All Forum Posts by: Becca Cross

I don’t know why I’m not understanding this. A real estate trust will create a veil of anonymity to protect my real estate investment. But the investment needs to be deeded to the llc or else the llc is for nothing.

How do I structure creating that trust, llc, and property?

If I deed it into the trust, how does that protect me from personal legal ramifications if the property isn’t deeded into the llc?

@Seth Teel Does deeding the property into a Land Trust with you and your partner's separate LLC's as the beneficiaries have the same liability protection as deeding the property into an LLC? I ask because I'm trying to decide what is the best way to configure the best liability and future protection for my mom's rental property.

Basically, she has had a rental property titled in her personal name for 15 years. She has an LLC, but the property has never been deeded to the LLC (oops!). She also has a trust, with my brother and I as beneficiaries to ALL of her personal assets, primary home, and rental property.

I thought, we'll just deed the property to the current trust, but I would imagine if something were to happen, everything in the trust could be held liable? Then I thought, we'll just deed it into the LLC, but was told that she'll lose her trust insurance and in the case of pulling it out of the LLC at a future time (to perhaps then place it in a trust), we'd pay big fees as well as various other repercussions? The third option I imagine is building a completely separate Trust just for the rental property, place the LLC as the beneficiary, along with her children. That way, we won't lose title insurance, no big fees, and easy transition for future changes. But it can't be that easy. There must be repercussions?

As she's past the age of retirement, she wants to extend the property to us. For the sake of my mom's sanity and to save her from losing the property (and in knowing I would eventually have stake in this property), I've invested a hefty amount of cash upgrading the property this past year. Since I don't have my own LLC, I imagine my 2017 investment can only be considered a personal "loan" to my mom at this time? It would be too much of a crazy endeavor to "re-shape" 2017's transactions and LLC into a 50/50 venture to recapture that investment as a write off. So, long story long, how can I best set this up today so that our future transition from my mom to our hands is actually benefitting?

@Jeff B. Those are just the pertinent details I've been looking for! It seems that many PM's have additional cleaning, repair, maintentance "companies" built within their infrastructure. Wouldn't that create a conflict of interest? Perhaps in some cases it's easier, but it's extremely frustrating to feel bamboozled by those that should be supporting your interests. I'll gratefully take both of your recommendations as we go through this cleaning-out process! Thank you so much for the support!

@Natalie Schanne, Thank you for the great ideas! I think at this point, you're right, we really have to help a higher quality tenant visualize the opportunity of this space. Furnishing a unit, updating the exterior of the property, and posting those photos on CL is a great way to explore our options.  

I made appointments to speak with 2 different property management companies, painters and handymen, thanks to you. We won't be able to stay a full week, but we'll stay 3 days at the property. We also just found out there are 2 big roof leaks at the apartments, and many storms in the next few weeks, so diligently trying to process all of this chaos. I believe our flat roof has had it's last day.

We have to hire a new PM. I'm no accountant, but I've flagged 20-40 questionable bookkeeping items in the last 6 months. I can only imagine what the past 12 years has looked like. We found out yesterday that they "renewed" a lease to a tenant that had broken her lease 1 month prior, that cost us $1200 in property damage. Now she's back in the same apartment with newly broken window shades and blankets covering her windows. 

Enough stewing! We just need to take control, whether it be by self-managing or hiring a more reputable, higher quality PM company. Thank you for all your input! 

@Lynn McGeein, Thank you for sharing your insightful experience! It's atleast somewhat satisfying to know other landlords have gone through the same PM neglect as we have! It's kind of bewildering to think that people/companies like this exist. It's not the end of the world, just a really good eye-opening, very expensive experience! We'll definitely be much more involved as we go through this process. As I mentioned above, I have appointments lined up for this week to interview/bid various jobs throughout the property. No more "stupid trips," we're taking hold!

PS: I was told that it is a great idea to have repair people (or your PM) take before and after photos of completed repair jobs. That way, it's documented, concise, and explainable to your bid price. Smart!

@Thomas S., Very helpful, definitely a C propety in a B neighborhood! Thank you!

To say the least, we're overwhelmed. My mom has owned her rental property for the last 12 years located 2 hours out of state. She's been an absentee landlord for the duration, and we continue to encounter problems with our property management. Some of the issues are: rent rates are way below market, poor tenant screening, frequent evictions, excessive damage and repair costs. Our property management contracts work out to his father's company, who specializes in repairs. He charges $45/hr for labor. We receive constant invoices for poor quality work at high prices. This property is on a shared lot with a 5-Bdrm, 3-Bath, 2000sq foot rental home. Behind the home is the 6-unit apartment complex.

Within the apartments, we get approx 3-4 evictions a year. Each apt unit is 600sq feet, 2bdr with month/month rental agreements. They rent for $495-695/mo. for unclear reasons. Reno NV rental comps are about $650 for a 1bdr, and $750+ for 2bdr. Turnover costs per unit go as follows: Painting $550, Patch/Repair $1100, Materials $500, Cleaning $130. The eviction process typically exceeds it's rental income for the month. $600 for the most recent: for locksmith, rekey, lockout, multiple eviction notices etc. The grand total repair/eviction costs for a single unit totals over $3000. This last particular tenant lived there only 5 months. Among all the disrepair, trash litters the property due to management neglect. We've recently noticed all of this in the last few months during our frequent visits to the property. We currently have 2 vacant units, and we're using this time to determine where we go from here. At this time, Reno NV is only experiencing a 1% vacancy rate. Considering our property's prime location, we are attempting to reconfigure the quality of tenant and price of rent. We are considering upgrading everything from exterior paint and light fixtures, to interior floors and faucets.

All that said, we're optimistic with this upcoming downtown area. The lot is walking distance from new cute breweries, restaurants, shopping, coffee shops, entertainment, etc. We'd hate to have seen this little gem fall into disarray.

Bottom line, we're ditching our property management company. Our feelings are mixed; we feel this could be a great opportunity, but this could also be a sinking ship. What lengths should we go regarding renovating to rent vs renovating to sell? What should we be renovating? What is recommended for calculating rental finances and expenses? How much should we invest before we abandon ship? How do we prevent hiring another terrible property management company? How do we determine rental agreements? How do we know our invoices are accurate and honest? We want to crunch all of these numbers, but we don't know who or where to acquire them from. Any input is very much appreciated!