All Forum Posts by: Suvarna G.

Hello,

I would like to start STR in Sedona, AZ. I found a nice house around 800k. With 20% down and interest of 7.12 yearly mortgage is around 56k. For that house Rentalizer estimates 65k income and 22k costs which makes 43k net profit. My understanding is that Rentalizer overestimates both income and costs. I don't mind spending 10-15 k out of pocket in the first couple of years because of high appreciation in the area. What concerns me is that net profit turns much lower than I expect and I have to pay way more out of pocket for so many years. What should I do?

Here's the latest stats from Hawaii Realtors. They have historical year-end stats for each island.

https://www.hawaiirealtors.com...

Note Maui is the only island where condo median prices are up 10% this year alone. I mention this because only condos are zoned for STR on Maui, so still strong appreciation even with interest rates.

If you do decide to buy on Maui, let's chat. I've lived here 18 years and own several rental properties on the island, and am also a real estate broker.

Thanks everyone I really appreciate the feedback.  I've decided I'm going to keep it and rent it for at least a couple of years.

@Ray Hage I understand being a LL may not be for everyone.  I know it may not be something I like or enjoy but I've decided that real estate investing, mainly rental properties, is something I really want to do. I don't really believe in the saying "do something you like" when it comes to a job or a career or a profession.  To me, as soon as it becomes a job you will not longer enjoy doing it. That's been my experience anyway.  I'm not doing this for fun.  I'm doing this for the long term benefits for my family and me.  I appreciate all the great advice Ray!

@Suvarna G.

This isn't a short answer, but here are 2cents..

Realize that the limited liability protection is a legal issue, not an accounting issue. If you are going to go the LLC route, you need to understand that it is its own legal entity. Think of it as a separate person. If you don't, then you are using it as an alter-ego which pierces your corporate veil.

So, if you transfer Title but keep the mortgage in your name, who pays the mortage, for example? If you are doing it, then its really not part of the purview of the LLC. If the LLC pays for it, then why is the llc paying somebody else's mortgage. That'd be like me making your mortgage payments. It doesn't make sense.

Since LLC's are formed by the State, you generally should have the LLC formed or registered in the State the property resides. OTherwise,if you have to go to court your LLC will no legal standing in that State. Warm blooded citizens are citizens of the US, so effectively have standing in each State (my layman's understanding)...

Why do you want the trust? I forget if the trust is above or below the LLC. I think the trust took Title, use the anonymity to hide it, and also you need to setup AND operate your LLC's to hide their identities.

Are you ready for all the additional costs and administrative overhead? As alluded, you'll need "non-residential" loans for the LLC. You'll need the separate bank accounts, debit/credit cards, extra accounting/bookkeeping, all the attorney fees to setup and manage these enttiies, can't share the umbrella policy..

Yes, people talk about the Due on Sale clause, but just about everybody says it never gets called unless you stop making your payments. And then there is the excpetion if you move it into your own single member LLC... None of this has anything to do with your corporate veil -- think about that when listening to other's chatter..

Hope this bit helps on your search...