All Forum Posts by: Mark S.

Consider managing the property yourself to increase cash flow and control. Tenant selection can be crucial to your long term success and no PM will do as good a job as you can. No need to tell the tenants you are the owner and not just the PM.

@Warren Foster ,

I've heard others mention this before and always wondered if there are reasons one should not do this. First of all, if you don't have an LLC or other entity that owns the property, wouldn't the tenants be making rent checks payable to the landlord? Also, should the tenants ever find out that you're actually the landlord and intentionally deceived them, wouldn't this create animosity and possibly have other unwanted effects?

@Dan Holden @William T.

ARV is around $83,000.

Doesn't matter anymore. Just found out it just went under contract. =-(

@JT Spangler

JT, I love your signature! Thanks for responding. The neighborhood is probably a C. It will at least need some fresh paint. Believe it or not, I've not yet been in the unit; I wanted to run the numbers first to make sure it's something I want to spend more time on. I'll keep updating the feed as I become aware of new / additional information.

Asking Price: $54,900
3BR / 1BA, 1,000 sq ft, built 1966.

Rent: $750/mo

Financing / P&I
Purchase Price (ultra-conservative): $54,900
20% down: $10,980
80% financed at 5.00% over 30 years - P&I: $235/mo

Expenses
10% Vacancy: $75/mo
10% Prop Mgmt: $75/mo
10% Maint Reserves: $75/mo
Taxes: $81/mo (based on assessed value ~$30K higher than purchase price)
Insurance: $60/mo (estimated)
Advertising: $8/mo (will mostly use free web-based media)
Total Expenses: $374/mo

Cashflow to the face: ~$141/mo.

Looks good to me. Coincides almost perfectly with 50% rule. 1.32 is not quite up to the 2% rule standard, but oh well.

What do you guys think?

@Therese V.

Have you checked out the Buy and Hold Analyzer on the site? As a free membership, you can only use it once (so choose wisely), however, if you upgrade, I'm told you get unlimited usage. The main reason I upgraded to a Plus membership was to have access to this tool. There's also a Property Analyzer spreadsheet available for free on the site that I use sometimes, too.

Hope that helps.

Hey @Brant Richardson ,

I'm interested in responses to your question. I just finished Nolo's book today on starting your own LLC. It was informative, but not exactly what I was looking for. It briefly mentions holding real estate in an LLC, but not the type of book we're looking for.

@Ali Boone posted a link on one of the recent forum posts with a link to her article on utilizing an LLC to hold rental real estate. As she stated in her post, the comments under the article are insightful, too.

I'm not sure what your situation is, but for me, I plan to use leverage and have mortgages on my properties. There are two major reasons I've come across so far that would make it unlikely I'll go the LLC route:

1.) The due-on-sale clause: I don't want the lender to call the entire loan due immediately because I move a property from my personal name to the LLC.

2.) Financing: It sounds nearly impossible for the LLC to get loans directly.

There are other considerations, too, but these are the big ones for me. It looks like I'll probably just get a huge umbrella liability policy.

This show is awesome.

My 2014 Goals: 1.) Buy my first rental property (either SFR or duplex), producing at least $150/month positive cashflow per unit, and cash-on-cash returns of at least 10%. 2.) Earn at least $125,000 income from my current W2 position (will earn about $105k this year). 3.) Lose a minimum of 40 lbs. 4.). Complete the next 3 courses (out of 5 remaining) towards earning my CFP professional designation. 5.) Become more social again and go out with other friends/couples at least once per month. You'll notice that these goals are all "SMART": specific, measurable, actionable, realistic, and time bound. I think this makes all the difference in the world when it comes to holding yourself accountable.

Eric Gutierrez , Brian is partially correct. You'll want to contact the 401(k) administrator (if you work for a large employer, it could be outsourced to a company like Mercer; if you work for a smaller employer, it could be someone in HR/payroll) and ask them about 401(k) loan repayment options if you become separated from service. Their answer will likely depend on what's written in the 401(k) plan document. The plan document outlines all components of the plan (I.e., are loans allowed, is there a Roth option, etc.). MOST plans that I'm aware of will call the loan due immediately and if you don't/can't pay it back all at once, it would be treated as a distribution. SOME companies may allow you to pay it back over time. For example, my employer allows you to make bi-weekly repayments if you're separated from service, but it has to be auto-debited from a checking account and you have to pay a small one-time setup fee for this. The bottom line: every company will treat this differently; ask yours.