All Forum Posts by: Mike D.

Iowa's pretty good. And it's not likely to get bad because there are no metropolises here that pass those kinds of laws.

How many 70+ year old landlords are going to be smacked with a multi million dollar fine for not filing for the last 2 years?? This is not going to end well. I wouldn't even have known about this law had I not been on the Secretary OF State's website setting up a new LLC.

Quote from @Dominic Rosato:

Hi Eric- I bought a condo in Jersey City last year, with plans to rent it out in a year or two after I move out. There's lots of good advice above me. However, in many cases you likely won't be able to obtain by-laws until you are under contract.

I would have your attorney include a specific "HOA" rider in the contract for this exact reason- It basically would require that you have ample time to review the governing docs of the HOA, such as master deed, current by-laws, current year's budget, and last two years of audited financial statements, association meeting minutes, etc. If you're not satisfied, you can cancel the contract.

I highly recommend doing this, as it provides an easy out. I'm a realtor in Hudson County, and would be happy to answer any more questions you might have!

Good catch. I had my realtor write in the contract that I wanted a week to review the HOA bylaws and financials. As a side note in my county we are able to find the HOA declarations and amendments on the county recorder website. You can learn a lot if that is available before even making an offer.

Also if you can figure out the name of the HOA a lot of times you can find the HOA website online by googling it. If it is a bigger one.

I bought a few condos in 2020. My thoughts are:

Buy into a large HOA. One with 90+ members is great because it affords the HOA a lot of economies of scale with vendors thereby keeping HOA fees lower.

Review the HOA financials and make sure they have a substantial reserve that would cover a hail storm deductible and/or other storm damage.

Read the Bylaws to make sure they're rentable and check the pet limitations.

Check the common grounds for any big ticket items that may need replaced soon. Those expenses are passed onto each owner in special assessments or HOA fees.

If you want a very hands off rental that you can manage yourself, maybe from a distance, Condos are a great option.

Condos rent fast because they are usually newer and there is a lot of amenities that can't be found in apartments. Ie attached garages, basement storage, large square footage, zero lots, etc.

Quote from @Account Closed:

Quote from @Ray Choi:

Hey @Martin D. - how did you decide on AZ? And when making the first property purchases did you go and see the property in person or via searches?

I'm in Arizona and I recommend that you either visit the properties you buy or have someone how knows what they are doing, do a walk through for you.

There are many good areas to invest in, but unfortunately there are some areas of high concentrations of drug addicts, just like anywhere else. I invest in the neighborhoods where my wife and kids can safely walk down the street, That's important for appreciation, cash flow and peace of mind. I can answer your questions if you care to DM me.

 I agree with that. If it isn't a desirable area it will have vacancy and won't appreciate much. Cash flow will come as value increases over the coming years. There aren't many good properties that I purchased that were excellent cash cows on day one. 

I'd get a few of your own estimates. Make sure they are reputable companies and bonded that warrant their work. Subtract that price and holding costs from the purchase price. Also don't forget costs that you'll incur like moving utility lines that aren't included in the repair bid. 

I had a foundation repair estimate about 10 years ago and it was $15k. $10k sounds way way too low!

Good luck!

Thanks for the replies guys. Just to be clear I'm looking for loans to an LLC. I'm not putting anything in my personal name.

Read David Lindahl's book. That's what got me going in this business.

Rates aren't going back to 3% though. They'll be stuck at 5-6% for all of next year if not longer. From what I've seen, high rates have done little to stem the real estate frenzy in the mid-lower priced real estate.

Quote from @David M.:

Quote from @Robert Schwenkler:

And nobody's answering the actual question I have... taking out personal loans on properties that are held by a business.

I get that there are questions in this can to bring to an attorney, but this is not one of them.

Does anyone have any input on that?

@Robert Schwenkler

So, personal loans on a property held by a business.... You can't / shouldn't. Legal entities aren't eligible for conforming residential loans. Since you are looking for the limited liabiilty protection, you really should keep it "clean." As mentioned, if you don't operate the LLC correctly you will pierce the corporate veil. Co-mingling and alter-ego are two of the top ways. While piercing the corporate veil is a state issue and subject to facts and circumstances of the case, having your LLC make your mortgage payments (especially since most seem to do it without any paper) looks like co-mingling to this layman. Moving Title back and forth just for a residential loan looks like alter-ego to this layman. Meanwhile, since the mortgage is in your name, it confused me regarding the liability issue.

If you want the limited liabiilty protection, you have to pay for it.

As mentioned, for residential property its pretty common to have properties in your personal name.  But, it does matter to your own personal comfort level, how you operate your rentals, and perhaps the nature of your residentials.

Anyway, hope this helps.  Happy to chat.  Good luck. 

Absolutely agree with this. I looked at personal name mortgages now that rates are so high. But I decided it's not worth the added risk to save a few thousand in interest. Not only are you putting your personal assets at risk but you're also putting your other rental properties at risk because you have an interest in them. 

It sucks but it makes more sense to me to find a better deal that can justify the higher interest rate you get using an LLC mortgage.