All Forum Posts by: Timothy Murphy III

You could require the seller to provide leases and tenant signed estoppel agreements (where the tenant signs a document confirming the terms of their rental agreement and attests that their rent is paid through X date). The estoppel agreement prevents the tenant from credibly claiming their lease term is different than reality, or that rent was prepaid for X number of months in advance. I vaguely recall handling an eviction several years ago where an inherited tenant claimed that rent was prepaid for several months to the prior landlord. We were pretty sure it was BS, but it still threw a monkey wrench into the whole process. I normally only use this for larger apartment properties, but a few of my clients want it done even for SFRs and duplexes.

Now if the existing tenants are only on a verbal lease with the seller, you obviously can't get a written lease which doesn't exist. But you could require the seller acquire tenant signatures on a month to month lease, just so you don't take possession without such agreements in place. I do like your idea of increasing the rent but not all the way to market. They're still getting a good enough deal so that moving may not be justified, you're increasing the cash flow, and not dealing with vacancy, turnover costs, and leasing fees.

Some will, some will not. I can recommend you one that's based in the Cleveland area that understands this sort of thing very well.

Originally posted by @Michael Plaks:

@Olga Zelenko

Also notice that people who give you legal advice about LLCs or even insurance being unnecessary have all graduated from the Social Media School of Law, apparently with honors. I'm not an attorney, so I won't be offering my legal advice, and neither should they, frankly.

Of course attorneys are interested in "selling" you the LLCs and other structures. Same as doctors are interested in "selling" you medications and procedures. I still take my medical advice from doctors and not from Facebook. I guess I'm old-school. 

This post as a whole is excellent advice, and a question I get a lot. At least in Ohio, the LLC is almost always worth using for property investors, EXCEPT when the investor resides in California, for the tax based reasons Michael discussed. The portion I quoted is hysterical in addition to being good advice. There's lot of people giving advice on how LLCs and tax issues function in the real world despite having no background or qualifications to actually give this advice. Beware legal advice from Facebook lawyers.

What part of Ohio? If you're in the Cleveland area I can refer you to legal counsel who can help you navigate the process.

Pretty common, and legal under Ohio law.

@Cam Wilk Welcome to BP and welcome back to Cleveland!

The Cleveland area is more than just Cleveland. While the city itself has had population decline in some neighborhoods, Cuyahoga County as a whole has had it's population remain remarkable consistent over the past decade, with around 1.25m residents.

Source: https://worldpopulationreview....

You want an attorney that's licensed and practices in the jurisdiction where you are operating. A California attorney will probably understand most of Ohio law, but likely won't be as familiar with state and local nuances in an entirely different jurisdiction.

Depends on where in 44110 you're talking about. That particular zip code can range from (in my opinion) C class to F class, depending on which part you're in. Talk with someone that knows that area very well if you're planning to purchase there.

Most CA based investors that I speak with are better off not using an LLC, whether the LLC is formed in California, or formed in another state where the properties are located. Check with a California based CPA that has background in RE investment, but my understanding is that California assesses an annual tax on LLCs that has a minimum tax of $800.00. I further understand that this tax is applied to LLCs formed in other states, even if the LLC has no other ties to CA except for being owned by a CA resident. If this applies to your particular set of circumstances, you're probably better off not using the LLC but instead carrying stronger insurance coverage to provide you with liability and asset protection.