cash out at close

[yrush2000]

Eric.... sorry to see your getting picked on in here, get use to it, I do also... Propertymgr will attest to that.  

I just read this whole thread since I been away for alittle...

I did not check out your website but I have a question about all your properties. Back in the posting you said we can check county records to see all the properties you own which will be 20 or so..
Well EXPERIENCED investors never OWN properties. OUR COMPANIES own the properties so when a record/deed search is done in our name it comes up blank except for our primary residence.  Once a property is QCD to your company, your name will not appear as owner on record.  Also why would someone want 20 properties in their name..IT spells out LAWSUIT!!!!

Work on establishing your company, get it 2yrs old or go out and buy an aged corp that is 2-5yrs old (typcially cost about $2500 per aged yr) and establish some credit history and buy in your company name.  

I do not like to buy in my name as it puts liabilities on me. If I make a bad purchase, its my company losing the money, not my credit..


Also I have to agree with you that not all rental properties will have a 50% expense ratio to rent.  I have some properties, particularly my condos that have no expenses aside from the basics of taxes and insurance since I love maintance contracts here in SoFL.  I spend $275 a yr and I have service 6days a week and emergency A/C and Water leaks on Sun.  I pay for no labor and usually no parts. They fix all applicances, A/C, electrical and plumbing. I just got a new water heater in a condo and it did not cost me a dime.  Plus I do not have to deal with the tennants, they call the service themselves and notify me later.  I build the cost into the rents..

[propertymanager]

yrush,

I agree with you wholeheartedly on not owning property in your own name.  As you said that is just asking for a lawsuit!

You said in the above post:

I have some properties, particularly my condos that have no expenses aside from the basics of taxes and insurance...

Then in the thread on condos:

But maintance fees can kill you and assessements.  Here in Fl I got hit last yr with assessments from hurricane damages. One complex was over $5,000 and I have no choice but to pay.

What would you call that $5,000?  I call it an expense!  That $5,000 could knock out a LOT of profits from rentals.  You can not just ignore expenses and have an accurate view of your business.  You can not pretend that you don't have assessments, eviction expenses, vacancies, management, damage caused by tenants, etc just because you only have a few rentals or haven't been in business long.

Take just one expense  -  major damage caused by tenants.  How often do you think that you'll have a tenant do $10,000 in damage because they are mad at you?  I have not had this happen a single time.  Does this mean I can ignore it?  NO!  

I have had $1,500 to $2,000 damage done twice.  I have a friend that has been in business over 15 years.  She has about 50 rentals.  She has had these smaller $1,500 to $2,000 damages done many times in 15 years and just had one that was damaged to the tune of $10,000.  It does happen.  And this is only ONE of the many expenses that landlords do have on a regular basis.

In any business, your cash flow analysis must include all expenses.  Underestimating your expenses is a certain way to fail in business.

Mike    


 

[dwj469]

Hi yrush, I noticed you buy properties in your company name? How do you get a mortgage in the company name isnt it always going to have to be personally liable and on your credit report?

[yrush2000]

Mike that is why I am selling my condos in complexs where the insurance policies are not covering me anymore. (ALso I said some, not all) Hurricanes like any storm are unpredictiable.  I also said be careful about buying condo's in FL.  For years I never had any assessments as I looked into condos very anti-assesment and had reserve funds ready or a condo not afraid to take out a loan to cover those assessments and raise the HOA about 10% instead which is just normal.  I actually have 3 units where the unit owners deductible are $750 but if you have an additional insurance policy which run about me about $500 a yr still, they will cover that assessment for damages like hurricanes or roof repair, etc.


Upside to condo living, is no outside maintance on your part...

BUt also I am lucky since I bought low, most of my units were all bought when the market was slow and priced in the low 100's and now all are worth mid 200's to high 400's so I have tons of equity in ever unit which makes me HAPPY

[yrush2000]

Hi yrush, I noticed you buy properties in your company name? How do you get a mortgage in the company name isnt it always going to have to be personally liable and on your credit report?

No do you not have to personal guarentee all loans.  I use a C-Corp to get loans in corp name. DO not plan on using a LLC to get loans in the company name only.
It is tough, your company will need to establish credit and get a D&B rating which is what businesses use.   Also it needs to be aged.  My corps are 5+yrs old, all have credit and income which is documented. I use a small local bank since they are easier to deal with. I believe someone posted previously to deal with them. They can be a great assest when buying locally because your dealing with the decision makers there, no underwritters in a cube deciding on the loan..

Also you should use your corp entity for flipping and wholesaling. Try to never use your personal name/identity in real estate transaction.  You want to be able to write off expenses for all your hardwork.

[propertymanager]

yrush,

See, you do have expenses.  So, you have an assessment expense and a HOA fee (expense).  There are more!  You said that you have entities.  How about entity maintenance?  State fees?  Legal Fees?  Office supplies?  Ink for your printer?  

Mike