. It's typically just a basic filing. Then they call you back and tell you you need this and that for so much more money. To do it right cost much more than that.

On the cheap, legal zoom, but because this involves taxes before you do anything, it's best to talk to Real Estate CPA. Pay for an hour of their time and become educated a little bit more on what the IRS wants to see to make the Sub-S work. And follow that persons advice before choosing someone to set up for you.

Also, there are legal requirements, and issues such as asset protection that can come from a Corp/LLC, and talking to a Real Estate Attorney about what the CPA recommends before doing anything with this would be a smart move too.

Good Luck!

Hi Robert,

Here is a quick thumbnail of property classes.

There is lot more on the internet about property classes, but regarding the refrigerator replacement or not for a new tenant, it kind of comes down to a high rent tenant is probably less likely to accept dents like this than a lower rent tenant because they know they are getting what they pay for.

Class-C might like a Cadillac at Hyundai price but they don't expect it, but you don't want to go to far overboard in this area and make the place look like a flea market either because they are also shopping other units. 

Class A Properties:  

• Usually built within the last 10 years.
• Will have the highest rent in the area.
• Will have all the amenities. Pool, workout room, etc.

Class B Properties:

• Not as new as the Class A’s but still high end properties.
• Rents are fairly high but not as high as the Class A’s.
• Typical renters are white collar office type workers; mixed with higher paid blue collar type workers.

Class C Properties:

• Lower rent than Class B's but not in a War Zone.
• Typical renters are hardworking blue collar type workers; and possibly Section 8 renters.
• Probably never afford their own single family home.

Class D Properties.

• Typically located in the worst parts of the city.

Hi Sinan,

Have you thought about asking a concrete skim coat contractor if he could solve the problem by making the skim a little higher at one end?

The downside is the service life of the skim coat being a few years, and then it needs to be redone.

The upside is it looks nice and new when its done.

Good Luck!

Hi Mark,

My first thought would be the future risk of building a new structure for this type of business. Do banks finance these types of businesses for construction loans? What if the Federal Government starts cracking down on these types of businesses? I think they are still illegal under Federal Law? If they are forced out of business what then?

According to smallbiztrends a bit more than 50% of business startups fail in the first four years. Do you want to risk construction costs for that?

Regarding the rent.  It seems like you may have a "Brownfield". Has it been remediated? Can you attract a higher paying tenant, given the EPA problems it has had?

Regarding the construction.  An Environmental Phase-1 will probably pull up the dumping and etc pollution problems, and might require a Phase-2. Will the construction lender require a Phase-1? Will the lender lend on a Brownfield? 

Just my initial thoughts on this.

Good Luck!

Hi Robert,

I have seen those small dents before. I have no idea how they happen, but if you provide the fridge free of charge and it's a class-A replace it. Class B, if the new tenant complains replace it, maybe. Class-C point it out and say that's the fridge and leave it at that. 

If you charge for the fridge, give the new tenant a choice in price between this one and a new one and make the price of the new one seem less attractive than the old one, so they see it as a bargain.

What does a scratch and dent low end fridge sell for compared to a new one, $50 to $75 less? Seems hard to justify charging for it when there is no "Repair Bill" to back up the charge amount, but that's up to you.

Good Luck!

Typically over 4 units are based on CAP Rate and Income-Expenses vs. comps.

Hi John,

Hash it out with the help of a local real estate attorney who forms LLC's.

He may suggest an LLC, where the operating agreement will lay out the details for everyone.

If everyone is not equal in duties and rights for the entity, you may have a Security situation on your hands, which is something to also discuss with the attorney. You "Do Not" want to run afoul of any Securities laws, either State or Federal. 

I am also under the impression the a TIC (tenants in common) situation could also be a Security in some instances.

After talking to an attorney, talk to a Real Estate Investment CPA about what the attorney recommended, and talk about personal tax implications, book keeping costs and tax return costs, etc...

Partners can be common lingo for owners of LLC Membership Units with a lot of people.

Good Luck!