My Plan B------> Real Estate

On your first purchase I would keep it within 10 to 15 minutes drive time. You will HATE HATE HATE yourself for buying something 90 minutes away that you then have to meet a contractor at 3 separate times to get 3 separate bids. Or to show the units to 10 renters in a week who cant all make it on a single day at the same time. Keep it close and keep it classy.

 

I have sold all my single family homes. 22 of them, over the last year and took that accumulated cash and added the same amount of debt I had invested in the houses and bought a 42 unit property in a not so great part of town. I am telling you right now this has been the best decision of my life the last 3 months. Its much easier to manage and repair one big building than 22 separate houses. Keep this thread alive.

 

This has been an ongoing debate between investors in my area. I will agree a large multi unit is easier to manage but I still like single family homes. These are the reasons. In Single family homes the tenants are more likely to stay because they have children in the schools. When you sell the single family homes your buyers will be owner occupied and investors. Multiunit only investors. When you sell your multi unit the investor will beat you up in price.

If you got a great deal on the multi unit, will hold on to it for a long time and the cash flow is much better then the single family homes the concerns maybe would not apply because by the time you sell you wont care as much about the sales price.

 

Its always easier to go with a bigger property. The break point problem on costs is the management. On site needed? Then thats a big chunk of money. If you own more than 10 or so houses I would encourage you to sell and buy a single building with as many or more units. Its easier to raise value by increasing rents and its 1 stop only for problems.

 

Sooooooooooo Allergan people reading this board. Anyone own any property? Single family, multifamily, investment property?

Whats are your hot takes on how this can help keep a rep afloat in these troubled merger times.

 

With the merger about to begin this year I for one can say without a doubt that having property in my portfolio makes me feel so much better about whats going to happen. I have rental income coming in and I have used my Pfizer time day to day to look for, renovate and build up my portfolio. 2008 was not very far behind us and it could happen again. I was scarred beyond belief about getting laid off in my late 20's with 2 kids. Now I have almost 8 more years under the belt and I learned quick. Build another business or own rentals. And one thing I also learned. When the market crashes again. Wait a year for the panic to be in full force and BUY BUY BUY like a crazy man. I only bought 3 houses at the bottom and they all have increased in equity of more than 400k in total in the recovery.

 

Great post. Just curious if any of you kept your properties in a trust? I have a handful of rental properties and wondering what is the safest way to prevent anyone or any organization from taking my properties or placing a lien, should I am sued or taken to court for whatever reason.

Is there any more protection with placing real estate in a trust vs just having an LLC? I've read of instances where creditors or really anyone have tried to go after peoples' property/ies so I just want to cover my bases.

Also I manage my own properties and wanted to know if anyone had to disclose this to their DM. On my credit report at the time of hire it shows I have 6 mortgages so do managers see all of this or just HR? I won't say what area Im in but I'm almost sure my DM would probably try to fire me if he knew. He's one of the biggest jerks in the company and I've thought about leaving bc of him the past year. I've never said anything to him since its none of his business but one day i got a call from a tenant during my field ride and my manager was w me. I had to pick up since it was an emergency and my DM said something along the lines of why not I complete my call and address it after work hours. Has anyone have any experience on this?
Thanks

 

I am not an expert on reducing liability but here is what I do. The mortgages I have are in my name. I have an umbrella policy for $5 million. If you have a LLC (depending on state filed) and you actively manage your own properties could the LLC be challenged in court? I heard this is possible. Don't disclose to DM. If they ask you hire a property management company or contractor to take care of your places.

 

I have a separate LLC for each property I own. I then hold those separate LLC's under a single holding LLC as subsidiaries. Then I have 2 million dollar umbrella policy over the whole taco.

Tell your manager to stay out of your investment business. Owning houses is no different than owning a company sponsored 401k.

I would note this incident in my little book of record if I were you. I had a bad experience on my first pharma job with my manager so now I have a written journal for every email and conversation I have with my current manager. She is cool but if the tide turns quickly I have backup to make sure I cant get screwed.

 

Thank you sincerely for the great advise. Unfortunately, I am a late bloomer when it comes to this and only have one property but it gives me a sense of security that is hard to explain if for some reason I lost my job. I hope to buy more in the future. Your separate Llc'smalso sound like a fantastic idea. Thank you.

 

I don't have LLC's but these would be my questions. Cost to set up LLC. What state should you use to set up LLC (if you don't know what I mean do an internet search). What about tax implications ( do you need to do separate tax returns? Will the LLC give you personal tax breaks against your Pfizer income).

 

I set up my LLC's via attorney. 500 bucks per LLC. I set them up in my own state. Doing something weird in Delaware or Nevada is dumb unless you have Zuckerberg level wealth. I use the tax ID from the Holding LLC then have the sub-LLC's language spell out that they are subsidiaries. Therefore I fill a single return under the umbrella LLC.

Also, my accountant handles the profit from houses we flip as business income so if we have a loss (on paper) or spend money we make on profits in the real estate business we skip that 20% capital gains garbage on our profit if we hold a house for less than 2 years. I expense plane tickets (need to scout new cities to buy property in like in Hawaii or the UK etc), family dinners, snow mobiles (with my company logo on them..its advertising!) and many many other things because I run those through my LLC profits. I pay almost zero tax on a good sum on profits because I use what I would pay in tax to enrich myself in "business" related expenses.

I set up a conference for local investors and promoted my self as speaker. I sent out some fliers and video taped my self doing it with the kids to show good faith. No one came BUT I had made 3 custom suits for each day of the conference, bought new iphone 6 to record myself and bought a trailer for my truck "to haul gear to the conference." NO ONE CAME TO THE CONFERENCE.....Like I hoped they wouldn't. Those tax deductible suits were 8k for a legit business expense. On each flier I had the tag line....The most notable RE Investor in (my state) AKA "THE BEST DRESSED MAN IN REAL ESTATE". That way my purchase of the suits met my salesman tag line creating a legit use of money for clothing. Now I look fly with nice new custom suits and Uncle Sam get zilch. Own an LLC just to line your own pockets. Why do you think Pfizer big wigs get jets, meals at great steak houses, the best health insurance etc....live like them.

 

can this guys story be called a suit tax inversion? I see Pfizer/Allergan strategy being used in the micro here. Genius.

 

ok RE accumulation time. Shout out your age, general region, number of properties and cash flow. Be legit.

40

Central East Coast

Own: 1 duplex, 1 four plex, 1 single family house, 3 really cheap lots.

Cash flow = 6k a month take home after expenses.

 

47

37 single units
2 multi units

East Coast
13 years investing

Paid cash for majority of homes

over $20,000 a month profit. Major expenses, which are rare, would be deducted from the profit

 

Awesome board! Thanks for all the input. I just began investing in real estate age early 30's. Has anyone purchase a multiunit as owner occupied in one unit and rented the others as rental income? This is exactly what I'm doing however when I asked if I could place this multiunit under an LLC, loan officer stated that they could call the mortgage since I financed the property initially as owner occupied. Right now it's under my name, however i want/need to protect my personal assets and put it under an LLC but it doesn't seem feasible.

Has anyone changed their property from owner occupied to an LLC?

 

Yes you can do it. I have done it. But with such few assets to protect just keep it in your name and get a 2 or 3 or 5 million dollar umbrella insurance policy. This is more money than you need to protect yourself. Get a landlord policy with the umbrella over it and call it a day. Get all the bells and whistles on the policy to make you feel better. After you move out go and do the owner occupied FHA multifamily thing again. Buy a duplex or triplex or four plex. It's legal as long as you love there.

 

If he changed from owner occupied to LLC wouldn't he have to pay the transfer tax again? I think that is the way it would work in my state.

 

30

Middle America
I own 5

 

Sorry didn't finish

I own condos. I like not having exterior maintanence and that college kids across the street rent from me. No vacancies in 6 years.

I make 1300 a month profit and locked in 30 year rates 5 months ago so I'm going to hold these for a long time at a low payment.