All Forum Posts by: Brett Roth

Thanks John!

Any other brand recommendations?   In Alaska it can be dark and cold in the winter so I'm looking for a brand that has good night vision and handles the weather well.  Thanks for you recommendation John Ford, I'll give those a look.  It looks like those cameras have a DVR as well as a wifi option....it would be nice to be able to review footage without having to go to the property for sure.  I have head that Cat6 Ethernet cables can provide enough power that some cameras can keep themselves from frosting up....maybe that's not really an issue anyway, I don't know.   Anyone seeing any good black friday deals on security cameras :)?  Thanks!

Hello,

      I'm sure this has been discussed before but I haven't been able to find the answer to my exact question so here goes:

It has been suggested to me that setting up a LLC to do property management (sign leases, collect rents etc.) and then have a separate LLC to hold title to the actual rental properties might be a good idea.

1. Assuming that the property management LLC dutifully and quickly pays all rental income to the property holding LLC, how, if at all, should the property management LLC be taxed? I know states can differ on all of this, so I'm just talking at the federal level

2. Would the property management LLC need to show income? If it does show income then I assume it would not be passive income and therefore subject to Self Employment tax (SSN, Medicare etc.)? Again, federal level only....disregard states regulation at the moment.

3. Finally, in your opinion, is it a potentially good idea for small time landlords to setup a separate LLC for the property management side of their business or is it "overkill"?

thank you

Brett

Hi Louis Just to clarify, you are saying that the only monthly expenses you have a taxes, water, maintenance, capex and possibly management? You don't pay for heat or trash or anything like that? Seems pretty good to me even with the high taxes. I am also curious what numbers you got when you ran them. Thanks

Welcome. Bigger pockets is a super helpful resource.

I'm a fan of First National Bank of Alaska. Local loan servicing, tight lending practices. Won't let you get in over your head. That said they definitely can be too tight. I've also used Alaska USA. It's it true that you have to pay all sorts of mortgage insurance with FHA these days? Maybe not so bad with VA?

Ronald.   I think it is a fine idea to ask the seller to remove the tenant prior to closing.   The tenant may have a perfectly reasonable explanation for their behavior and perhaps your relationship would be entirely different once you are the owner but unless you get that feeling you should take a cautious approach and have them removed and the locks changed prior to closing. 

I should add that I have taken this approach before.  My situation was more serious in that two of the tenant groups were squatting and had stopped paying rent.  They were causing/neglecting to inform about a large amount of damage as well......The damage was negotiated as part of the purchase price so that wasn't a big deal.  One of the groups left after being asked to....they were sick of living there I'd guess.  The second group didn't exactly resist but they paid some rent and the property manager accepted it.  We got closer to closing and realized they were still there.   The property manager explained that they had paid rent so there wasn't a problem......Ahem.....we said we weren't buying it with them in the unit and nevermind the fact that the people paying the rent weren't even on the lease :)   In any case, once they realized we were serious they got everyone cleared out and we were able to get into the property and begin the rehab right after closing which was the goal in the first place.  It sounds worse than it was, and it really wasn't a source of conflict between buyer and seller.  I'm just suggesting that you propose the contract change and insist that they perform on it.  For one thing, there could be significant repair issues in the unit that you are unaware of because your access is being hindered.  Also when you go to get the property appraised the appraiser might have trouble getting into the unit.   We DID have this problem at the building I'm referring to.  I think the appraiser had to go back FOUR times.  The seller had to pay for that but what a giant paint and delay for everybody :).  Happy to report that, one year later, that building is doing great and the new tenants are very good and seem happy there.

I'd love to get in on a coffee klatch to discuss this topic. Heck, I'll buy :). Please clue me in as researching this is high on my summer to do list. Not as high as fishing, but still very high.

Thanks for the input.   I'll stand by and listen to others experiences on this because I find myself wanting to defend the idea when really I started the thread in order to learn, not teach :)  Thanks all.

Hi Ryan,

Thanks for you input.  I'm definitely looking for help here as I'm not an expert and I don't want to steer other in the wrong direction.

I'm not sure that you are correct about rules and fines in my state.  For one thing,  my lease does state that the property manager can adopt rules and regulations for the benefit of residents and the building.   It also states that failure to honor the rules and regulations can result in a fine or even termination of tenancy.  On the other hand, I read somewhere that rules can't be added or changed if they would substantially modify the lease or the like.  

 In my case, I'm trying to clarify what is the lease already and am not trying to add new rules or modify the lease.  For example lets say that a tenants boyfriend or girlfriend moves in and isn't ever approved by the property manager for tenancy.  Lets say that the lease states that the tenant may have guests for up to 14 days without notifying the manager.  Hypothetically, every 12 days or so the boyfriend or girlfriend stays somewhere else for a night thinking that they are "reseting the clock".  The landlord, on the other hand might interpret that to say that it is a 14 day limit during the entirety of the lease agreement.  We all know that the real reason such a rule is in the lease in the first place is to prevent unapproved tenants.  A house rule could be added that would clarify and help avoid misunderstandings if it stated, for example, if a person stays there more than 14 days in a 30 day period then they need to be approved as tenants or have some other sort of approval from the landlord.  

I can think of other examples and that's probably not the best one but I don't want to get into to many specifics.  Appreciate the comments and help as I'm definitely a newbie in this area.