All Forum Posts by: Steven Lewis

Thanks for the reply! Our property will indeed make a good rental. If we were purchasing it today, then it would not but we’ve built some equity into it so it makes financial sense to hold for a few years at least. The numbers are as follows:

Current estimated value: $240-250k

Current mortgage amount: $160k

Current rent estimate: $1700-1800 monthly

My 50% rule of thumb was simply my way of easing concerns about allocating for expenses while bolstering our reserves. I have a very good handle on the costs associated with our prior home becoming a rental and the numbers work. We're going to let the equity build then either sell, or do a cash-out refinance at an LTV ratio that makes sense for the gross rents.

Our whole approach is to have a solid reserve first, then siphon off positive cash flow to continue building our down payment on future properties. I think we beat like your first option on simply sitting on a large, highly-liquid fund for emergencies.

Does that sound like a logical approach?

Hello Everyone!

My question is pretty start forward. I am currently getting our former primary residence ready to become our first rental and am working through some strategies. I also subscribe to the 50% rule for expense and cash flow planning and am building up the emergency reserves (6-9 months, still deciding) as we move forward.

Here's the question. Once my reserve coffers are filled, what should I do with the cash flow? Every month I will set aside 10% each for maintenance, CAPEX, vacancy, property management, and taxes/insurance (50% total). I realize those figures may be high for some but I like to be conservative. However, once I have a large enough cushion for emergencies, it seems foolish to continue to build an emergency fund due to opportunity cost of not utilizing that positive cash flow elsewhere.

How does everyone like to handle this situation? I’m thinking of setting up a separate bank account for “future investments” and allowing the money to pile up in there until I redeploy it into another property. Then, rinse and repeat moving forward.

Thank you in advance for any thoughts on the situation! Happy to answer any questions as well.

- Steve

Peter, thanks for the great insight.  I'm doing a bit more research for my state, county, and city, but your advice is definitely helping to narrow the searches.  Best of luck to you in your investments!

Thanks for the input, Jay and Kevin. Just to clarify, I know we can manage our property without a license. The real question I have is whether we can manage our properties through our own property management company (LLC) without having a license? Essentially, does a PM company necessitate a license, regardless of whether you refuse to take on properties belonging to landlord other than yourself?

Hello everyone!  This is my first post on the forums (despite surfing the site for many months now), so please bear with me.

As an up-front comment, we are considering the advantages/implications of property holding LLCs and trusts, but that is a topic for a different time. For this forum thread, we're solely focused on the management LLC.

We will soon be moving out of our primary residence and turning it into a rental (in South Carolina, where we live currently and will remain). To learn the ropes, we will be self-managing and would like to do this via a property management LLC. This LLC would theoretically manage all our future investment buy-and-hold rentals as well. Of note, we WILL NOT be managing anyone else's properties. This LLC will provide a nice "barrier" by serving as the main point of contact for all tenant-related issues and would hopefully limit the amount of calls received directly to our personal phones/emails/etc. Additionally, we want to the rental checks/etc. to be made out to something more official than our personal names/bank accounts.

So, with that in mind, here's the question. Do we require a license to set up a property management (PM) LCC, through which, we only manage our own properties. South Carolina requires a PM license, but it only references managing other landlord's property, not self-managing. If a license is required, could this be avoided by naming the LLC something that doesn't use a protected term like "Real Estate" or "Property Management" (if those terms are truly protected)?

If anyone has any personal experience supported by specific sources, references, case law, etc., that would be terrific!  I look forward to the discussion!

Cheers,

Steve