30) Nightmares, Murder Houses & When Enough is Enough

Real Estate Investing with House Money

House Money Weekly

In this week’s House Money Weekly segment, Lauren and Alan get together with their special guest, Dave from Side Hustle Houses on Twitter, where they discuss blog 129 about the big risks of transferring your property from your personal name into an LLC. The article was written because many people ask Alan about this topic. Loans are cheaper if you put them in your personal name. Aside from the low interest rate, you will also have a lower down payment. Some people then transfer the asset to their LLC through a quit claim deed. It is quitting the claim to a deed in a personal name and transferring it to an LLC and the 1st risk comes here, although your property is in the name of an LLC, the mortgage is still in your personal name. The mortgage company can call due and say they approved you and your personal name and your personal income for this loan and if you transfer it to an LLC and that’s not what is underwritten. Lenders can call loans due and when this happens, you can either refinance in your LLC name where the interest rate's a little bit higher or quit claim a deed back to your personal name. Lauren shares her experience from speaking with different lawyers on this topic and nobody has a good answer about it. Dave asks if STRs should be in LLCs more than LTRs and Lauren answers how hosts sometimes structure their businesses. He also adds that part of the underwriting in England was that he needed more life insurance! Although Alan wasn’t able to talk about all the risks, he discussed title insurance, which protects you when a claim from the past that states you don’t have the right to own a property because someone owns it because it was illegally sold or the paperwork was done poorly. If you do a quit claim the title insurance doesn’t go to your LLC because YOU paid for it. Because Dave lives in England, Alan asks him if there’s something similar to this in his place and he doesn’t know yet because it’s something he hasn’t experienced. To read more about this Blog, you can sign up for the newsletter.

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Mortgage Minute: Jasmine answers the question: What is a lender’s relationship with an appraiser?

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Real Estate Is Easy Interview

Lauren interviews Dan, the host of the Landlord Horror Stories Podcast. He is a Chicago native and he has 4 properties up in Milwaukee. He just recently moved into his brand new house hack in the suburbs outside Chicago. Lauren asks about why his podcast is called Landlord Horror Stories and he shares that it’s because he loves podcasts and real estate shows. Dan noticed that most podcasts and social media posts are about home runs and how perfect things are. But living in the trenches, he knows that real estate isn't always passive and he loves to hear stories about things going south and when things are starting to go crazy. He shares that if things go south, there are ways to right the ship that's why he built Landlord Horror Stories. Lauren was on Dan’s show where she shared her Real Estate Horror Story. Dan shares 3 Landlord Horror Stories and he ranked them from least crazy to most crazy. In Episode 10 with Cody Berman, Dan shares an amusing yet challenging experience. Cody received a call from a tenant reporting water in the basement, but it turned out to be sewage. Dealing with the issue cost him $6,500. Later, another tenant revealed that former occupants had stuffed potatoes in pipes out of animosity. The story illustrates the unpredictable challenges property owners face, highlighting that one may not always be aware of everything when acquiring a property. In Episode 7, The Reluctant Landlord, a property manager, and landlord, recounts a surprising incident. A young applicant lacked sufficient funds to qualify for a property, so he had his grandma a co-signer, and both passed background checks smoothly. However, during COVID, the landlord received calls from neighbors and the police, revealing that the applicant's grandma was involved in running a gang with the assistance of her grandchildren. The last story was in Episode 12, Brian (an investor landlord) hired a property manager and when COVID hit, tenants lost their jobs and they were able to remain on the property without paying the rent. Brian started receiving calls that the property was falling apart. Brain was charged a thousand bucks per month for water, electricity sewage, and trash. Finally, the cops were called over an incident and the people were removed. Although these landlords experienced these crazy events, they still rose to the challenge, and continued investing in real estate and every single person Dan has interviewed has said that they have been net positive. After sharing these stories, Lauren asks Dan how he makes real estate easy, and what he does every single day without fail is to look at his market.

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Vyzer Wealth Building Break: Litan answers the question: Why do wealthy people invest as limited partners (LPs) in Real Estate syndications?

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Guest Host's Segment

Guest Host Dave asks: when is enough enough? When is the time to sit back and smell the roses and enjoy what you have? Alan finds this question hard to answer because of his love for real estate. He doesn’t know where to put his time and energy if he ever stopped investing. He wants to do more deals even after retiring. Alan calls himself a “deal junkie.” For Lauren, enough is having enough cash flow to cover your expenses. Their goal was for real estate to cover their bills and for their stocks to cover additional things. Dave’s goal right now is 10 units, and he will re-evaluate at that point.

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