All Forum Posts by: Gayla Kemp

I agree with James. I run fully under an LLC so here is how it is structured. I am married but we decided to do a single member LLC. Like I told my husband, he would get 1/2 of what I owned if we got a divorce so there was nothing to worry about. At some point, when we get more houses, we may get an LLC for him just to limit how many we have in an LLC. I am the only one that can sign contract and closing documents.

1. Single member LLC advantage - does not require any yearly tax filings but do have to file yearly state name registration renewals to renew the LLC name and keep it in good status. For taxes, all the income/expenses just roll down into my personal 1040.

3. Operating agreement - Lawyer created it and told me to sign all documents for the LLC as a manager.

4. Get a checking account in the LLC name. I did add my husband to the checking account as a check signer but that is the only place his name is on anything.

5. Find a local small bank, no "big" name bank, call around and ask them if they will do a loan in the name of an LLC. You may have to call several to find one. I did not find a credit union that I could use either, they wanted loans in your name only, not the LLC. Find out what their loan requirement are as they might vary. My bank that I am using, know the banker thru my daily job, gives me loans at 5% interest based on 360/365 days, 20% down, amortized over 15, balloon at 5 years. At 5 years I will be able to refinance with no money down. Might not be the best but another bank was just about the same but they had different closing fees. LLC will only be able to get a commercial loan, there are no loans like you would be able to get personally since LLC's are a company.

6. You will have to provide the bank with a personal financial statement, they have blank ones for you to complete.  They will check your credit scores but that is all they do.  They will ask for prior year tax returns.  

7. Call insurance and get the insurance in the name of the LLC. There are some insurance companies that will not do this so you need to verify this with them. I would also suggest getting a couple of different quotes because there can be several hundreds of dollars different.

8. Decide if you are going to be active or passive in the LLC. This makes a difference on your taxes. I am passive, only own the properties and have a rental manger handle everything else, rents, evictions, repairs, etc. I did this because I work a full time job and also to reduce exposure of talking with renters.

If you do this, your personal name will not be on anything and limits the exposure.  I was guided by a CPA, Banker and Lawyer when I did my start up.  CPA also told me to not leave too much money in that bank account, so I transfer "draws" out each month and only try to keep as much as I initially invested in the company with in that account, mine being $500.

Hope this helps.  Best of luck!

Gayla

You all have been a great help on this.  There seem to be too many questionable items about this whole deal.  But the income not being what was advertised on the listing really throws a wrench in all the numbers.  I will pass this one up and continue my search for something else.   

The main reason for looking at this property was they stated on the listing that income was $4,000.  After getting the rental rolls, I do not know where they got $4,000.  They do not have that now and did not have that last year.  If rent was really $4,000, I would not be questioning this deal.  Now it will be trying to get the price reduced but I am not sure they want to sell it that bad.  I will be having it comped and we will see where we go from there.

i have thought about partnering with someone, but have not asked anyone as I only know 1 other investor that might be interested.  However she is my boss at work so might not be a good idea if things were to go haywire with either the job or the rental.

I am looking at investing in the multiunit market in Oklahoma.  I would like to know what everyone thinks about this property.  I have not walked it yet, but have done a driveby.  All information below is from the internet per the seller's statements and income statement and rent toll.  

In Millers Addition, near downtown OKC

Multiunit 4plex apartment - (total 3626 sft per county assessor)

Built in 1926 

Main entrance opens to hallway with stairwell for the upstairs apartments, all apartments have an interior door.

each apartment is 900 sft, 1bed, 1 bath

many updates have been done in the last 2 years

Not sure about updated plumbing and electric, need to find out.

4 car garage with 2 units over the garage - (1035 per county assessor)

There are a total of 6 units.

Main laundry somewhere on site, not in the units.

Owner pays trash and water bill

rental roll shows 2 short term rentals which we would probably turn into long term rentals. They are furnished apartments so need to see if the seller is selling them furnished or not.

other 4 units are as follows

#1 900 sft rented for $600 leased until 12/31/2014, moved in 12/10/13

#2 900 sft rented for $500 lease expired, moved in 11/3/2010 

#3 906 sft rented for $550 lease expired, moved in  2/1/13

#4 900 sft short term rental expires 7/22/14

#5 600 sft short term rental expires 7/23/14

#6 600 sft rented for $450 lease to 8/31/14, moved in 8/11/10

Rented units total $2100 and am thinking that #4 could rent for around $600 and #5 could rent around $500.  If so, this would be $3,200 in rental income

Expenses Total $1320

$174 per month real estate taxes

$250 per month insurance probably thru national real estate insurance group

$75 per month water

$75 per month trash

$160 per month allocated to the 5% vacancy

$267 per month property manage fee

$320 per month maintenance at $10% 

Operating expenses would be 43%

Yearly net operating income would be $22,560

Monthly cash flow would be $1880

With no loan CCR is 36.68%

List price is $325,000 but going to try to get it lowered

Need to do a loan though which really brings into question if this is a property to look at.

I can make the 20% down payment with my funds (heloc loan at 4.75%) and a gift from my parents but this will be a loan thru an LLC so a commercial loan. I do not know what the rate and terms will be on a loan like this. If this would be a stated income loan, are the figures good enough for a bank to accept? My personal bank will do the loan but it has to go to another area of the bank being this many units and he does not know the rate and terms yet. Lower units, my banker did 5% balloon at 5 years, monthly payment amortized over 5 years.

Would like your thoughts about this property and loan possibilities.  Do you think central laundry will be a major problem finding renters?  So far, my rental manager has only gone 2 weeks with no renter on another house that is now on the 3rd renter.

Thanks for the help.

I am new to the investor market but this is what I did, along with another person I know doing the same thing. After researching and talking to my accountant, I chose to start my 1st purchase under a single member LLC and hired a rental manager. I did this for asset protection, and single member for tax purposes. My husband and I had to personally back the commercial loan that we got thru RCB Bank. The commercial loan runs under the LLC company so this does not hit your personal credit report like traditional mortgages. You provide your financial information for credit worthiness and back the loan. They provide us with a 80% or 90% loan based on inspection and equity built into the house. Loan amortized on 15 years @ 5% paid back in 59 payments with balance due on the 60 payment. Will be able to redo loan at the end of the term with no money down as equity will be built in. I checked all the local banks that I could think of in Edmond and this was the best I could find, there are several banks that refuse to do a loan with an LLC or at a lower % with more money down. When we hit the limit of houses, if we do, we will then open an LLC under my husbands name. I think you have some RCB banks around Tulsa so you might want to check them out.

Thanks guys. I would like to attend an REI club meeting but so far it does not work in my schedule as I work full time and have sporting activities with my child. Maybe after summer starts, my schedule might change to where I can attend one. I only plan on being an investor as I have a rental manager that is great and mentoring me. Thanks for the links, I will check them out.

Hi, I am a new member from Edmond, Oklahoma. Bought my 1st rental, a residential house in Dec 2012 in Edmond and it has been successful. I am now searching the market for another house or even a duplex or multiplex. I am wondering if there is any wholesaler out there with something to offer that would not be a major fixer upper. I am searching for something in Edmond, Northside or westside of OKC, Piedmont, Yukon or Mustang.