All Forum Posts by: William Anderson

Tim Allen, SimpleMortgageOnline.Com

https://simplemortgageonline.c...

I have used Tim to finance more than a dozen investment properties plus the many more he has financed for my clients.  

If your property is in a mild climate area, set up a nice place outside.  Picnic table, side chairs with a bbq, and fire pit.  Invite them to eat outside.  Another reason to get them out of the house is odors and pests.  Eating outside reduces your cleaning bills.  

As Christian says "heads in beds".   I have a 3/1 with a space in the kitchen for a square table with four chairs.  It's tight so I put chair rails on the walls.  Most of my guests comment on the yard and it appears they are using it for their meals when they are not out eating.  Beds mean $$

I have been telling my clients recently that buying for appreciation alone in this current market has a greater risk than I have seen in several years.  Take a look at the FED prices of homes from 1965 through 2021 with a bit in 2022.  The rise in prices during the past twenty-four months is the highest increase in U.S. history.  

This tells me that not only are many properties overpriced for this market but a recovery could fall into that 10-year cycle. This means while you may go into this property very lean on ROI it may take years to hit your goal.

Buy a property offering lower than current market pricing now to give you a good start.  It's all about the numbers. 

If you have worked with a real estate agent in another area, ask that agent to find a good agent in the area you are interested. Agents are permitted to pay a fee as part of the sales commission to a referring agent.  One reason this is a good plan is that the referring agent you know has to do all of the work researching a good agent.  Then when they make contact, your old agent can continue to play a role by staying involved.  All at no cost to you.  Assuming you are the buyer.

Another source is simple.  Go to Google and type Real Estate Agent (the area).  Google will list agents with their websites providing good info about their business.  This search can drill down to a neighborhood if necessary.

We have a binder with rules and local recommendations.  It's read about 1/2 of the time.  We receive comments on it from time to time.  The last page has a list of costs associated with damage and theft.  No statements just for example $50 for damaged blinds etc.  Also the property management company has started to sell damage insurance for $55 per stay.  When the property manager knows there is a large group e.g. 10+ and or kids, he strongly suggests this coverage.  The best part, damage costs are paid directly to the hosts.  Yes I know that ABB has such a program but this is easy and the insurance company is easy work with.

Having said all of that, you have bad guests and good guests.  They are who they are.  You will have to prepare for damage.  Screw down your art work, bold your beds to the wall and do all you can to prevent damage.  Buy heavy duty furnishings.  Have spares of kitchen ware to replace the spoons the kids take to the beach etc.  It's part of the business.  All of my analysis include a damage and replacement budget.

Thanks, I will reply from time to time when I feel I can contribute 

You are welcome.  

Alon,

I am neither but I am a broker and I was the CEO of a national corporation for over 25 years. Having consulted on real estate investment I know a few things. First, you need to have an attorney create an LLC for you. This is the best form of business for a real estate agent as a single LLC is a straight pass-through for taxes. And, you need a CPA not just an accountant. CPAs understand business taxes, many accountants are good at managing taxes and paper but poor at strategy.

You are on the right track.  I suggest you consider waveapps.com for a free accounting system that is very easy to use and auto-downloads bank information.  At the end of the year, your CPA goes into the system and uses it to prepare your taxes saving you a bundle.

Consider obtaining "MileIQ" an app that tracks every drive you take.  Simple swipe one way or the other to track all of your mileage.  It's IRS bulletproof as it records dates, times mileage and you can add notes.  Works in the background, once per month do some swiping and you can claim all of those miles.

Open a business checking account.  Get a "business" credit card for business expenses, not a consumer card.  Be sure you are specific about the application for a business card as these cards are not reported to the consumer agencies.  Good if you have to pay for repairs etc. it will not affect your credit.

I hope this gets you started.  

You can consider talking to friends and relatives about your experiences.  Create some interest in possible partnerships with that group. With a partnership, you can buy more frequently.  Yes, you own less but you still own and it will keep you active.  Create a spreadsheet that tells them what their portion of the investment will yield using an example property.

I have created several partnerships with friends, co-workers, and relatives. When the purchase is made it goes into the LLC which was created as a partnership. I have one such partnership where one person contributed $2,000. Now he wants to contribute more to another.

Someone will have to be responsible for managing the partnership e.g. accepting rental funds from the PM, working with the CPA for taxes, and approving maintenance items.  If this is going to take some time, tell the partners you will be charging a fee for this service.

Other than buying and selling your own property you can't get more active than this.

Don't use a hand-me-down LLC agreement. While they can be similar, an attorney will craft yours using state-specific language. Every state has a statement or terms that vary including typical citations of specific state statutes that authorize LLCs. You can have one written by an attorney and then use it as a model for others. To reduce my legal expenses, I modify the agreement and send it as a word file with changes to my attorney for review.

If the property is in California, be sure to create a CA LLC, it's expensive but the alternative is to register as a foreign entity and pay the same fee. If you do neither, you can not bring a suit in a CA court.

FYI, in most states and perhaps all states, if you have a court appearance against any of your LLCs you need an attorney. You are not the LLC and unless you are a lawyer, you will not be able to defend your LLC as the LLC has the same standing as a person.