All Forum Posts by: Cameron Green

Yes, to convert a multi-member LLC to a single-member LLC, Form 8832 is used to elect how the LLC will be taxed. If you want to be taxed as a disregarded entity (the default for single-member LLCs), filing this form informs the IRS of the change. In addition, you'll want to check with your state, as you might need to update your LLC's operating agreement and notify the state business registry of the ownership change.

Even if you haven't done any business this year through the LLC, you may still need to file a zero return for this year depending on your state requirements and whether your LLC has any outstanding tax obligations. Also, if your multi-member LLC filed as a partnership in previous years, you may need to file a final partnership return.

It’s always a good idea to consult a tax professional or attorney to make sure you're following the correct steps for both federal and state requirements.

Hi Hadar,

In your case, since you're new to real estate investing and want to focus on one property at a time, I would recommend purchasing the property outright with the $120,000 you already have. Here’s why:

1. No High Interest: Hard money loans come with high interest rates (around 11%), which could eat into your profits as a new investor. Since you already have the cash, you can avoid that added cost.
2. Lower Risk: By purchasing outright, you're minimizing your risk and giving yourself time to learn the process without the pressure of loan payments and short-term financing deadlines.
3. Better Refinancing Terms: After you purchase and stabilize the property, you can refinance it with a traditional lender at a lower rate and pull cash out for your next investment.

This approach keeps things simple and allows you to focus on learning without the complications of high-interest debt.

Let me know if you need more advice!

You're correct that the Clark/Fulton area is a bit rougher and is known for having a higher concentration of Section 8 housing. This doesn’t necessarily make it a bad investment, but you should be prepared for the challenges that can come with managing properties in this type of area.

It's definitely a scam. I've received similar messages on my Airbnb in Cleveland, and they usually try to pull some kind of trick—whether it's asking for personal information or trying to get you off the Airbnb platform for payments. If you’re ever in doubt, you can ask for more information from the guest through Airbnb’s messaging platform, but never take the conversation off-platform.

If you were doing a longer rental (like 30+ days), you'd want to have an off-market rental lease in place, but for anything on Airbnb, it's best to keep everything within their system for your own protection. Stay cautious, and flag any suspicious messages to Airbnb!

I would strongly recommend not starting renovations until the seller has fully moved out. Even though it’s tempting to get a head start on the roof due to the weather, having workers in the property while the seller is still living there can create complications. There’s potential liability if something goes wrong or even tension between you and the seller. The Northeast Ohio weather does start getting cold, but roofers often work into December, so you have some time to get the roof done safely. If you need a reliable roofing contact, let me know—I’d be happy to recommend someone.

Your agent should have negotiated a clear possession date that accounts for the seller needing extra time to move. A few other things to consider:

• Escrow holdback: Your agent's suggestion for a $3k escrow holdback is a good start, but I’d recommend considering a higher holdback if you’re concerned about damage or delays. A larger sum might provide more leverage to ensure they leave on time and in good condition.
• Rental Agreement: You could also consider having a formal rental agreement in place with the seller for the two-week period. This would give you more legal standing if they don’t leave on time.
• Walkthrough: Ensure you do a thorough walkthrough with your general contractor once the seller is fully out to assess any new damage or necessary changes to the scope of work.

Planning ahead like this will give you peace of mind and reduce the chances of things going sideways during the transition!

Hi Josh,

You can definitely dispute the classification of your property to reflect it as a 3-bedroom instead of a "Den." Here’s how you can approach this:

1. Gather Evidence: Start by collecting any evidence that supports your claim. This can include photos, floor plans, or documentation showing that the room meets the necessary criteria for a bedroom (e.g., size, egress windows, heating).
2. Contact Cuyahoga County Records: Reach out to the Cuyahoga County Fiscal Office or the local assessor’s office. They can guide you through the process for disputing the classification and updating the records.
3. Submit an Application: You may need to fill out a formal application or request to change the property records. Include all your evidence and any relevant details about the property.
4. Appraisal Process: If your request is approved, it might impact future appraisals positively, as the property will be officially recognized as a 3-bedroom.
5. Risks: While there’s generally little risk in disputing the classification, it’s important to ensure that all changes are accurately documented. Inaccurate claims could lead to complications down the line, especially during future sales or refinances.

Overall, the process is straightforward, but patience may be required as it can take some time to update records. Good luck!

It sounds like you're on the right track! I also own properties in the Cleveland area and initially paid for them under my personal name before transferring them into my LLC. It was super simple to do, and as long as you're personally guaranteeing the loan, you should be fine.

Regarding your question, it's generally safer to pay the down payment from your personal account first, then transfer the deed to your LLC afterward. This way, you avoid triggering a "due on sale" clause. Just make sure you document everything properly, and once the property is in your LLC, it can operate as you described.

As for your concern about taxes, keeping it under an LLC is a smart move for liability protection and managing income. I used the same LLC for multiple properties and only changed it when I adjusted my strategy. Creating a new LLC for each property can be costly in Ohio, so consolidating can save you money and hassle. You've got this—just make sure you have everything set up correctly!

I own a couple of properties in Cleveland, and I had an attorney draft up my LLC for me. It wasn't too much money, and I always keep each house with finances separate in its own LLC but only have a few LLCs. It starts to become costly to create a new LLC for every house in Ohio. So I definitely recommend hiring an attorney, especially if you're new to the industry. It gives you peace of mind knowing everything is set up correctly and in compliance with local laws. If you need any contacts or recommendations, just let me know!

Hi Jhamari,

I live in Cleveland Heights, and have three rental properties in safe neighborhoods throughout Cleveland/Cleveland suburbs. I would be cautious with Lorain, I don't know that area as well, but there is a high rate of crime in that area. 

I purchased a home 1 1/2 years ago for around 130, and I am currently renting it for 1,750, so it is possible! We put a bit of work into it, but total cost to update it was less than $5,000. 

Hi Calum! 

Yes, this was a regulation passed recently in Cleveland, all rental properties must be lead certified. I own three rental properties and had to go through this process. Depending on the house, it can be a very quick correction by simply painting over the lead paint. I have a great inspector who certified my rentals for me, if you want his contact information let me know and I'll shoot you a DM!