I started watching some of these TV shows about property, but wanted to ask people for their advice on this. For a noob like me who just wants to collect rent and do no work, should I just find a property manager and let them do everything? How can I make sure I won't get completely ripped off?

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25415164)

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25415186)

also rent yield and rent range

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25415209)

i would even recommend pooling together money for a REIT and taking out an entire apartment complex with your friends/family

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25415259)

Just remember, basically don't believe any rent roll or PnL you see. Assume it is at least 20% optimistic. And if you ever see the words "pro forma cap rate", or "cap rate once stabilized" it is basically useless.

The whole racket in C class properties is selling to people who don't know how much they suck to own and run.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25415905)

Are you talking about all the fancy goblygook where they run the monte carlo simulations? I just don't think I believe any of it.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25416079)

They way I am structuring my allocation is to use my whole life policies as my bond proxies, so I don't own any bond funds anymore. All my equity stuff is now S&P indicies.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25416298)

Any advice on LLCs? Texas has a franchise tax on LLCs, so looks like I should probably form a Delaware or South Dakota or whatever is the hot state du jour.

Any other structuring matters that I am sure I already messed up?

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25787934)

Texas is one of the states that has Series LLC. you should do that and create a series for each property (they were created for real estate). that way the liability is isolated but you only have to deal with one state-registered entity (and likely only a single tax too instead of a tax per entity). adding a new series is as simple as updating a schedule to the operating agreement. each series can get its own separate EIN, if you need that.

if you're doing your own management, you may consider setting that up as a separate entity that is hired by each property series llc. that way tenants don't need to write a check to "ptbarnum holding co, llc Property C series", you can pay all maintenance expenses out of one account, and remit income back to the individual series on your end. makes things cleaner and your books easier as you get additional properties. each series llc would enter into a management agreement with the management llc.

don't fuck around with security deposits. look up your state regs on where and how they need to be held, what happens to interest, how quickly they need to be remitted after a tenant vacates, requirements for the security deposit transmittal letter, etc.

read this for some tax reasons you want to use an llc and not an s-corp, and some of the things you can do with real estate: http://www.cbiz.com/page.asp?pid=8632

the forums on this site are good and you'll get much better advice here than on xoxo, and you can make connections: http://www.biggerpockets.com

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25788682)

I hired a management company, trying to make this a really passive thing once it is going.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25789425)

This was more of a pure asset allocation play.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25789485)

There are far easier ways to diversify your allocations than to purchase physical assets that require significant time/work.

EDIT: if you already bought the place, you can disregard most of what I've said since it's moot

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25789496)

Although you probably feel like you are above doing this, speaking to a fee-only financial adviser that recommends only low-fee passively managed index funds probably wouldn't be a bad idea. The Bogleheads community can be kind of single-minded and lame sometimes, but their general philosophy is right on for almost everyone.

Also, probably worth keeping in mind that according to plenty of studies, simple long-term allocations to the equity indices supposedly outperform even very intelligent market-timing strategies such as buying when the Shiller P/E 10 is low/selling when high.

Rather than trying to squeeze out 50-100 basis points overall on your overall portfolio performance (since I'm assuming your allocation to rental properties isn't going to be more than 10/20/30% of your assets), you might be better off just having a diversified passively-managed portfolio and focusing your time on more interesting things.

Of course, this all goes out the window if you are extremely lucky, shrewd, or a real estate genius (which 99.9% of us, myself included, are not).

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25790285)

I'm looking for something different and not really correlated or over which I have more "control".

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25790902)

I'm running a multimillion portfolio and need to meet some people whether live or on the internet who have experience and advice.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25791623)

It's hard to do materially better than the broader market over any long time horizon - just look at the investment management industry. There have been plenty of people on xoxo (or almost any message board) who claim/earn insane market-beating returns, and then flame out spectacularly within 1-2 years, or abruptly stop talking about their performance. Usually they are just running extremely high beta strategies (day trading, options, etc).

EDIT: How did you amass this multimillion dollar portfolio? Whatever got you there might be a decent path to continue following.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25792567)

I'm not at all interested in tying my money up in private equity or a hedge fund.

Saving money from my job is a pretty slow and unenjoyable way to make the next million, so I'm looking for something that requires less hours.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25792660)

It would probably be a higher-return path to figure out something entrepreneurial, whether it's making partner and building a book of business, transitioning to work for a client, or something like that.

It's hard to learn from other rich people around you, because such a huge portion of them got wealthy from starting/inheriting successful businesses when there was no major large corporate competition, bought real estate at the right time, or otherwise got ridiculously lucky.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25792689)

But, assuming you are starting with one single-family home and using a management company, it doesn't sound like there's a whole lot of downside as long as you are very careful on the legal and tax side. I just don't see real upside or other benefits from doing this, other than potentially the stuff you'll learn.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25794750)

if you do have another job but think you can swing it, you really should manage the property yourself to take advantage of the 25k offset. how much do make now?

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25790951)

another thing that going to hurt is the brand new NIIT tax. Thanks Obama!

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25790982)

or maybe a warehouse and see if you can work a net lease, or hold onto it and hold for redevelopment in a gentrifying area.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25790393)

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25793212)

My neighbors/coworkers are all sps poors.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25791143)

there's an age issue too, it is ridiculously hard for me to talk to people over 40+ on a non-professional basis.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25792665)

I don't have a CPA or lawyer, I do that stuff myself for now.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25793183)

The poster that warned you against C class and below properties is spot on. Managing those places will be a nightmare. If you can find something in a decent part of an urban center like Houston or Dallas, you'll do well over the long run. A 2-4 family property as close to downtown as you can afford would be optimal. Hiring a management company could make sense, but they'll take around 7% off the top, which could be your whole profit margin. However, over time, your rents will grow by around 3% a year and your mortgage will stay the same. You'll make a slow and steady trickle of profit while gradually building equity.

One trick I would recommend is collecting rents by credit card. I set all my tenants up through a credit card processing website that charges them rent automatically each month, and both I and the tenant get an email saying whether a given rent charge did or didn't go through. I lose around 2.5% to the cc processing fees, but I only have to intervene if a charge fails to clear or if something breaks. So long as the property is in a desirable location where you can find quality tenants, it's not that difficult, and the yields can be pretty good when you account for the benefits of leverage. It's also a good hedge against inflation, a steady bout of which could inflate away a sizable portion of your mortgage debt.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25796677)

https://www.realtymogul.com

https://fundrise.com/

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#25802912)

I'm always tempted to buy an income property, but it seems like every small scale landlord you talk to gets wiped out every few years.

Rent out a home netting $500 a month after expenses = a whopping $6,000 a year.

New roof = $20,000 +

Tenant destroys your floors = $5,000 +

Four months of vacancy = wipes out an entire year of profit, assuming you have a mortgage.

Just seems hard to actually have a positive ROI.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#30345004)

Oh, and stop being a risk averse lawyer and ruminating on every thing that could go wrong.

(http://www.autoadmit.com/thread.php?thread_id=2547680&forum_id=2#30345119)