Numbers - not my strongest point

[John N.]

Some of you might have seen my other posting regarding a LLC with a relative of mine.

She will purchase a house in cash for $35,000 and lease it back to me at $235 per month. The current tenant is paying $800 per month. I will be responsible for the tax, insurance and upkeep (basically I’ll be a property manager). After paying the lease and everything else I keep what’s left. Tax is about $950 per year, I’m figuring about $1,000 to 1,200 per year for insurance. Might be a little low on that number though.

The agreement that we have written up so far is that I can keep maintaining the house, renting it out until a day that either of us want to sell it. At the time of selling, for what ever price I sell it at I return her $35,000 that she invested and again I get to keep the rest.

It sounds like a win-win situation. I know it can get very complicated trying to get lawyers and accountants involved, but since it’s “in the family” I think it should be pretty easy. I’m sure something like this happens all the time.

But looking at my numbers, I should be able to sock away a few hundred per month but the main goal is to get some experience from her since she’s been doing this for more than 20 years.

So, my question is, if anyone would like to chime in and throw some scenarios out there I’d be happy to listen.

[John N.]

She has a will that any current and future investment properties that she has will be turned over to me. If something happens to me, she's in the clear since my name is no where on any of the papers for the house. Right now I don't have any connections for her current properties and if she was to file bankruptcy (which I doubt), then I'm out of a house that I was managing but I'm not out any money, only my time that I learned. Using her as a mentor is the biggest thing I'm looking forward to.