All Forum Posts by: William Anderson

Joe, it's been months but ChristiesGulfBeachRentals.com manages short term rentals in Long Beach MS

Most state have a provision in their law for residents of that state which will require you to register any llc formed in another state to register as a foreign llc.  What this means is that if you fail to register in your home state, you lose the right to use the courts to settle disputes relating to the business in your state.  

When you form an llc in another state, there are no such requirements except for taxes that may be paid on the sale of property in that other state.  For this you need to seek the assistance of an escrow company or real estate attorney.  

Your Oregon llc can own the property in PA but may have to file in PA as a foreign llc.  Most of my clients who purchase property in MS where I work usually use MS secretary of state for their filing.

Some people to go NV or DE for their llc, you can create the llc anywhere but as mentioned you may have to set up a foreign llc in your home state.  

FYI when working with attorneys, it's always good to do some homework first as you are doing otherwise you will be paying them to tell you what you can find in a forum like this.  Bring all of the details to the lawyer, the more work you do, the less it will cost you.  And by all means, see an attorney to get that level of comfort.  The attorney can create the llc agreement for you, you can do the filing yourself on line.

Yes.  You can be sued for specific performance in some states which means you can be compelled to complete the purchase.  This gets into legal advice and If you are considering wholesaling you need to seek advice before you sign any contracts.  

This does happen.  My client is a seller and recently signed a contract for a cash purchase.  The next day the buyer tried to renegotiate the contract.  My client said no and the earnest money funds went to my client.  He considered suing, I convinced him to move on.

I recommend that investors use the services of professional property managers.  There are so many reasons it's hard to know where to start but key one is if you plan to own more and any of those are not down the street, you will eventually need a PM.

This is where the rental experience comes in.  Learn about investing and property management but your efforts can be concentrated in the buying and business management of your investments.  Unless you intend to go full time into property investing and management, you will need help.

Any good property manager can help you with what is necessary for repairs.  To find a good PM ask a good real estate agent e.g. the one that you will use to find your first rental property.  Agents also know good contractors.  Property managers handle the simple stuff after it's rented.

Take a look at this Residential Rental Investment course it's full of info you could use before taking that first step.  https://keyladder-training.tea...

Try dealcheck.io their calculator is great for investment purposes.  Fill in the blanks they provide with information that you have at hand.  Taxes are taxes.  Consolidate similar items e.g. insurance flood, household.  

You just want to get a good idea of what type of investment you started out with.  

FYI, Zillow stopped buying houses because they could not accurately determine house values yet they continue to put out numbers that do not work in the real world.  If you plan to work with a real estate agent in the future contact that person now and ask what they think the value is.

I have seen a few and I mean very few second homes come on the market fully furnished. Most were not STR's. Lots of people bought second homes during COVID and now things have changed. These houses are coming on the market at what I consider good prices, no deep discounts.

Prices are still going up in a few areas but for the most part, people are starting to shave something off of the asking price or paying closing costs.  Nothing even close to the 2008 collapse.

I was with a mortgage broker today who agreed that while there are some new programs with zero down out there and variable's are back, the one thing that makes this market different than 2008 is the FEDS are not pushing to lower the credit requirements.  DTE and good scores are still required.

We can start to get excited if this congress does what Barney Frank did years ago and tell Freddie Mac and Fannie mae to drop their credit requirements to anyone with a pulse.  Let's hope that this type of insanity does not happen again.

Aside from running the numbers there are at least two key considerations.  First is risk.  Three sources of income may be better than one.  If two are doing well they can support the third.  The next thing is if you close on three properties you will pay three times the portion of closing costs that are non-reoccurring.  In my market, the closing fees aside from financing are about $1,250 regardless of the selling price.

In my market, larger properties tend to bring in more dollars because while many guests are millennials, they come with lots of friends and relatives.  Many of our guests arrive for bachelor parties, birthdays, family reunions and other small events.

Our larger properties that sleep more 10+ get more business than the ones that sleep 4-6.  The income is greater per stay and there are more stays.

There is no doubt that all of our areas are different and you should buy what the market is demanding.  Run the numbers and consider risk and closing costs.

Try using Waveapps.com it's a free accounting system.  All transactions from your checking account drop into it automatically.  All you need do is to use drop down boxes to identify the items and call up the reports.

If you are looking for individual rentals e.g. guest info etc., creating a spreadsheet will work along with the accounting system.  

I have a complex system that has a separate worksheet for each property with details on every stay, income etc.  The totals transfer to another worksheet.

One thing to consider about areas with tight restrictions is resale. In my area there are a couple of cities with some tough rules and the zoning make's it hard to locate an STR. There are fewer as a result. The problem is that upon sale, the permit goes away. The new owner has to apply and there is no guarantee it will be approved. My guess is that's 50/50. If that were not enough, the buyer can not apply until after the deed is recorded.

This makes for a big risk on the part of a buyer acquiring the property for the purpose of using it as an STR.

People that come from far away don't have any issues with staying at properties in adjoining cities without any rules (couple of miles away).  I have not see any real differences in occupancy rates.  The premise is a good one, I believe it depends upon the location and situation.

I recommend that you have at least six months in reserves before you buy.  Create your budget for the next five years, buy and hold.  

Estimate the cost of replacement for each of the items during your ownership.  For example the water heater is a 10 years item but it's 8 years old.  Accrue for that every month for the next two years.  Same with all of the big items.  

You need to set aside the accrued funds in a savings account or CD for expected replacement. You are asking the right questions.  Often I see new investors spending 100% of the income and putting zero away for the eventual replacement.

Failure to accrue means that you will be paying out of pocket at the worst time possible.  If you decide to sell to avoid putting on the roof, you will take a hit on the selling price usually greater than the actual cost of the roof as an example.