1. Regarding LLC. Can it be based in, say, Delaware if the property is in California? I ask because the LLC annual fee alone is $800 in CA. If the property I buy is only $100K (an older SFH in San Bernardino), the annual LLC fee is almost one full month of rent!
2. Regarding LTV and financing, it’s interesting for me to learn that banks prefer to deal with a single-asset LLC. A follow-up question: do banks consider interest-only loans for this type of mortgage? (That is, a SFH purchased to generate rental income.)
3. How about property management companies? Do they charge 7% or 8% of rent? Do they charge the same when the unit is vacant? Do they help finding tenants in exchange for a commission? Do they have plumbers, handymen to do any repairs at reasonable cost to me (the owner)?
4. I aqree with the opinion that it’s best to charge below-market rent, but you need to be super strict with FICO scores and checking references.
5. I’m very tempted to buy SFHs in Riverside, San Bernardino, Fontana, etc., places where probably monthly rent is close to 1% of the value of the house. Problem is, this ratio works only in the very cheap, entry-level houses. Say, a 2/1 built in the 1960s with less than 1000 sf. I’d consider buying 20 or 25 of houses like that (putting 20%-25% down in each). Would that be too much work, even if I hire a Property Management company? If I set up an LLC for each house, the State of Calif would be making a fortune in LLC renewal fees alone!
6. As an unrelated example, I just found a 10-unit building in Oxnard for sale. Asking price is $2.3 to $2.5 million range. The units are apparently 2-BD, and the building is very close to the ocean. Built in 1972, and looks ugly/plain from outside. Some windows may even have an ocean view. The ad claims that gross income is $130K/year, but an ad on Craigslist lists one apartment in that very same building for only $1095/month. Is the seller being completely irrational? Compared to the potential income, this building should be listed for half of what they are asking! Or am I missing something? Who would buy this?
