All Forum Posts by: Steve Smith

Regina,

Maybe, but not necessary. I may us a "friend" that has an LLC, but will not create one just to be the trustee. I'll often use another trust to be the trustee. Also, there are services that will act as your trustee for property which is an excellent choice.

Well, trusts and LLCs make not be total asset protection, but they sure can help. With and LLC, the partners are not liable for anything personally.
With your rental houses, put a mortgage on them to the hilt and use the money for another investment.
Overall, houses are pretty bullet proof. The first thing in asset protection is to get great tenants. Next is a good insurance policy.

I like trusts better, much easier to "hide" behind, however, insurance is your first line of defense.
Also, doing simple, smaller deals where less can go wrong is not a bad idea.

Trusts won't stop a lawsuit, but it's often VERY hard to find out who the beneficiary is, and they are normally not liable for anything that they did not personally cause. The Trustee is protected by law. But the trust can be sued and be attached and sold to satisfy the judgment.

BUT, being sued, and loosing is extremely rare if you're reasonable careful. I've had a few over the year and the numerous properties I've had. Never lost a dime, even with one that was not insured!
You need to make it look like there's nothing to get an no lawyer will pursue it if there's no money in it for them.

Ask the seller to carry a note, but I'd buy a SFH instead of a duplex, especially if the duplex needs remodeling! You can remodel a nice home much cheaper that a duplex, get better tenants, better appreciation and MUCH less work. Granted the duplex will throw off more cash but you'll work your tail off for that.

You might want to learn about subject to deals and the right way to do it. There are several Gurus out there that teach this subject. I haven't taking a course in that in a long time, so not sure who to recommend, but some of them are:
Bill Bronchick
William Tingle
Jeff Watson
Dyches Boddiford (deceased recently, so not sure who's handling things)
And others, perhaps some on this site.

Perhaps other members here can comment on the best training.

Quote from @Devin Scott:

Quote from @Steve Smith:

Quote from @Devin Scott:

Quote from @Steve Smith:

NEVER ReFi anything! Every time you do that, you loose money. 

Strange take.  That's not how finance works, though.  By that logic, you should never use leverage in the first place.  There's no actual difference between a house you've owned for 20 years and just re-levered and a house you just bought with a new mortgage, all else being equal.

Devin,

There's a LOT of difference! The 20yr house should be cash flowing handsomely! Why kill that income stream with a refi? If you need cash, borrow against the equity if you have to. Don't kill a good note (assuming you had a good note when you bought).

There's on case where one might want to refi, and that's if you bought a property that had bad debt on it from the start...pay that off with a new note. And there's ways to do that without much risk using a joint venture with other investors. Give them a piece of the deal if they pay off the bad loan. That can work well for both of you. I have worked both sides of that deal and works well.  

No. There is literally zero difference between a house you just refinanced at 80% LTV and the same house if you buy it today with 80% LTV. I'm talking post-refinance. "Why kill that income stream with a refi?" Well that applies to new acquisitions as well, if that's your thought process. A new deal is also theoretically cash flowing handsomely.... unless you use a mortgage to buy it, lol. Any mortgage of any type kills cash flow. So why do it? I don't think I need to explain that on this board.

Again, the fact that you've owned the house for a long time makes no difference.  There's nothing inherently different about re-leveraging a property versus a brand new mortgage.  In both cases you're keeping more of your own cash and paying a bank interest to do that.  But if you're making the assumption there's a low-interest mortgage in place, so why refi that out, then yea that's a little different.  But if you've held for 20 years that mortgage is going to be next to nothing anyway.

Whether you are buying a new place or evaluating your own portfolio, if you value current cash flow over leverage to allow you to buy more properties, then you shouldn't have any debt whatsoever.  No argument on that point.

 There's a BIG difference in a refi and a new a acquisition. There are many more ways to structure a purchase than a refi, and often at mush lower cost. And where are you getting the money for a refi? Don't tell me you still use banks.. ugh? Private money, use it for a purchase, not a refi.

Like I said, why would you kill a nice cash flow with a refi? Isn't the cash flow what we want for the betterment of our lives?

And you can certainly have good cash flow and leverage and still go out an buy more. I could argue a balance makes sense.

Quote from @Eric James:

A lot of people have the same experience you did after they buy only 1 or 2 rentals. For me, rental real estate wouldn't be worthwhile without having multiple advantages. Living in the area of my rentals, self managing, being onsite frequently, able to do repairs cheaply by doing them myself or having employees do them, owning in a relatively landlord friendly area, etc.

Eric, You're spot on! Buy homes close to you, do your own management, and keep a close eye on them. However, there's and argument to let the tenant do almost all of the maintenance items. Work well if you train them. However, I do maintain the AC (if the tenant changes the filters on time, major structural issues and roofs. Rarely do I have any major issues... far and few between. Usually nothing between 15 to 20 year roof replacements. Maybe an AC unit, but not much. Love my houses, and my tenants!

Quote from @Devin Scott:

Quote from @Steve Smith:

NEVER ReFi anything! Every time you do that, you loose money. 

Strange take.  That's not how finance works, though.  By that logic, you should never use leverage in the first place.  There's no actual difference between a house you've owned for 20 years and just re-levered and a house you just bought with a new mortgage, all else being equal.

Devin,

There's a LOT of difference! The 20yr house should be cash flowing handsomely! Why kill that income stream with a refi? If you need cash, borrow against the equity if you have to. Don't kill a good note (assuming you had a good note when you bought).

There's on case where one might want to refi, and that's if you bought a property that had bad debt on it from the start...pay that off with a new note. And there's ways to do that without much risk using a joint venture with other investors. Give them a piece of the deal if they pay off the bad loan. That can work well for both of you. I have worked both sides of that deal and works well. 

Depending on how your county handles it, you should be able to get them out in about 15 days with an eviction.. which will cost $500 to $1000.

I like the idea of hiring a couple of large obnoxious males to move in, also as squatters. A guy in Calif did that and it worked pretty well.

Hoping the laws will change, and think they will.

Why would you want him on title? Whose name is on title now? Personally, LLC or trust owned? You could easily put his name on title in any one of those situations. Personally, just add his name to the deed, Pandu Chimata and Joe Blow, as tenants in common.... LLC, make him a member, Trust, assign him part of the beneficial interests. Only the first option requires a new deed.

However, for a note, a more common way is to give him a mortgage to secure the note, and you'd record the mortgage at the court house. And if you have other assets, you could give your lender a security interest in that.

Personally, I much prefer a trust for property ownership and not holding title in ones personal name.