Home buying thread

Fucker · Mar 14, 2022

Araysar said:
Fucker

I plan to own a couple of rentals

1. Is it worth forming an LLC for the rentals?
2. Should I form 1 LLC for each rental, or just put all rentals under 1 LLC? These will be single family homes.

LLC is needed to shield your personal assets from lawsuits. Get a good atty who has done this a lot and knows the ropes. What was good for me in ID might not be good for you in KY.

Besides, a good atty is vital for anything. I ended up using the same firm for everything and it was money well spent...they handled some pretty complex issues with skill and precision.

I was never sued, but that doesn't mean you won't be. I limited my exposure by renting only to people who had their shit together. First house I bought had existing renters...I should have booted them, but I was in naive nice guy mode. They were always late on rent and went in arrears. I ended up evicting them week of Xmas...nice guy mode off. ID had pretty fair landlord/renter rules so I was able to get rid of them but it took a few months.

I don't know what the appreciation is like there, but $140k seems like a steal. Mine were $70-$80k and appreciated nicely in the years I owned them...that was the point to doing it to begin with. I had 5 total at one point which was a pretty good stash of cash in the years I had them. I managed all the properties myself. I ended up with some pretty good renters too which made the project vastly less annoying. I did have three total that were PITA, but handling them was easy...follow the law, document everything.

For sure skip the low-income/bad credit rent assistance types. They will be a weekly PITA.

Araysar · Mar 14, 2022

Thanks, thats kinda what i figured but wanted to make sure.

My reasons for doing this:

1. I live in an area where there will be massive private investment (billions of dollars) to build manufacturing factories in next 24 months, so at least 5K middle class jobs are coming and there's nowhere near enough housing
2. There is also a large military base nearby providing a regular supply of renters, also providing opportunities for "inflated" rent to match max housing allowance from USMIL
3. Housing prices here are "reasonable" compared to rest of US at roughly $100 per sq. ft
4. Inflation making the dollar rapidly lose value makes me want to take on debt so that inflation works for me, rather than against me by making debt worth less.
5. My long term plan is to buy up as many as I can afford in next few years, make some money on rent, and ultimately sell them in 5-15 years hopefully with enough profits to contribute nicely to my retirement nest egg. I plan to make the vast majority of my profit when I sell them.

Fucker · Mar 14, 2022

Araysar said:
Thanks, thats kinda what i figured but wanted to make sure.

My reasons for doing this:

1. I live in an area where there will be massive private investment (billions of dollars) to build manufacturing factories in next 24 months, so at least 5K middle class jobs are coming and there's nowhere near enough housing
2. There is also a large military base nearby providing a regular supply of renters, also providing opportunities for "inflated" rent to match max housing allowance from USMIL
3. Housing prices here are "reasonable" compared to rest of US at roughly $100 per sq. ft
4. Inflation making the dollar rapidly lose value makes me want to take on debt so that inflation works for me, rather than against me by making debt worth less.
5. My long term plan is to buy up as many as I can afford in next few years, make some money on rent, and ultimately sell them in 5-15 years hopefully with enough profits to contribute nicely to my retirement nest egg. I plan to make the vast majority of my profit when I sell them.

That was my plan when I started. It started out slow, but picked up decent steam with 5 units full. I didn't have an interest in expanding beyond that, but you might find you enjoy it. Great source of cash if you look long term.

Sanrith Descartes · Mar 15, 2022

Araysar said:
Fucker

I plan to own a couple of rentals

1. Is it worth forming an LLC for the rentals?
2. Should I form 1 LLC for each rental, or just put all rentals under 1 LLC? These will be single family homes.

Its all about liability shield. Each property is a separate entity with its own LLC so If little Timmy trips and falls at property A and you get sued, regardless the outcome property B and C aren't touched. For simplicity sake, we name each LLC after the address. 123 Main Street LLC, 500 Madison Ave, LLC etc. It makes it easier to keep track of which is which.

Araysar · Mar 15, 2022

Sanrith Descartes said:
Its all about liability shield. Each property is a separate entity with its own LLC so If little Timmy trips and falls at property A and you get sued, regardless the outcome property B and C aren't touched. For simplicity sake, we name each LLC after the address. 123 Main Street LLC, 500 Madison Ave, LLC etc. It makes it easier to keep track of which is which.

That's the kind of advice I come here for. So a separate LLC for each property then

Thank you

Sanrith Descartes

Sanrith Descartes · Mar 15, 2022

Araysar said:
That's the kind of advice I come here for. So a separate LLC for each property then

Thank you Sanrith Descartes

The potential headaches it saves is worth the couple hundred bucks each. As a side note, since they are separate companies they will each file a schedule C on your taxes and some people might use this to their tax advantage when it comes to expensing out business costs like vehicle expense, home office expense etc. Nothing illegal mind you, just abuse the legal tax loopholes as much as humanly possible.

Blazin · Mar 15, 2022

For what its worth the whole LLC shields from cross liability rarely holds up in court. Not going to argue it because it's just a meme at this point to put each property in an LLC. If you are a single member LLC and the sole purpose of the LLC is to hold the real estate a judge would simply pierce the vial. Go ahead and do your own research, it's what everyone says to do without knowing it doesn't even work.

Your protection from suit is not being a cheapo on insurance, and if you have multiple properties having a large umbrella sitting on top of them. Insurance is the true watcher on the wall.

BrutulTM · Mar 16, 2022

I was a little disappointed the first time I took out a loan with my incorporated company and they made me cosign it personally as well. They have their ways of getting money out of you.

Sanrith Descartes · Mar 16, 2022

BrutulTM said:
I was a little disappointed the first time I took out a loan with my incorporated company and they made me cosign it personally as well. They have their ways of getting money out of you.

My experience is it depends on the history and revenue of the company. My startups needed a personal guarantee, my long existing company does not.

Sludig · Mar 16, 2022

Any advice

Given inflation, interest, and housing prices. We think we want to buy our house in OK ahead of our move in a year or two now and just rent it for a while.

I understand I'll likely need a larger % down? Really i can get 20-30, can push to 40 if I sell my jag is most liquid thing, but if it's like 20% then that's going to fall short on a 250k property.

Current house bought for 255 but worth about 500, but id rather not pull money out of it especially since we refinanced last year. And when we bought it, source of money was heavily looked into, so I'm unsure if you can even fill the rest of the down via another personal loan or something.

If we can swing both, at least makes moving easier than some day having to try and time selling, and buying at the same time which always scared me about being rushed into a shit home, in a hotel, or financing problems because of the old house on your credit.

Araysar · Mar 16, 2022

Sludig said:
Any advice

Given inflation, interest, and housing prices. We think we want to buy our house in OK ahead of our move in a year or two now and just rent it for a while.

I understand I'll likely need a larger % down? Really i can get 20-30, can push to 40 if I sell my jag is most liquid thing, but if it's like 20% then that's going to fall short on a 250k property.

Current house bought for 255 but worth about 500, but id rather not pull money out of it especially since we refinanced last year. And when we bought it, source of money was heavily looked into, so I'm unsure if you can even fill the rest of the down via another personal loan or something.

If we can swing both, at least makes moving easier than some day having to try and time selling, and buying at the same time which always scared me about being rushed into a shit home, in a hotel, or financing problems because of the old house on your credit.

Rates are jumping massively now.

I was quoted a 3.99 on preapproval letter 6 weeks ago (this was for investment property today). Today it was 5.5%. Talked to some lenders today, they said rates have skyrocketed in past 2 weeks.

Might be worth locking in a rate now, everyone I talked to doesnt think its going down any time soon

Sanrith Descartes · Mar 16, 2022

Araysar said:
Rates are jumping massively now.

I was quoted a 3.99 on preapproval letter 6 weeks ago (this was for investment property today). Today it was 5.5%. Talked to some lenders today, they said rates have skyrocketed in past 2 weeks.

Might be worth locking in a rate now, everyone I talked to doesnt think its going down any time soon

Go read the investing thread as we debate the possibility of the Fed raising rates 7 times this year (including today's rate increase). Btw these rising rates should cool off the housing market as demand slows as people get priced out of houses by mortgage rates. And yeah, they aren't going back down anytime soon.

Araysar · Mar 16, 2022

Sanrith Descartes said:
Go read the investing thread as we debate the possibility of the Fed raising rates 7 times this year (including today's rate increase). Btw these rising rates should cool off the housing market as demand slows as people get priced out of houses by mortgage rates. And yeah, they aren't going back down anytime soon.

Today's rate hike and the promised future rate hikes were mentioned a few times. I spoke to 5 separate mortgage lenders today, trying to find a better rate than 5.5.

3 of them mentioned upcoming rate hikes.

Go read the investing thread

i only read one thread nowadays bro

Sanrith Descartes · Mar 16, 2022

Araysar said:
i only read one thread nowadays bro

But the investing thread is a Phisey-free zone.

Araysar · Mar 16, 2022

Once Chad Putin finishes curb stomping The Shitstaine, that thread will also be Phisey free

Captain Suave · Mar 16, 2022

Araysar said:
Rates are jumping massively now.

I was quoted a 3.99 on preapproval letter 6 weeks ago (this was for investment property today). Today it was 5.5%. Talked to some lenders today, they said rates have skyrocketed in past 2 weeks.

Might be worth locking in a rate now, everyone I talked to doesnt think its going down any time soon

I was quoted 2.6% in December and 3.5% early last month for a primary residence. 5.5% this fast hurts. I've been trying to buy in my area for about eight months now, but I wasn't seeing good values and refused to YOLO an extra $100-150k during bidding wars, which is what everyone else is doing. Hopefully the market can cool some with higher rates, though that might force me to but in cash or at least with huge equity %.

fris · Mar 17, 2022

Fucker said:
For sure skip the low-income/bad credit rent assistance types. They will be a weekly PITA.

My neighbor says the opposite. Charges $1700 for a small 2 bed room, 1650 is paid by the state. Says at worst, the renter is behind on 50 bucks

Khane · Mar 17, 2022

I dont know how it works in every state but here in CT what your neighbor is doing isnt legal. You arent allowed to charge a tenant more than their rental assistance and have them cover the difference. People do it anyway obviously but the fines are pretty large if you get caught

Koushirou · Mar 17, 2022

Feeling really lucky now that I got my 3.99 rate locked in a couple weeks ago.

Falstaff · Mar 17, 2022

Koushirou said:
Feeling really lucky now that I got my 3.99 rate locked in a couple weeks ago.

I hope you find a place. I’m never moving again but market looks worse now than it did last year in terms of inventory when we sold/bought.

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