All Forum Posts by: Andy D.

@Tobey Porter  Personally, I couldn't care less about whether the seller is annoying or whatever. You're buying the property. My question therefore is: do you (still) want that property or not? If yes, then, just like @Dan Schwartz said, you just got the chance to fork over less money as initially expected. Whether the lower appraisal now causes a concern is not something we can judge. You need to know that. If the answer is "no" then you want to walk away, assuming that this doesn't cost you more than not walking.

@Shannon Vanderweide I'm with @Brandon Hall or rather the concept of asset protection via entities that he described. Then again, I'm also quite interested in this topic (let's put it that way) and like to "tinker" with this to get a proper setup. With respect to your point of not needing this for only your "small" empire (it's bigger than 0 and much more than what a vast majority of other people out there has!): if done right from the beginning it is not that big a deal to set up and maintain. But it is more work to just have the properties in your own name, especially when doing it right (which is absolutely mandatory when you want to achieve any protection). You must involve a lawyer to get it right or at least really know what you're doing. Most people don't, unfortunately. Especially when managing things themselves. That's why there are professionals. But as the cost might seem high you might as well start out, or rather continue for the time being, without an LLC, especially as you manage yourself. This gives you time to look for a suitable RE attorney, avoids mistakes on your end with respect to such an LLC set up and also keeps things simple for the time being. Get an umbrella insurance, especially when further expanding and take it step by step. That's what I'd do. However, if you feel a bit adventurous and are willing to educate yourself even more on the topic of using LLCs then I'd go down that route and start out with 1 LLC.

Then he owes money, in this case to the Government. I'm not familiar with how the process works in that regard in the US, meaning whether it's easy to get that on your record simply because you didn't (fully) pay your taxes due or whatever. That would make that person a naughty boy/girl but I also know that there are always disagreements between a tax payer and the tax man. ;-) He might have simply contested a bill by his state government and ended up with that lien. The money will have to paid to get rid of that lien, yes, but so will your credit card to avoid bad credit. And yet nobody cares how high the credit card debt of a potential tenant is as long as the credit history is (pretty) clean... I would inquire with him about the nature of this lien and go from there.

@Lynn McGeein Thanks for explaining. Just what I thought.

@Lynn McGeein: 

http://apps.leg.wa.gov/rcw/default.aspx?cite=59.18...

@Kevin Harrison The (potential) problem with the not only having it in a bank/checking account but investing it is that cash on an account is FDIC insured (up to a certain sum). If you use that cash to invest it into something else then you convert that cash into a security, such as, for instance, a mutual fund, shares, bonds. It's "security" meant in the financial sense, not as in "safety".

"Money market" is, typically, also a fund and therefore a type of security (I shall keep it simple here). One therefore now bears the risk of the issuer: should that issuer go bust then the security is worthless (Lehman, anyone?) or at least worth less than what you invested in initially. And now you, as a landlord, have a problem because you, in essence, didn't properly fulfill your duties as trustee of these security deposits which you hold in trust for the tenant. That's why it's best to keep that money in cash on a checking account. Then again, FDIC also insures money market deposit accounts.

I recommend following the KISS principle. :-)

@Brandon Hall Absolutely correct - of course. :-)

@Tim Walsh I was teasing you a bit there.  ;-) Just to be clear: a gain is your money. What you do with it (for instance pay off a loan) is entirely up to you. What you were implying (at least this I have to assume as your question was not unequivocal), though, is whether you can use a gain and "make" it tax free (for the time being) e.g. via a 1031 exchange and then use these funds to pay off a loan on your primary residence (= non-investment). And that is, as Brandon correctly said, not possible from a tax point of view.

You may want to read up on the basic rules of a 1031 exchange (plenty of posts about that here on BP, for example). One key point is "like-kind exchange".

@Lynn McGeein What do you mean by "excessive charges"?

And I agree with not making up any receipts - wow, really?? The whole point is to make the tenant pay for what they have messed up which means they are unhappy and do not like to pay. The case, therefore, might end up in court. And then you want to make your case with fake receipts? That's gonna turn out real well - for the tenant! Honest business, people. C'mon!

And I also agree with hiring such work out. Working your butt off in the yard and having to deal with a pile of crap, literally - no thank you. And this way I have shown my due diligence and someone else is responsible if there is an issue. And I have proper receipts. Also always good for tax purposes, you know. ;-)

@Irma Duran The bottom line: they are in breach of their contract with you (= lease agreement). This resulted in damages. That is the basis for your claim. They owe you money now. At the same time you owe them money (= security deposit). Assuming you can legally set off these costs from their security money then that's obviously the way to go. You may want to consult your lawyer.

@Account Closed What do you mean by "profit"?

Also, why would tenants need to move out when the owner/landlord sells the place? How is that the tenant's problem? At least over here a sale does not break a lease!

Hate to brake it to you but two things in life are an absolute certainty: 1) death at some point and 2) paying taxes.

You can only defer the payment of taxes (assuming you have exhausted all means of reducing the taxable income/gain as much as legally possible).

You say you "have been reading up" on this. So you must have come across something that involves the numbers "1031", right?

And as regards your question: of course you can use a gain to pay down a debt. That's a given, is it not? ;-)

I agree with what @Thomas S. describes. A lease is a contract, and my property is not a hotel where I charge on a per-night stay. If the contract says that the tenant's obligation to pay rent is until day X then this is exactly what the tenant will have to do - simply also because I keep providing the tenant with access to the unit until that very day too. Typically a lease term goes till the end of the month. But, of course, that can be different and obviously depends on what's written in the lease agreement.

Now, if tenant decides to move out prior to day X then this does not end my obligation to keep providing him with access to the unit. Since I still have that obligation, tenant still has their obligation to pay rent. It's a bit similar to them going away on vacation and not wanting to pay rent for that time because they are not on the premises. ;-) Yeah, right, good luck with that idea!

Having said that, I would (need to) pro-rate rent if I had a tenant ready to move in prior to day X. As a matter of fact, I have done it that way quite a few times: new tenant gets monthly rent pro-rated for the days he actually lives there and old tenant pays till the day prior to the one the new tenant moves in. Irrespective of when the old tenant moves out.

But the above described is a new agreement between two contracting partners (here: landlord and tenant) to modify the existing agreement (= lease) and nothing else but the rescission of the lease agreement based on this new agreement.

Long story short: anything can be done between two contracting parties if they agree (barring some exceptions via compulsory law, of course).