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First Rental Property

ttazzman

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Only shooting for very high cash flowing properties with not much headache.
Hmmmmm you and every other realestate person.......sure beats the heck outa shooting for low cash flow and high headaches LOL.................in my past history High cash flow properties had a lot of headaches...........low cashflow properties could be less of a issue.....one rule of business is profits take care of cashflow as long as you get paid ........ :)
 

davycoppitt

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Hmmmmm you and every other realestate person.......sure beats the heck outa shooting for low cash flow and high headaches LOL.................in my past history High cash flow properties had a lot of headaches...........low cashflow properties could be less of a issue.....one rule of business is profits take care of cashflow as long as you get paid ........ :)
Oh they are out there. Have next to no issues with the old welding shop. It’s less work than the triplex and cash flows almost 3x
 

ttazzman

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Oh they are out there. Have next to no issues with the old welding shop. It’s less work than the triplex and cash flows almost 3x
Ride the sweet spot as long as you can they rarely last...not a thing wrong with things working as they should
 

EchelonPL

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Davycoppit, Thank you for sharing all your work in this thread; it is inspiring so i'm a subscriber now. There are so many useful tid-bits of information from the thread participants and thanks to them too!

Here are my main notes below. I'm curious how your partnership is working out from the nitty gritty details of LLC, taxes, accounting, etc. I am looking to invest with someone and do a split mortage/ real-estate purchase. I've never been in partnerships, never worked with lawyers, never had an accountant or tax adviser but i'm soaking up all the knowledge so I at least i don't end up in utter failure. As one of the members said, if you don't try and fail, you won't get as far in comparison to if you never tried.

Notes:
—get a competent lawyer
—partnership agreement (many things to write in: IE survivorship)

—get a competent tax adviser
—700 series code: https://www.law.cornell.edu/uscode/text/26/subtitle-A/chapter-1/subchapter-K
–Federal tax law does not recognize an LLC meaning it will remain a partnership for Federal tax purposes.

—An S corp is better than an LLC.
In an LLC - there is no requirement that distributions be in accordance with shareholder equity. For example - you could own 49.99% of an LLC - but if the other guy has a majority - he can pay himself all of the profits and give you nothing - and there isn't much you can do about it...unless you specifically have language in the LLC addressing this. But even that wouldnt fly as the majority owner can change the bylaws anytime they want to...

—An S corp requires distributions to be doled out based on the ownership percentages… one hint for finding a good business or contract lawyer ....such as in the OPs case is to find one that owns and leases a lot of commercial property in your area sucessfully since he/she has had personal investment in such similar ventures they will have dealt with the pitfalls and issues on a personal level and should have pre-developed documents and can provide advisement specific to your venture....in the case of a partnership i always made sure i personally paid and was the said client of the lawyer so all advisement was specific to me and he would then represent me in case of a future issue...

joint ventures were done via LLCs or C-Corps.
single ventures were LLCs or S-Corps

—I’m in an LLC with partners. The bank made it clear it makes no difference what the op agreement said, they’d go after deepest pockets. In my experience if you spell out distribution and strategy and have limited scope like a rental it’s safe to have partners.

–I personally always Insist on a clause of no changes to bylaws or op agreement if not unanimous I’m a no debt kind of guy but went with the wishes of my partners on this current deal, to maximize cash outflow and pay the minimum on the mortgage

The typical issue are free riding partners (we build expectations and penalties right into the agreement). Don’t do your part we outsource it and it comes out of your share of distributions. Never had to invoke, I’ve been fortunate to have always had great partners.
 

Unca Walt

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After being a landlord again for 3 years I am ready to cash the F out. Too many headaches for me.
For a short time I was a landlord -- a lovely house in Queens in sight of the twin towers. Next thing I knew, there were 15 Sri Lankans living there. Threatened to totally trash the place if I tried to get them out.

Sold the house to... WAIT!! Kewl short story: My darling Witch was in the meeting we were having with the two Chinese interested in buying, and she was as nervous as a bastard at a family reunion -- we HAD to get out from under, we were leaving for Floriduh.

The two Chinese were talking to each other in Mandarin. Herself likes to tell the story about how she suddenly saw me relax and smile.

Seems the number of Big Noses that can speak Mandarin is kinda thin in the housing bidness. But I heard them say, "This is a very cheap price, we cannot let this go."

That was the ONE time my creaky background helped me out. ;) cool:
 

hammerhead

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to maximize cash outflow and pay the minimum on the mortgage
Interesting strategy. I know a hotelier. After the completion of his latest acquisition in the area, I asked when he will have it paid off and he becomes the owner. He said never. It's not part of the plan.
 

nickndfl

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If anybody wants to move to FL let me know. I have 3 renovated oceanside condos 1/1 + 2x 2/2s from $275k cash only low reserves. Not on market, but I am looking to retire.
 

Uglytruth

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If anybody wants to move to FL let me know. I have 3 renovated oceanside condos 1/1 + 2x 2/2s from $275k cash only low reserves. Not on market, but I am looking to retire.
1. Bet you would take metals also right?
2. That has always bothered me. Soooooooooooooo many boomers all running for the exit at the same time.
 
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Thecrensh

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If anybody wants to move to FL let me know. I have 3 renovated oceanside condos 1/1 + 2x 2/2s from $275k cash only low reserves. Not on market, but I am looking to retire.
Wait...what?
 

Unca Walt

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We did the what thing awreddy din we?
 

EchelonPL

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If anybody wants to move to FL let me know. I have 3 renovated oceanside condos 1/1 + 2x 2/2s from $275k cash only low reserves. Not on market, but I am looking to retire.
I don't have enough cash. Otherwise, was looking at Cocoa, Melbourne, Palm bay, Rockledge. (purely in the research phase).