All Forum Posts by: Andy D.

@Marcus Tanner  From what you write wouldn't this actually be a good thing for your sister? She has a secure legal position (assuming everything is indeed in order) and if the new owner wants her out for whichever reason and she has a new place lined up to move in to (= she wants to move out of that place she's currently in) then why not come to terms with the new owner? Make them possibly even pay her something so she is willing to agree them (!) breaking the lease. She should negotiate according to the position she is in. And that is a strong one (barring any undisclosed issues that might exist).

@Al Williamson Your last paragraph is an excellent point!

And I do agree with the rest you write as well: legally the sd belongs to the soon-to-move-out-tenant. Give it to him.

One could, especially as the amount is the same, keep the money in the account and just have it "switch hands" from the old tenant to the new tenant. But that I would never do with a written statement of these two people confirming exactly that and the old tenant explicitly therein making a statement that he considers the sd having been returned to him by you as the landlord. These two people then do whatever they want to get the money from new-tenant to old-tenant (assuming old-tenant doesn't gift the money the new-tenant; *shudder* thinking about all the implications of this!). This way you don't have to return and recollect the money.

Would I really ever do it that way? No! Way too complicated and with too many risky variables involved.

@Richard: If you have your properties in individual LLCs then I would make sure - since your goal is liability protection - to use an LLC of the state where the property is located. This means you will have to continue to use >1 LLC as you are invested in several states. However, for what you seem to want you could simply consolidate these LLCs under 1 (your WA LLC). Wouldn't that achieve what you want? It would then be the WA LLC that owns all the other (WA and non-WA) LLCs and that way you only need to register in the state where your WA LLC is registered - which you have already done by registering it there. ;-) That would be a big bonus with respect to registration of business activities in the individual states (which I think would be required in every state, but I don't know).

Granted, that way you would always have to deal with several LLCs (registration fees etc).

Since you, apparently, do not yet have the properties in individual LLCs you probably would simply transfer ownership over from you into the LLC (quitclaim). For any mortgaged properties be sure to be aware of the due-on-sale clause.

Tax situation depends on how your LLC is treated. Generally, with real estate, tax is due at the location of the property (state and any local taxes). Your WA LLC would, as a single member LLC without any special election, be disregarded for tax purposes anyway.

@Robert Lenfestey I wouldn't be worried about someone saying you're lying. Simply not saying something doesn't make you a liar. And even if you were to negate the fact that you own a place when directly asked: so what? It's really none of other people's business. They have a contractual relationship with an LLC (a legal entity) that manages a property (assuming you're doing it right). That's what they need be concerned with, nothing else.

People should really understand the difference between doing something in your own name (as in: you as a human being) and then doing the same thing in the name of an entity: every entity needs some actual human being acting for it. Still, that human is doing it for the entity, not for him-/herself! And this would not change if you are also the sole member of said LLC. It's a legal principle (often called "corporate veil") and the whole point of setting up an entity in the first place.

Regarding your goal of not publicly displaying your name and private phone number etc: one of the most legitimate things to do in this business (= "landlording"), as far as I'm concerned! So by all means, yes, do this. You will see many, many other people recommending to do just that. Just be consequent about it as also @Account Closed correctly stated.

Finally, which kind of entity you chose is, as others have already mentioned here, typically primarily tax driven. There is no such thing - from a legal point - as an S-Corp. That's a mere tax related election (if you fancy it, you can start reading Chapter 1 of the IRC - I wouldn't, LOL!). The entity in this kind of business will, most likely, be an LLC either way. But from a taxation point of view there exist different types of LLC. Even a single-member LLC with no special election ("look through for tax purposes") will still remain - from a legal point of view - an legal entity in the form of an LLC.

I don't know if this is confusing or not, but in a nutshell: one should always distinguish between the legal aspects and tax related aspects, especially when it comes to (legal) entities.

Edit: ups, just realized that this thread is over a year old... oh well.

Dear BP,

my RE attorney would act as Trustee but he doesn't feel comfortable enough to set up a trust deed etc. for a land trust which would own an (existing) LLC as he's never done that before.

The US States involved with respect to the real estate are currently CA and UT but this could easily expand to other parts of CONUS. So I'm not entirely sure how I should go about this. Anybody able to assist me with this? Thanks!

@Brendan Reilly: it depends. Really! I had a similar thought going on a short while back, wondering what I should do to the place to increase rent. Well, let me tell you that my ultimate conclusion was: let it be. At least with respect to more costly matters (see paragraph at the end).

Why? It's a multi-family stand-alone building in a cul de sac with similar buildings surrounding it. When I drove there the first time I couldn't believe how "bad" everything looked (bought it sight unseen back then). Coming closer I saw that my place is actually quite nice, though. So now what? Well, as others have, rightly so, mentioned the first impression, if that impression is not driven by your property due to the overall situation then there is almost no point in making your place stand out as being much nicer as this will, at least typically, not attract "better" tenants and get you more rent. Because the people deciding on wanting to live there - again: typically - apparently don't care about the looks in a manner where they would want it to look nicer. Otherwise they wouldn't move there.

With respect to the interior: same logic. Yeah, the upgrades would warrant a rent increase. Sure. But you will most likely not find any tenant willing to pay that because - see above - the lower rent is what is the market in such a neighborhood.

For the sake of completeness: I'm not saying that nothing should be done. On the contrary. Curbside appeal is always important, and here the little thing matter: clean yard, no weeds, certainly no trash and potentially enforcing city ordinances on your neighboring buildings. Been there, done that. Didn't hurt anybody and I helped others by doing so as I slowly improve the look on my place by very small steps which will benefit them as well.

Just my 5 cents. Good luck!

Ok, so it's probably just only me again being different in my needs but all these programs

a) have a monthly fee (not interested; certainly not for only some 10 units) and

b) focus on the user being the property manager. I'm not (at least not for more than 2 of my units).

I don't deal with ACH, tenant screening (professionally) and all that stuff that's offered with these services.

What I do need is a program to easily add a new property/unit, put in the rent, any recurring or one-time costs, mortgage info, purchase price and associated costs and the same for any sale transaction on the property. This way I know what's going on. And for this I use excel. But I have not come across a "professional" (you know, GUI-driven and whatnot) program that is limited to what I need and doesn't charge me a monthly fee. And before anyone starts with Quicken: nope, never again.

So here we are again: the typical needs are taken care of (makes sense, that's where the "masses" are) but for people like me there is nothing ready-made - that I know of. Any pointers here maybe?

Sometimes it's the little things. ;-) Good luck!

Mark, sorry to say/write this, but how about doing the following?

https://www.biggerpockets.com/search?utf8=%E2%9C%9...

This has been discussed over and over again...

@Peter W.: You're welcome. I think what @Chris Carollo is also implying is that you are doing your first deal potentially without real positive cash flow. I consider this a bad idea, honestly. Yes, the interest rate will probably be a little lower for a 15 yr mortgage (vs 30) so you "save" money (you really do as every expense is money less saved) on interest. However, you might have to pay more taxes as you can only deduct less interest. What would be the point? What would be the benefit of a 15 yr? Don't forget, it's not your primary residence, it's an investment object! The goal is to make money, not pay off the mortgage as quickly as possible (which, for a primary resident, is typically what you should try to do, all things being equal).

So why focus on positive cash flow? Because the one and probably only thing you can really bank on in a business (and that's what you will be running!) is: there will be (large) unforeseen costs sooner or later! Unless you are wealthy enough to cover these costs from your private funds (probably not the best way to go about unless you're doing real estate investing as a hobby) you need to build up reserves fairly quickly. And a 15 yr mortgage does not help with that.