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    Real Estate Investing: First timer here! LLC vs individual

    Real Estate Investing: First timer here! LLC vs individual


    First timer here! LLC vs individual

    Posted: 25 Jul 2020 01:07 PM PDT

    I'm looking to purchase my first multi-family which will also be my first home purchase. I will be living in one unit and renting out the second. Looking to move and start the process again in 3-4 years. I have done lots of research online but have not been able to find a mentor to guide me. How did you go about finding your mentor? Also what's the verdict between buying as individual vs creating an LLC and doing it that way? If anyone has resources that would be super helpful and appreciated.

    EDIT: thanks to everyone for their helpful comments and insight. I'm excited to research more in this sub.

    submitted by /u/ericateeee
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    Favorite books, courses, podcasts?

    Posted: 25 Jul 2020 03:53 PM PDT

    Looking to get into development one day. What are your favorite resources to learn about the principles of success in these ventures? Managing risk, selecting properties or land, how to structure deals, that type of thing.

    submitted by /u/shagawaga
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    Anyone ever seen a mortgage on investment property make you sign that you will rent it out and not live in it more than 2 weeks per year?

    Posted: 25 Jul 2020 05:24 PM PDT

    I've seen owner occupied mortgages say that you must live in the home but I've never seen this before. What if something changes and I want to live in it? I don't plan on it but you know.

    submitted by /u/thatguyryan
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    Should I sell or rent my house?

    Posted: 25 Jul 2020 06:41 PM PDT

    We are about to move around 30 miles away. I'm leaning towards renting because I want to continue to build equity, but I am concerned about the financial aspect of it. I estimate that we could rent it out for around 1200 dollars based on prices in the area. The monthly payment is 900$ (escrow and HOA included). We would also hire a property manager, so that would probably be another 12% or so. The ballpark estimate for monthly profit is around 100$, all of which I would put towards a maintenance fund. I guess I am just afraid that during the first year, something will go horribly wrong and we would have to fork out money from our personal emergency fund (currently at 15k, but we add to it every month). Could you guys provide any advice? Please let me know if there is more information that I can provide that would be helpful. Thank you!

    Edit: I should mention that if we sold right now, we would profit around 20k.

    submitted by /u/hibbert0604
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    Any Canadians in this sub?

    Posted: 25 Jul 2020 08:19 AM PDT

    I feel this is predominantly a USA sub. I dont't know if there's any Canadians in here that could give me some pointers. I'm living in Montreal QC.

    Is there any point for me to follow this sub since the rules and things are vastly different. We don't have 1031 exchanges etc.

    submitted by /u/rawnaldo
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    What banks give non recourse loans? What is the criteria to get a non recourse loans?

    Posted: 25 Jul 2020 06:36 AM PDT

    In terms of getting the best mortgage possible, would it be better to pay off fixed rate debts that I have, or use that money for a larger down payment and continue paying off debt monthly?

    Posted: 25 Jul 2020 05:06 PM PDT

    I'm currently paying for my car as well as my student loans. Total debt is around 67K. I have 100k in liquid assets. Would a lender prefer a huge down payment, or a lendee with no outstanding debt and a smaller down payment?

    submitted by /u/fragilewhiteguy-
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    How do you usually pay cash for a house?

    Posted: 25 Jul 2020 10:45 AM PDT

    Just Wire it?

    submitted by /u/MountainAspect8
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    Taking over 2 leases with new duplex I'm purchasing; help doing it right

    Posted: 25 Jul 2020 06:43 PM PDT

    This is my first rodeo being a landlord. I'm taking over two leases for the two units I'm buying. Any good templates, resources, checklists or wisdom you can share?

    I know at a minimum, I need to have the seller sign over the rights to the leases. I also need to notify the tenants of the modification of where to send the rent checks. I am just starting to research how to do this all properly. Plus, I don't know what I don't know.

    submitted by /u/penguinblanket
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    Would you invest in ProLogis REIT?

    Posted: 25 Jul 2020 03:43 PM PDT

    They have ties with Amazon and there is additional demand for delivery in times of COVID19. Would you invest?

    I'd say yes, but the finances (e.g. balance sheet) are not that great and the price is high.

    submitted by /u/stvaccount
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    Thoughts on Various Rules of Thumb for Investors

    Posted: 25 Jul 2020 10:20 AM PDT

    So I was recently evaluating a deal for a 5plex, posted about it here, and decided not to proceed with the purchase. Typically in the past when buying deals (I have 5 SFH's), I've looked at ROI and tried for an estimated $150/a month profit. Pretty simple.

    This time, for the first time I also ran the numbers using some other popular metrics, like CoC, the 50% rule, and IRR. I'm still not comfortable with IRR, so we'll leave that aside. But for the others, I compared those numbers to one of my SFHs. The results are interesting...and contradictory.

    So, we're comparing a 5-unit complex versus 1 SFH. A rent of $950/month compared to the hoped-for rent of $3,750/month. The one big difference in the two deals: the SFH was a cash purchase.

    CoC Apartments: 15.63%

    CoC SFH: 13.95%

    Cap Rate Apartments: 8.5%

    Cap Rate SFH: 13.95%

    50% Rule Cash Flow Apartments: $185

    50% Rule Cash Flow SFH: $475

    So the COC is better on the apartments, but the ROI is better on the SFH, even though it was a cash purchase. And 50% rule suggests the SFH is actually 2.5 times more profitable than the 5-unit apartment complex.

    So, I'm just thinking about this stuff. What are your experiences with these rules of thumb? Do you like any of them? If so, which ones?

    submitted by /u/compuzr
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    New purchase in Canada. Buy cash and finance or get mortgage?

    Posted: 25 Jul 2020 07:20 PM PDT

    I've recently had great success in the stock market and have hit $330k portfolio. I wish to continue stock investing and liquidate as little as possible but I also want to purchase a 3rd and 4th rental property. The properties I'm looking at are in the $150k-$200k range. Is it better to put 20% down and get a traditional mortgage or buy the properties with cash and open a HELOC or similar line of credit and pull out as much equity as possible. I read some HELOCS allow you to pull 85% out. Which option gets better interest rates?

    submitted by /u/Andrewskeeter
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    First property in LLC, but reconsidering fo second property

    Posted: 25 Jul 2020 07:06 PM PDT

    I currently own my own home, plus have one SFH that I own through an LLC. After doing some additional research and going through the experience of the first property, I am strongly considering purchasing the second property under my own name rather than through the LLC. The key reasons being

    1. Better financing rates
    2. LLC really won't offer complete legal protection so I'm going to need some kind of umbrella insurance Policy anyways to protect my assets

    I have two questions:

    1. What are the tax implications of doing this? Am i creating more work for myself?
    2. If i buy the second property under my own name, will i need to then have two umbrella policies? One for my llc and one for myself?
    submitted by /u/almualim1
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    Looking to purchase 2M warehouse as owner/operator

    Posted: 25 Jul 2020 05:39 AM PDT

    My business is in online sales. Past years have had net under 300K on more than 10M in sales (That net is extremely low in my industry). This year, Corona has changed a lot of things and I am looking to end the year around 2.4M net at about 20%. I am currently renting 12K sq ft of warehouse for 6,500 a month. My utilities are another 1,000. Add in insurance and that is an extra 600 a month so total expenses on the building I am in now is around 8,100.

    In my area (Tampa) I have looked at hundreds of warehouse online over the last 2 years to get a feel for the market (looking at 15-30K sq ft with a max of about 2.2M). I finally found a building that looks good but I am not sure if I can swing it. The profit above may seem like a lot but I have carry costs for inventory in my industry (about 1M at any given time).

    here are some ROUGH estimates I am throwing together on my own. I have a banker and realtor that are guiding me along but I just wanted to see what opinion you guys have and what I am missing or what situations I should plan for. Below are some notes about the building:

    Property is 7 acres. 2 acres are designated wetlands (at the very back of the property). The full 7 acres is AE flood zone which requires flood insurance. Current owner states the property has never brought on water and he has about 2M of machinery in the warehouse so I believe him. Zone AE requires flood insurance.
    18K sq ft of warehouse and 6K of office.
    8K sq ft of the warehouse has AC. Here in Florida, that will cost me about 800-1000 a month if I want to cool it (my current WH does not have AC)
    2.5K sq ft of the office has AC. The rest is used for doc storage.
    The office is wayyyy too big for what I need. Since the warehouse is AC, I am considering building out my small office in the warehouse and renting the full 5K sq ft office out. Office space in the area rents for 13-20 a sq ft. If I could rent at 10sq/ft, that would give me about 5K of income a month from just the office space. 3 acres are currently rented to a guy that subleases the space out to truck drivers and he pays 2,400 a month. I could most likely rent direct to the truck drivers and increase that revenue. Could use it for car lot overflow or rental car overflow in the future if needed.

    This would increase my current property and utility expenses from about 8,100 a month to about 15,000 a month (includes the 2,4000 a month in rent from the truck drivers). I know I need to get my numbers completely in order (attached spreadsheet is super rough estimate). This is a significant purchase for me and exciting and frightening at the same time. I grind 24/7 and know this project is going to take a year to get everything in order. Any insight or callouts are appreciated.

    submitted by /u/jordanwilson23
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    Investment comparison - Real Estate vs Index Funds

    Posted: 25 Jul 2020 06:03 PM PDT

    It seems to me like the biggest advantage of index fund investment is the ease and fully passive nature of it.

    Comparing that to real estate investment, the advantages are -

    • Leverage - if used properly can expedite road to financial independence. Kind of similar to margins in equities world however less risky and easier implemented in RE.

    • Tax benefits - while you're still working, tax deductions from owning property can add up.

    The biggest disadvantages for RE investing seem to be the time and effort requirement. The time requirement can easily make it to be like a second job during the first few years. However, what you get in return is possibility to reach your goal NW faster.

    If you're willing to put in the work, what is wrong with this portfolio -

    • Index fund investment in tax benefit accts (401K, IRA)

    • RE investment with remaining funds

    submitted by /u/brownsteeel
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    HELP: need advice from investor/ house hacker with duplexs, lost out on one and wanted some feedback on my plan

    Posted: 25 Jul 2020 10:13 AM PDT

    hello everyone,

    i waited 1 day too long to submit an offer and now it under contract. i have been looking for 3 years so far 1.5 in north jersey and now 1.5 in Philly.

    i like Philly more cause numbers seem to be better because of NJ's high property taxes make it super hard for cash flow.

    my strategy is the following

    1. cash flow $150 per unit after all expenses
    2. use $100 per CAPEX, vacancy and repairs (assuming the place is fine and just needs cosmetic work
    3. use 5% down conventional loan
    4. use the bi-weekly payment plan to create the 13th payment towards principal every year
    5. put down total cash including fixing up the property $60000
    6. hoping to get 7% + cocr since the stock market is 7% return
    7. the area has to be c+ or better

    now am i doing something wrong? rates are so low i felt like this recent miss out was a huge blow to me. i am not interested in house hacking a single-family house. Can anyone give me some advice on what i should do? i have read every single real estate book. The market now is crazy and who knows what would happen next.

    submitted by /u/blueeyesdragon92
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    Evaluate price based on seller operating expenses?

    Posted: 25 Jul 2020 12:00 PM PDT

    Hi Everyone,

    Novice RE investor here. My qualifications are that I've been a resident manager for mid-sized, commercial multifamily properties for a long time- but didn't deal with the finance side of things- just rent collections, day-to-day maintenance, rent collection, showing vacancies, signing leases, etc.

    I've recently read Investing in Duplexes, Triplexes & Quads by Larry Loftis.

    Current situation: I looked at an opportunity based on GRM and it looks good for the area. Good location; good three-family house that I intend to owner occupy. I'm under contract for the house now and going through inspections, etc.

    The seller's agent shared the operating expenses of the house for the last year. I now know the 2019 totals for rent collected, water bill, mortgage payment, property taxes, and operating expenses.

    Armed with these numbers, how can I use them to 'reverse engineer' their asking price to help me determine if I feel it's fair for this area?

    Thanks! Hope this isn't too much of a newb-sounding question.

    submitted by /u/FubarOtter
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    Getting financing on a duplex that also has a mobile home on the land?

    Posted: 25 Jul 2020 09:18 AM PDT

    Is it possible to get FHA or 5% down financing on a duplex that also has a mobile home on the land? I was pre-approved but looks like my lender might back out and my only other option from another lender is 20% down.

    submitted by /u/HDTV_FTW
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    I'm 15 and want to learn real estate investing

    Posted: 25 Jul 2020 02:19 PM PDT

    Hi everybody I'm 15 years old and I recently got interested in real estate investing. I want to educate myself but I don't know where to start. I would appreciate any reccomendations on how to learn about real estate investing or what books to read. Also I would love to know what you guys would do at my age with all the knowledge you have today. Thanks in advance

    submitted by /u/Charliearm88
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    Mortgage Financing Issue

    Posted: 25 Jul 2020 06:53 AM PDT

    I purchased a new construction condo in NYC back in January (pre-covid) that was still being built. I just received my closing notice; however, I learned only 25% of the units have been sold. I am afraid that I won't get adequate mortgage financing because of this. Does anyone have experience here and what I should try to do? And no, I can't back out of my contract unfortunately.

    submitted by /u/birdmanunited
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    House Replica

    Posted: 25 Jul 2020 05:24 AM PDT

    I recently saw a listing for a newly constructed home I really liked. Unfortunately, it sold for around 550K before I could make an offer. If I were to buy a plot of land, and hire a company to construct the exact same house, materials and all, would it be reasonable to assume it would cost me about 550K? Or would it cost even less because I don't think anyone would sell a home for less than what it cost to build.

    submitted by /u/ursak6i
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