All Forum Posts by: Todd Groom

@Vikram Arora save $500. You really don’t need an Attorny for that. Just go on Facebook or the boards here and ask what it is you want to know about them and why one over the other.

And as far as the LLC goes it's really a personal thing for most. If you have millions in assets and trying to protect yourself it's one way but there are other ways to do the same thing. And if you do get an LLC that means everything has to be done right. No co mingling of funds, Attorny has to handle evictions and other stuff. Lots of little things you need to do but all of that can be answered here on the boards for free.

As far as insurance again ask away. Lots of smart people here who own millions in property ready to help you for free.

@Allen Moore pretty much your questions have been answered. You sometimes will get a bad one. But they can be dealt with easier than straight pay. While you can get back on HUD it's hard if kicked off for something like non payment or damages. So they tend to be good about that stuff.

Screening is the same as non section 8. Look for evictions, felonies, past evictions for damages etc. When you call the last landlord look up who the owner is of the building. This way when you call the person you can ask them a few things kinda see if they may be faking it. It’s not uncommon for a tenant to lie and use a friend. They may have been kicked out for some other reason. There’s a myth that once you’re kicked off section 8 you can’t get back on. while yes it’s very very hard they can in some cases get back on. We have a tenant who’s been kicked off but managed to get back on. So just always do you do diligence.

A good thing is If they don’t pay you just send a late notice to both them and their case worker. Your payment magically appears pretty quick. But that portion is small so even if they don’t pay and you do have to evict it’s not a huge loss. Some landlords are strict when it comes to late payments. We have dealt with tenants in the in these neighborhoods for a while. I also grew up in the projects and know how it is. We do have hefty late penalties so if they are late then they pay a $100 late fee. We have a credit system where the sooner they pay the bigger a credit they get off the $100. So say they pay on the 7th then they would get a $50 discount and only pay $50. But if they paid on the 12 then it’s $100. But we don’t evict at day 10 like everyone else. If they call and say hey I can’t pay until the 15th then we set it up as an agreement. As long as they get it paid before the end of the month or call and work it out we usually are understanding. We tried the per day late fee thing and it’s hard to track that so we got rid of it. It’s up to you on how hard you want to be with your tenants but remember they are on Section 8 for a reason so they will not always be able to pay on time. And you’re going to have agencies sending you stuff to help them pay rent especially during covid.

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We have only had damages so far by one HUD tenant. Of course she lied and said she locked herself out and had to kick in the door. Rumor on the street was her boyfriend kicked it in. But is what it is. We are allowing her to find someone to replace it and save money as long as they are licensed and we approve it. Again this goes to how willing you are to work with your tenants to help them when they screw up.

HUD inspectors can be a hard sometimes. A small chip in the bathtub and that's a fail, window doesn't open good enough that's a fail, bedroom door lock doesn't lock properly that's a fail. Even if you're a good landlord and try to be perfect you won't always pass so don't take it personal it's just how some are.

We are leaning towards 100% HUD tenants just because everyone who's not paying are straight pay. As mentioned above it's nice knowing at least 70-80% of your money will be there every month.

DO A GOOD BACKGROUND CHECK. I can not emphasize this enough. A lot of them will have criminal backgrounds. Don’t get in trouble discriminating. A drug conviction can’t be denied unless it’s selling because using can be an addiction and that can be seen as an illness which is protected. So just be careful for stuff like that. All of ours have some sort of criminal background. Same with credit all pretty bad. We look for drug sales, assault, theft stuff like that for denial.

Good luck though. Can be good money in these neighborhoods you’re talking about because investors are scared of them. Our properties (duplexes and triplexes) cash flow $500-$1000 a month with 12-15% some higher. This is cash in our pockets it’s great. I hear people excited over $150-200 a month and think man am I doing the math wrong lol. One property we purchased in March we raised rents $800 a month out of 3 units in 10 months 2 out of 3 section 8. So money is there.

@Bradley G Fagg Tampa / St Pete Florida here have raised rents all year long. Just raised one unit that’s section 8 from $985 to $1,275 and the tenant was only approved for $1,050. They said they are about to change and raise the zip codes across the board. In Tampa we have raised all new leases and renewals 10-15% or more.

Covid has made it very hard to find anything. Inventory is at an all time low around 2 months this includes apartments. And people are not moving. Some people are not being paid rent but it’s I guess in select markets most of the tenants we have not paying are ones who don’t pay anyways covid or no covid.

I have spent hours trying to find this magic FEMA book or guideline that will tell me exactly what the reimbursement rates are for different things like clean up, calculations on material cost and so on that adjusters use to pay out claims. Companies like Servpro have a tool they use that allows them to max out what insurance companies use or go just over it. They are able to bill for every screw they pull out of a wall versus a landlord only getting paid for cutting sheetrock out. It's just such a massive gap it's sad. I was going to take on a flood myself but then was talked out of it by an old pro who explained it exactly like that. He said where I will get paid for 5 items they will get paid for 25 items. Let them do it. Well, I just got a bill for $10,600 for something I could have easily done. Not only that but they actually went behind me and billed them for things I did which I'm fighting to get paid for now.

I have learned Everyone is out for themselves and it's sad. We really need a good educational series that talks about what steps to take from the start, who to call, what to do, who to trust, and so on. Everything I found online just talks about two things. First, you need flood insurance, and here's why. Then second, this is the soap you should use to clean it up. 

Does anyone know of a good video series that talks about this? Or are there any links to FEMA and what they use to pay out for cleanup? There has to be something somewhere that tells you exactly what is paid for. For example, Servpro was paid around $400 to go pull out the screws after they charged them for pulling the drywall off the wall and charged them for taking the baseboard off the same wall. Basically, they are being paid 3 times for the same foot of the wall. I'm interested in making a video if anyone else is. I have learned a lot and still learning but would like to go through this with someone who has been there if I can. Please DM me if you can help me with the rest of this.

Thanks, I will follow up. Right now we need to see where we are tax-wise. Should we hold off on certain projects or go for them as far as write-offs go? Why trying to push through this. We just had a major flood in a unit and this is a headache trying to navigate these waters. There's ABSOLUTELY NOTHING online as far as to help when it comes to what you should do and if you should hire help or do stuff on your own for clean up. Someone needs to do a series on this they will be a hit. Will post this on another topic soon. 

@Henry Lazerow

As someone with a lot of tattoos including hands, arms, shoulders etc I would not go past wrist if I was In Your profession. It’s a rule I used to follow my whole life until the point I knew I’d never work for anyone who would have an issue with it. As long as you keep it just above the wrist line you can hide them with a long sleeve shirt and never worry about loosing high end clients or those who may have an issue.

I have spent hours looking for anything that will give me an idea of how much is paid out for different things during flood clean up and remodeling. I know how it works as far as the process so I’m good there and how they will calculate replacement cost for flooring, appliance, etc but when it comes to the actual clean up and misc items I can’t find anything. I was told there’s an old tool made in 1977 that calculates the price the big clean up companies use to charge. But our adjuster said there’s stuff they will charge for they don’t pay like hazmat suits.

So is if anyone here has had this happen or deals with flood claims and can give us an idea of how much money we will be paid for the demo, cleanup and other phases any advice would be awesome.

Thanks!

@Lance Lvovsky correct. Looking for local CPA firms or even mom and pop people in the area. Down the road maybe we can do more stuff on our own but I’d rather focus all our time on the business. Can’t beat someone at their trade.

I’ve kind of asked a ijt this before but have not been able to really locate anyone on here with in my budget. And to be honest there was only one person I had found and that was Anderson Partners and that was in the tens of thousands way over our budget.

We are looking for a local CPA in Tampa who specializes in realestate that we can first consult with to make sure we are set up correctly and on the right path. As well as possibly start a relationship with doing our books. New to real estate on the larger rental side and have almost 20 doors here in Tampa. I also have a medical practice that operates separately. So I'd like to see what options I have in refused store that and these operating as two separate companies. That one has partners this one is mine. I have an Attorny now who's setting up an LLC just need a good CPA.

I am not really interested in an expensive plan that cost tens of thousands of dollars like Anderson has. I understand a good accountant cost money but $11,000 for an LLC? For each one? Come on, really made me realize you gotta be super careful on here that not everyone is your friend here.

@Misael Carlos Vera that's why you don't buy under your LLC. You buy under your sol prop then quick claim in to your LLC after closing. People will try to scare you and say your bank can call the loan by doing this but no one can really show any examples of it every happening.

Some insurance companies won’t cover an umbrella policy if you own real estate. Some have limits on how many homes. Geico I think is 4. We were just canceled when we tried to raise the policy limits. They found out we have more than 4 properties.

Most people who do the LLC rout like mentioned are doing it to protect assets. I would not recommend it for each property or for your entire portfolio. Both of those cases don't really benefit you. The first is just too expensive paying fees for every unit. The latter we'll if ever pierced by a judge and you loose it all anyways. But if you set a limit say 1 million per LLC then you can protect groups. So group together properties of 1 million in LLC's. So if you do get sued only that bubble is affected.

Also protect all of those LLC's inside of a Delaware or Wyoming corporation which will hide them from prying eyes. What people can't see will help protect you. But learn as much as you can and be careful not to get scammed by these fast talking Attorneys who want to charge you insane amounts to do this. Find a good local realestate Attorny who's reasonable. And get you a good CPA who's only in to real estate. Not saying they are a scam because I don't want to get sued but this Anderson law firm has insane rates. I don't see how anyone uses them and is still able to profit. But maybe they find it somewhere.