All Forum Posts by: Tim Vecchioni

Thanks Oren! This response helped a lot! The lawyer I did speak too, said he had no issue being the managing member, but then would resign the LLC to us. Then when someone would look up the LLC, to my understanding, would point to him, not us. So if we were visiting the properties, we could hide behind the LLC, saying we are just the ones managing the property. Obviously, if it ever came down to a lawsuit, this would go out the window. But it could help prevent a lawsuit when they look up who owns the LLC as see a lawyer pop up first.

So, I am here looking for your views on no Entity (LLC) for the first couple deals (buy and hold). Is Landlord Insurance the same as these umbrella insurance policies I keep hearing about? I only ask because I fear when we go to refinance on a job, it may be hard with a new LLC (Again, so I hear). Plus we (My wife and I) may not really need that kind of protection without that much equity in our properties just yet. Feel free to tell me to shut up and go figure this out on my own, but figured it can't hurt to ask! I have read through quite a few relevant threads but couldn't seem to find much. I went and visited an RE Lawyer last night, and well just in my small couple days of research on LLC's he didn't seem to know much more than I did. I guess from a tax perspective, will it really matter until I get 4-5 properties under my belt? I can understand then setting up an LLC to start protecting the equity in the properties. I feel like I want to make sure I am not missing anything but to my understanding, insurance policies (landlord or umbrella?) would do until LLC's are formed? I do understand if I flip any properties, forming an LLC for that would be in my best interest especially if partnering. This question is more so for the rental properties side of things.

Would a manager-managed LLC for anonymity in say NV/WY be worth the trouble and the charging order? Thinking down the road if I were to have 20+ properties, this could be an important decision now to not have my name really linked to anything? Then have the 2 LLCs (flip, rental) here in MD where I live, member-managed by that LLC in NV/WY? Then any future LLCs for rental properties, as we grow within the same structure? Is my thinking right on that? Is it worth it? Or should we just put them in our own name here in MD and not worry about it!?

Can a lawyer create the LLC and then appoint us as members, so when we are managing properties and direct them to the LLC, they will see his name, and not ours to allow them to think we just work for the company and are not the owners? Am I being paranoid?

Help!? haha

Thanks for any help/advice in advance!

Hey! I am looking to start forming some relationships with contractors, mainly general contractors who are looking to take on full projects! Would like for you to be able to walk a house with me and give me a pretty spot on estimate by the time we leave. Room by room would be awesome! Doesn't have to be TOO specific, but just a number to a room would be great! Look forward to meeting some of you and talking further!

Thanks!

Tim V.

Good conversation starter! $1725, 3B2B Townhouse. Pasadena, MD.

Hey Brent,

I think you have done a good job at ramming home your opinions on this matter and I have to say, I agree with you. I was on the fence 50/50, but now I would say I am more 90/10 in your favor. Plus I happened to go look at a place today where I could use that money to make a lot more than what could be projected 10-15 years down the road on this one! 

Now this is a quality post! Thank you for explaining your thought process and looking for best ways to help!  

 I totally get where you are coming from! I do! I don't want you to think I am fighting what you are saying, but instead just bouncing ideas back and forth to learn from every angle possible! This is been a very knowledgeable conversation and I appreciate that! I guess my last question based off what you just said would be, in those 10-15 years, wouldn't the equity the house has formed make it worth it? If we bit the bullet now and took the best case scenario $23k and re-invested it. Would that $23k really help or could we simply do without so that it would eventually become a lot more in equity!? If we found our next GREAT deal, finding that extra $23k shouldn't be an issue right? At least according to the BP community! I guess as much as I want my pockets to indeed be BIGGER, it doesn't make complete sense to me, why you wouldn't wanna keep this property in the meantime knowing it will reward you later. That is the purpose of buy and hold in the first place right!? Another thing I always use to hear in sales was "some money is better than no money" when it came to making a sale. 

 Good to know! Thank you sir!

You have very good points here! I am trying not to think of the past but only the future! We know it wasn't a good investment when we moved out, but we had no choice at the time! However, now we are at the crossroads of keeping/selling! It is an actual viable option now that it could potentially be a positive cash flow from here on out which would ultimately make up for any losses we had after moving out. The neighborhood is a large townhouse only development. The nicest in the area IMO. However, the surrounding areas aren't the GREATEST but are also being upgraded. New stores, High School was recently renovated. Lots of positive things happening in the area! I think Steph was assuming the property was in a different area of Annapolis, but this is in Pasadena. It is the "middle man" of a great area and a bad area to the north. It is very "cookie-cutter" in there as well. So pending the condition of the homes is what brings the price up or down in the neighborhood. There are homes in there listed ranging from $180k to $270k (water view). So to answer your question, I would say no, the neighborhood is not going the wrong direction. If anything, the HOA will not allow that as they are very strict, which I hate, but we have grown accustomed to it.

Well, I am looking at it like this. The home is in one of the better neighborhoods in the Pasadena area. It is in great condition. It would cost say $2,850 + $6,000 out of pocket to refinance down to the $184k we need to be for no PMI. The house at that point would be cash flowing $68 a month as well as accruing equity for as long as we have it. So how long, would it take to make back the $8,850? Well, that would be 130 months at $68, or 10 years. But within those 10 years, how much equity has the property gained?

The second option is to sell in say 2 years. We will have about $188k left on the loan and say best case scenario we sell for the $230k. Let's just assume 7% to be average for closing costs which would be right around $16k. That leaves us with $214k minus the $188k, which is $26k in profit. Not bad! But also not that great for selling off a property after 7 years.

I guess my argument to keep it would be that we plan to keep it for a long time until the equity really starts to dip in our favor.

My argument for selling it is that we could use the profit to really look for a great deal instead of holding onto this at a smaller cash flow. Although it is a cash flow on top of all the expense after the refinance, which is always a plus!

Edit - Just saw you edited your post with that last comment. Yes, that is the end goal! But some of us don't have the luxury to get into the deals like others! Some of us have to keep these small wins to keep our feet wet! Plus as long as it is paying for itself, say 30 years down the road. It will be worth a lot more than the possible $26k we would be selling it for now!