All Forum Posts by: Andrew Varney

Hello All,

After a long time watching and getting life in order, we're ready to start our investing journey. My wife and I are in Sarasota, FL. (a little South of Tampa). I see one of the most common questions from new investors (myself included), is if they should use an LLC or not. From what I've gathered, owning property in a Trust or an LLC with a clear separation of personal and business activity is one of the most secure options in regards to asset protection and liability, but it has a lot of challenges with getting traditional loans to acquire property.

My family has already started an LLC to do business, but after reviewing all of the information, I think we may start in our personal names with an Umbrella insurance plan for protection to make acquisitions easier at the start. I'm worried about using a quit claim deed into an LLC, but that may be an option in the future.

*If we own the property personally, is there any benefit or need to keep the LLC?

*Can the LLC be used to 'manage' the properties and start generating an established income source in the LLC?

*Are there any tax benefits to taking the money in through the LLC and dispersing it to us personally? Can you even do this if the property is owned personally?

*Any other advice from the community?

I'm curious if anyone has a use I'm not thinking of, otherwise I'll just close the LLC and not worry about the minor additional fees / tax preparation after this year.

One minor addition, currently my Brother- and Sister-in-law are in the LLC with my wife and I. We were planning on all going in together to invest, but they've decided to pull out and not jump in for now. I already have the forms to remove them from the LLC, and will do so before any 'business' would be conducted.

Should I keep it or kill it? I know none of your advice is official legal info, but am interested to hear your thoughts on what you'd do???

Thanks!

ASV

@Richard W.

I'm new to the area but have been attending a weekly luncheon / once a month educational meeting near I75 And Clark / Fruitville area. PM me and I'll find the shoot you the info after work when I can find the details.

Thanks, Mike and Josh!

We're moving into a cheaper location and using the gains to start our Real Estate investing. Ready to Take Action!

Cheers,

ASV

My wife and I closed on a Condo Jan 19, 2017. Since then, it's appreciated ~120k (Seattle market + some renovations). I've read time and again that if we are live in owners for 2 years, there isn't capital gains upon selling (or at least 500k profit allowance we won't break). My question is exactly WHEN is that 2 years? We closed on Jan 19th, so if we sell on Jan 20th 2019, does that count? Does it need to actually be longer? Shorter for some reason? Just want to make sure we don't miss it by mere days. I'll put it on the market in December and require a close of Jan 20 onward if that is the magic date. Thanks! ASV

This is a pretty common topic, but I haven't seen my specific question answered - most seem to center around single member LLCs or committing to Commercial loans.

A couple of partners and I are finally ready to get started in REI (had my first post last Nov., but a primary residence repair issue backed me up a couple of months while it was rehabed!). We created an LLC, but now I think that may not be the right entity to utilize as we start. We're meeting with a RE Attorney and CPA this week, but wanted to sound board here so I go in with a few ideas of directions to go.

As we begin, I'm less worried about asset protection - I have a newer primary residence with little equity at this point, older paid off car, and about $25k in savings not being allocated to the REI business, but want to work on growing this as a scaleable business, not just a personal endeavor.

What I'd really like to figure out is how to buy a few properties with conventional, Fred/Fannie loans, but treat and manage them as a partnership business. This is mainly to avoid Commercial loans (20-25% down, 15-20 year notes), and get more properties and better cashflow with the 5-10% down, 30 year notes; it's the difference in possibly having 3-4 SFH doors vs 1 in the next 6 months. Is that possible?

Ideas:

1) If we created a Partnership and I purchased the first few properties in my name only, would we be able to report all the finances in the partnership, sans LLC?

2) If i purchase the properties in my name personally for now, can we use the LLC to 'buy' them from me with a commercial loan in the next 1-2 years to move them into the LLC and not risk the wrath of a Due on Sale clause?

***Additionally, depending on appreciation / pay down could I use a 1031 exchange and then personally reinvest in the next set of properties without any capital gains impact?

3) Could I buy them personally and use the LLC that I'm in to manage them? Could the LLC charge 100% of the rental profit to move the rental revenue into the LLC vs. my personal income? I called out this is Florida in the title, as I believe 3rd party Property Mangers need licensing in Florida. If they are owned in my name, but I'm owner of the separate LLC managing them, does anyone know if that needs additional FL licensing?

4) Should we just suck it up, buy in the LLC with commercial loans for asset protection and keeping business taxes separate from personal?

5) Other ideas?

Thanks and have a great weekend BP!

Andrew V.

I have only exchanged a few emails with them so far, so I can't vouch for their ability, but I found:

http://thetaxhandlers.com/index.php in Sarasota. I'm not sure if they own properties, but I know Robin is involved in the local REI Club off Bee Ridge.

Cheers!

ASV

Three questions on this topic:

1) Does Cozy / eRentPayment allow tenants to pay with CC, or just Debit / Bank Account?

2) For Cozy / eRentPayment, can the landlord make it a mandatory recurring charge, or is it up to the tenant to select that option?

3) For Direct Deposit selections, do you open a deposit only savings account and provide that for the tenant?

Great conversations here, thanks all!

ASV

Thanks Nirmal & Marlon!

Love the deal funnel idea and have been practicing analyzing properties to learn the various metrics and inputs so we understand them. Also tracking taxes, fees, insurance costs, etc. so we have a better understanding in the location we're interested.

Keep suggestions coming and thanks for the welcome!

ASV

Hello all, 

I work for a tech company in Seattle managing international contracts and driving operational excellence with our providers. I have always been interested in REI, but thought it had a higher barrier to entry than I could hurdle. I've been devouring information of late (especially from BP!) and am excited to get started early next year.

My brother lives in the Sarasota area, and our families are partnering together to start in that area with the right opportunities. We're learning about the industry and locations to determine our niche. Currently most interested in BRRRR and Buy & Hold Turnkey to begin.

Cheers! 

Andrew 'ASV' V.