All Forum Posts by: Christopher Liu

I personally always avoid, when possible and practical, the owning of real estate in my own name. 

Here's what I've been told after numerous discussions with lawyers and accountants regarding buying a property in your own name, getting a loan and then transferring ownership into a sole member LLC and the subsequent potential triggering of a "due on sale" clause.

The reason that the "due on sale" clause is hardly ever triggered, is that whilst technically the ownership of an asset changes from your personal name to an LLC, the banks look at who the owner of the LLC is. After all you can't chase an LLC in the case of default, you have to chase the owner of the LLC. In the case of a sole member LLC the debt obligation still resides with the same person - you. Essentially what the bank really cares about is who carries the debt obligation.

I can only say that this explanation is the most logical one I've heard.

Optimally for me, I would want to buy multi-family with all units rented on month-to-month leases. As stated above by @Bjorn Ahlblad, with whom I fully agree, the precondition is that these are good and paying tenants. I would not want to inherit any "problematic tenants" for ANY reason. Why fully leased and month-to-month ?

1. Ongoing cashflow (hopefully positive!) whilst mobilising your efforts for your value-add strategy. Mobilisation of whatever it is you want to do could take one day or up to a few months. 

2. Ability to move on from tenants within a month. Either to find a new tenant or to renovate the unit.

3. Flexibility to adjust rents and lease conditions within a month.

A few things to consider in answering your initial question :

1. If you own two properties in two different states, then it would be prudent (for reasons we won't get into here) to form separate LLCs to hold each property. Advice I have received is that properties should be held in LLCs that are organised in the state where the property is located.

2. The number of properties you hold in one LLC depends on several factors : the value and equity in each property, and more importantly, the value of each property as a percentage of your overall net worth. If one property is a significant amount of your net worth then it makes sense to put it into it's own LLC. If a few properties added together are an insignificant amount of your overall net worth then by all means go ahead and put them together in one LLC to reduce paperwork and administration costs.

3. The risk profile of each property. If holding ownership in an LLC is to limit liability then it makes sense to me that say a 10-unit building with 10 tenants carries a similar risk profile as 10 SFH if you take the view that each tenant is a "risk". Also if a particular property has a high risk profile (i.e. potential for a lawsuit for whatever reason) then again it makes sense to put this into it's own LLC.

May I recommend some of the free video material put out by Clint Coons from Anderson Advisors. You can find his videos on Youtube. Having followed up with lots of research and consultation with lawyers, I can confidently say that his advice on the use and proper structuring of LLCs to optimise asset protection and anonymity has turned out to be pretty accurate. 

"The Psychology of Money" by Morgan Housel and "Grit" by Angela Duckworth 

Two absolute gems. Entertaining and informative reads with great insights and highly persuasive arguments. Read with a glass of wine and your favourite cheese.

A cuddle therapist... I had to google that to find out what that was ! Never knew this was a thing. Pretty great. Congrats on publishing a book and being a best seller. Welcome to the site and best of luck with finding your house.

I would offer the following advice about starting in real estate investing.

1. Don't worry about doing everything perfectly right. You will make mistakes. We ALL do. Things will go wrong and you will have to adjust.

2. Whilst it's important to run the numbers and understand what they mean, you really only need to pencil out the broad parameters to give you some semblance of comfort that you won't lose your shirt. 

3. Trust your instincts regarding the basics. Most people can use good judgement to gauge what is a good house, what's a good neighbourhood and whether someone would want to rent your house. As you gain more experience your instincts will guide you on more sophisticated parameters.

4. Focus on a scale and type of real estate investing that minimises the variables and makes it easy for you to digest. You only need to understand and absorb the information that's relevant to what you find interesting. Forget the rest.

5. Here's something I used to worry about a lot. How do I know what a good deal looks like? I learned that it frankly can look very different to different people and if it looks good to me then to go with it. Why? Because everyone has different objectives and targets, different likes and dislikes, are at different stages of their investing journey, have different financial situations etc. 

I hope this helps and I wish you the very best of luck with your investments !

Checkout the Greater Syracuse Land Bank. They have a website and an instagram account (@syrlandbank). It's essentially a not-for-profit organisation that facilitates the return of vacant and abandoned properties in Syracuse, NY to productive use. I don't know where you're looking for properties, but there might be other organisations with similar programs in other states. 

Also, instagram accounts like Cheap Old Houses (@cheapoldhouses) and others, will always showcase fixer uppers. Typically beautiful houses that require A LOT of work. Whilst those houses may not be the ones you're looking for, I have found that these houses are typically found in neighborhoods with other fixer uppers close by. I hope I've understood your question correctly and best of luck !

Living in Germany and trying to self-manage a property in Florida seems like quite a challenge ! Without knowing all the details and the context of your particular situation, I personally wouldn't self-manage from that distance unless you are intimately familiar with the area in Florida, are extremely experienced in how to resolve conflicts and issues that are bound to arise and have ample time to keep abreast of what's happening in the market. Self managing from afar is easy when things are going right. Not so easy when poop hits the fan. 

I can share what I am currently doing, which is both. We currently live in Hong Kong and self manage our rental properties here. Our properties in HK are condos so there's already a management team in the building for which you pay a monthly fee to handle "building related" issues. Self managing these properties is basically rent collection and miscellaneous repair items inside the units. We can also use RE agents to place tenants when needed. So self managing here is a piece of cake and we're physically here to deal with anything.

As for our rental properties out of country in the US (CA and NY) and Japan, there's absolutely no way we would be able to pull off self managing any of those properties. Whilst we are very familiar with all those locations and have a reasonably extensive network in place, we simply cannot possibly replace the local knowledge required to optimise the performance of those properties. I guess that the critical element isn't it? Whilst it is entirely possible to self manage remotely, it seems to me that in order to truly "optimise" the performance of a rental property, finding a reliable, knowledgeable and capable local property manager is the way to go. Hope this helps and best of luck !

@Brad Whit if it was me I’d refinance and keep it as a rental.

@Andrew Fudge One other thing to consider. I like to target students in graduate and PhD programs, instead of your typical undergraduates. They tend to be older, more mature and responsible. Good luck !