All Forum Posts by: Syed A.

Dear Friends,

Need your expert advice, How to buy commercial umbrella policy under LLC name. I have more than 10 rental properties now and personal umbrella policy allows only to include up to 4 rentals including your personal residence. In order to put more than 4 rentals under insurance policy requires a commercial umbrella with different rules and premiums. What should I do? Any pointers please? Thanks in advance.

Chicago Investors,

Please let us know if there is any meetup groups in Elgin/Aurora/Naperville area..lets connect and share the ideas...

Thanks

Syed

Dear BP Friends,

Any pointers for good real estate attorney in Chicago Suburb? I need help in landlord-tenant disputes and also help on eviction process..

Thanks

Syed

Thank You so much Ali and Mike. Great Info!

BP Gurus,

I need your expert advice on forming the company for my rental properties. I am very confused right now. My attorney is telling me that lets open the series LLC and move all the rental properties to that series LLC.

Looks to me Its way too complicated to manage the series LLC for the small investor. I am located in western suburb of Chicago. Here are the key issues i can see in my situation.

ISSUE #1) To provide full asset protection, an Illinois Series LLC must be in strict compliance with state laws that require each cell to maintain separate bank accounts and accounting systems, independent records, operating agreements and rules of operation. If there are several LLCs in the series, this can be a big administrative issue if I have more than 20-30 singe family homes. I need to open 20-30 different bank accounts and, since each is producing separate financial statements, each must have separate accounting. It's not over kill here? what happened once you have 100 homes? This solution is not scalable once we have large number of units. how other people are doing here?

ISSUE #2) I was looking on internet and some states have found single member LLC owners to be personally liable, essentially removing any liability advantage of forming an LLC in the first place. Single Member LLC's, whether series or not, are virtually useless anyway when it comes to asset protection. The single member LLC doesn't get much benefit as per the rules. Other option was that we need to have multiple active members or a very well funded LLC with lots of assets that's not the case for me.

Please let me know your thoughts. how should we form the company to manage rental properties. I already have S-corp for property management work so i do all the regular day to day tasks using that S-Corp. I wants to address 3 major concerns. 1) Liability Protection 2) Future Real Estate Appreciation 3) Tax Savings.

Thanks

Syed

Hello Gurus, Any advice please on the above situation?

Hello BP Folks,

I am new to the forum and need some advice at this juncture. I am computer engineer by profession and started the real estate investment around 2 years back and purchased 8 rental properties mostly townhouses in the Chicago suburb. Overall, I am doing property manager job for my personal properties as well. right now all the property title is on my personal name and i wants to take that out to corporation. I wants to run like a business since I wants to add 1 property every month in my portfolio.

I need advice & guidance from gurus & my seniors here? I opened the S-Corp around a year back and I am creating ALL the tenants leases on my s-corp and not on personal names. every property already has liability insurance. I have separate business accounts for real estate business. so its 100% separate entity to day to day transactions. All the incomes and expenses are running through business accounts.

In order to grow my business, what should I do next ? Should I transfer the property deeds to S-Corp or LLC and grow the company? I wants to address 2 major concerns. 1) Liability protection 2) Tax Savings both are important.

Issue #1: Eligibility for S Corporation Treatment: I have been told that Loss of eligibility can occur if the S corporation receives too much passive income. so in my case I am creating rental leases on my S-Corp name and not on my personal name. is that OK or my S-Corp is in trouble?

Issue #2: S-Corp VS LLC: My accountants are telling me that S-corp is better for tax purpose and my attorney is telling that LLC is better for liability protection. so who's correct here? As the argument goes, the S corporation can establish a salary or bonus for its stockholder-employees, and pay social security and medicare taxes only on the salary or bonus.

Issue #3: Exceptions to Passive Loss Rules, We are the high earner couple over $150K AGI so we are getting ZERO tax deductions for rental losses. There are only two exceptions to the passive loss ("PAL") rules:

a) qualify as a real estate professional ===> for that, someone needs to spend over 500 hours actively managing properties. whats the guidelines here?

b) Income is small enough that you can use the $25,000 annual rental loss allowance=>> NOT Applicable in our case, AGI is over $150K

Thank You for ALL your time and help.