All Forum Posts by: Sergio Altomare

some other considerations are in the terms of the bank. For example, I have purchased properties - small (2-4 units) multi families under an LLC, and the interest rates are aligned to commercial loans as opposed to personal loans, which means higher interest rates. I live in Pennsylvania, which means that the state also would consider the transfer post close from a personal name to an LLC as a transfer tax eligible event. This makes it really expensive. Echoing what Jennifer mentioned, the bank can require the entire amount of the loan due upon transfer. You really have to do your homework on this. something else to consider is what you stand to lose right now. What I mean by that is the LLC is to protect your assets, so if you're just starting out and don't really have such a high degree of risk then I would argue that it's worth doing everything under your personal name and expect to grow to the point where your first few properties will be flushed out anyway, and therefore you'll be in a much better position to take possession under an LLC, limited partnership, Etc. Our first few properties were all in our personal name, and we eventually started using limited Partnerships for new Investments. Your goal should be to get the credibility and experience with a financing and investing, and then tidy things up as your portfolio grows.

In a soon to be written blog post I will share my story of growing a real estate business to the point of leaving a high paying day job to be a full-time real estate investor. Aside from our expertise in property management, we have grown a sound portfolio of high net worth investors interested in diversifying their investment strategy with us. We also have grown a fleet of contractors that can take on many types of projects. That being said, please send me a private message or reply here if you are a wholesaler in the area and can generate solid deals for fix and flips or value add apartments. Thanks!

Hi Shanna, 

I am available to chat. Let me know your preferred method and availability. 

Thanks

Very clean duplex that was previously owner occupied. Should rent for $2750-2850 a month, including an already rented detached 2 car garage ($225). Could use some upgrading, but can also be move-in ready. Owner contacted our company for PM services, but has decided he wants to pursue a sale because of his margins are too small with an existing loan from pre-bubble of 2007. Our company is syndicating 5+ units, so I am passing this along as a great find. Please contact me directly if you are interested. We offer management services and can GC repairs. I will serve as a buyer agent or assign a contract for $4k. This is a quick win for a newbie investor and an even better opportunity for a first time homebuyer that will live in a unit. I've done the analysis and taken pics. BP Rental Analysis and Pics

*Additional due diligence is still required, which we can also help with

@Megan Greathouse

Congratulations! You did what most don't have the courage to do and just get in it. You have lots of lessons to learn, but you've already shown your ability to learn, which is the most important part of the business. You mentioned cash on cash, which is nice, but I get a 6% cap rate (using your $700 a month NOI). That's too low for my liking, but did you factor that in and is that normal for the area? I don't like to buy unless I can buy at 8% or more, with knowing that our team will be able to force equity into the property by just being great at marketing and increasing rents.

Lots of great advice here, so I will share my story. What I've learned is that it is not about the tenant, but the property COMBINED with the tenant. 

If the property will rent to better paper tenants then spend little time vetting them, if not then keep reading. 

We have a property in a not so hot rental area (old house under water) and were getting plenty of people interested, but most were either weak to begin with or would have blemishes on their background. As we all know, if they were as brilliant and resourceful as we are then they would all be owning a duplex and living in one unit and renting the other. That obviously is not the case with many, many people. Credit scores can get wrecked for many reasons, but too many people have no idea of what the impact is.

The tenants we eventually rented to are a couple that lost their house and were in a struggle. They even had difficulty showing any kind of income, let along the amount they needed for the house. In the end, it came down to my gut, but my gut based on many tests (and desperation to find a tenant - took 6 weeks), which included asking as many questions that I could think of and requests for many documents and information. Each was a test and gave me more and more confidence that they were telling the truth and really wanted to be there. How quick they responded, what they provided and the clarity of their story was huge. The end result is that they are still the tenants that take care of the house better than I did or any of my other 50 tenants!

Bottom line is that you have to get to a level of comfort that they can afford the place and are responsible enough (as individuals) to warrant an approval. This level of effort to place tenants drops with the more units you have though, as time and time to "being nice" is reduced dramatically. 

On the flip side we have tenants that we followed our processes without regard to the person, but now have some good paper tenants that we can't wait to leave. 

Sergio

Hi @James Brand, I'm not as active on BP as I'd like to be, but stopped in earlier and turned on a Philly alert.  Low and behold, I get an alert on your post. My company is also based out of Philly, so I hope we can connect at some point. We syndicate investments and manage the properties. 

As for your question, I have a different view to think about, but of course it depends on your target renter. We do our own PM, so I look at the difference in caliber of tenant and what I can charge and convert when considering "amenities," which I would not think of a ceiling fan as being one. To me it is a depreciable asset ;-) Turning a ceiling fan on or off should not burn it out, but if you put in a cheap or contractor grade unit then it may cause problems. We've never had a call on a ceiling fan in the 3 years we've been in business, so it's not something I consider. We do get lots of calls on washers and dryers, but they come with higher rents and a better renter, so I wont skimp out there. Same thing with central air and garbage disposals. There is a law of diminishing returns, which we are slowly learning.

We bought trash cans for our first couple of properties, but found them to disappear, so that's one "amenity" we don't do anymore.

Sergio

A big shout out to everyone that made it Saturday night! The turnout was great and there was such a great stream of knowledge and information shared. We're looking forward to hosting another event in the next couple of months. So happy to have met so many of you. 

Thanks everyone!

@Francisco O. Great to hear. So far there has been a great response, so it should be good. Looking forward to meeting you.

Hi , @Eleena de Lisser glad to hear you're coming. We do not have a cap, so feel free to invite others. Depending on how many show up, the only concern might be how tight it gets, so I would say 2 or 3 others in addition to you would be fine. See you then