All Forum Posts by: Brad Clarizio

Hi folks,

Now that I am acquiring enough rentals to have true value, I am getting worried more and more about the risk. That said, it's time to convert to LLC's (probably a little late, but better late than never).

Currently, I own 6 rentals in the State of Ohio (Columbus area specifically). 2 are on a mortgage, while 4 are owned free and clear. My question is, for those that own multiples, do you have a separate LLC for each house, and then role it up through one large LLC? Or, do you have them all under one LLC? My concern with the latter is, if I have 600k worth of real estate in one LLC, then that's 600k that can be attacked. Where if I have each LLC in it's own, and then umbrella'd under one overall LLC, that may be safer.

Any one have advice or experience with this? Also, I may have this done through an attorney to make it all simpler, so any recommendations?

Thanks,

Brad

I did have a professional inspection where he confirmed the presence on both sides. I paid for 3 treatments on each side, and they guarantee it for 6 months. If I need a respray within 6 months, it's only $75 (not bad).

I have a feeling I am going to run into a language barrier issue- one side is Hispanic and speak very little English, and there are quite a few things that the tenants have to do to prepare for tomorrow (dry all their clothes, vacuum, etc.) and I'm worried they won't listen to my wife and the treatments will be useless. If they come back, I will evict. They've been troublesome anyway, so a reoccurring issue if they don't follow instructions will be grounds for eviction. 

Thanks everyone- I jumped right on this because they have children on both sides, definitely don't want to mess around with that.

I had an inspection today that confirmed the presence of bed bugs. Both sides are getting fully exterminated this Wednesday at 11:00am. I was able to find someone local with an awesome reputation and make 2 companies go at it price wise. Ultimately, I got it down to $500 for both sides (total). It sucks to have to spend that on basically nothing, but welcome to the life of a landlord :) 

Thanks for all the help and I'll keep you updated if anything new arises! 

Well, it finally happened. One of my tenants (in a duplex- so that plays into it) is claiming they have bed bugs. They believe they came from the house next door (not the other side of the duplex) that recently had all their mattresses outside, etc. Mind you, this is a decent part of town, so it's not exactly hillbilly town. The property is in Columbus, OH.

That said- how do you guys approach this? It is not referenced in the lease at all as to who is responsible. Ultimately, I believe I am going to be responsible, but do you handle this yourself or go to a professional? What kind of costs should I expect (2100 sq feet between the two sides), should I treat both sides, and how do I protect myself moving forward? My mentor, who has 37 properties, told me to have them sign an addendum stating I will provide one treatment only...thoughts?

Thanks! 

Brad

So just as a brief follow up, you all were completely right. Keep trucking away and you will find the money. Luckily, I did. Here's how:

I connected with a friend who works for a loan bank, Union Savings. We looked at all of my options and the smartest thing for me was to leverage equity from current houses. We re-financed my previous primary property (currently a rental) and my current primary property, taking them both from 2 separate 15-year mortgages to a combined (1) 30 year mortgage. With this, I received $47,xxx back in "surplus". I was able to score a (likely) once in a lifetime deal on a duplex in Columbus that appraised at 94k for nearly half that due to the couple retiring/relocating. 

However, I did not have the money for rehab, so I worked with a separate lender (although affiliated) on a 20k personal credit line, allowing me to rehab both sides and have ~10k left over (property needed the basics: carpet, paint, some drywall and appliances). 

Thank you all for encouraging me to keep going, as I was starting to think I wouldn't find money anywhere. Yes, my mortgages are now on a 30 year, but I am saving $450 a month (freed up cash flow) and already have both sides of the duplex rented for $675 a piece (acquired the house on 12/19). All in all, it was a about a net income per month of $1100 to do everything this way.

Happy New Year and here's to a successful 2015!! 

@Stephen S. : I purchased a Ruger LC9. $299 brand new from Gander Mountain. 9mm ammo- a box of 50 self defense ammo was another $25, and I bought 250 practice rounds for another low price. I go to the range once every $6 and paid my $12 entry fee to freshen up. Otherwise, it's about as low cost as it gets. 

Joel- consider the financial investment into that as well. You have to think, not everyone can afford these courses. I don't think she is unwilling to invest in herself just because she doesn't want to take a course. I think that's a bit unfair. 

I did a CCW course for $100 and spent $299 on a gun. A $400 one time cost with little to no time investment, vs. a course that takes 3 hours a week and probably $75 a week for them. You have to weigh the options and realize that not everyone can do that.

I do agree that a gun isn't always the answer and is great in theory. I however, thought to myself "if I am in this situation, would I rather A) Have a gun or B) Not have a gun. Chances are, A is your answer 99% of the time. 

You are definitely correct for worrying. I am a 6' 200 lb man and sometimes I still worry when I go to certain areas. I went to a house one time with my agent (6'1, probably 230 and jacked) and a squatter was in there- you never know! 

Be safe and seriously consider a conceal carry license. After the squatter incident, I got mine a month later and now conceal when I go to certain areas. It's like car insurance- hopefully you never need it, but when you do, it'll be there.

Good luck and stay safe! Always air on the side of caution.

As a side note, my daily profession is in HR. One of the top 10 deadliest professions from rogue associates taking out their HR partner (see Oklahoma beheading last week). Looks like I was very selective in my career choices, ha! 

This being in Columbus, OH btw. 

Perhaps you are too good to invest in lower income areas.

I have about 40k in 3 properties and collect $2,075 a month....over 5%. 

Bought pretty damn cheap (cash), did a good, quality rehab (all new painting, floors, gutted bathroom and kitchens and put builder grade in, etc.) and rent to people who qualify. Owned over a year, made over 20k profit after taxes and insurance. 

It can be done. 2.5 years ROI sounds tasty in my books.