All Forum Posts by: Daniel Wolz

Hello!

I purchased my first property a few years ago into an LLC, and have acquired a few more within the LLC since. I want to make sure that I am doing everything right to protect the limited liability status of the LLC. I am confident in my bookkeeping as it relates to the income/expense tracking schedules I utilize (all basic excel based), as well as what is reported on tax returns. What I am unsure of, is how important the flow of cash through bank accounts is. I have a separate business bank account for the LLC. When I started out, it was probably a bit sloppy. Even more recently, as an example, I accidentally deposited 2 rent checks into my personal account rather than the business account. I quickly transferred that money between the 2 accounts to get it in the right spot, but I'm curious if this could cause an issue with "piercing the veil" by commingling personal and business funds. If this simple mistake wouldn't, what would/could represent an issue? Or does the bank account activity not matter as much as long as it's reported on tax returns appropriately?

As a follow up, if this, or other minor infractions were an issue, what would be my course of action to correct? Comb through every single transaction over the last 4 years (since the LLC was created) and write up some sort of documentation? Or just create a new LLC, deed the properties over to that LLC, and start all over again fresh (making sure I am PERFECT going forward)?

Lots of questions.... thanks for your advice! 

Thank you SO much Brit for the ideas. Definitely next level stuff that i would have never thought of.

#2 seems pretty complex and seems to still have my personal assets at risk...

#3 is interesting because we do have a HELOC on our personal home with a great interest rate, but that interest would not be deductible to the business. Your idea fixes that by passing interest into the LLC to get deductibility, but then I'd have to recognize the interest income on my personal taxes which negates the benefit.

#1 would be the best possible scenario. Once we identify a lender, I will explore this further with them. 

Until then, it seems like I should handle everything for this home from my personal finances. 

Thanks! If anyone else has advice, I'm all ears!

I have an existing LLC with 4 rental properties in its name free and clear (purchased all cash), a bank account, and file taxes as an LLC. I am paying cash for, but wish to mortgage immediately in order to take advantage of low interest rates (and more importantly, not be completely broke) which will have to go into my personal name to satisfy the lender.

My question is - do I use the LLC bank account and thus, go into my LLC taxes, for this property? Or because it's in my name, I would need to keep separate from my LLC and handle everything through my personal bank accounts? If I have to keep this property separate from the LLC, does that income just go on schedule E on my taxes directly? Just want to make sure I can still deduct mortgage interest and regular expenses as normal while still maintaining the limited liability on my other properties.

Thanks in advance to to anyone with advice who knows taxes, laws, and/or has been in a similar situation!

Decided I will be putting in vinyl plank flooring in a rental remodel I will be starting soon. I came across vinyl plank at Walmart of all places... I'm wondering if anyone has any experience with it? Any insight would be appreciated. Thanks!

https://www.walmart.com/ip/Graphite-4mm-Thickness-...

Thanks! Open house is tomorrow - we'll see how it goes. :)

Hi BP!

I have finally finished fixing up a rental and have listed it for rent. I have received much interest, and decided to just have an open house for a few hours to show the place to prospective tenants and collect applications, rather than trying to meet with individuals one by one (so I'm not driving across town everyday for a showing and dealing with people who are no longer interested, not qualified, or don't show up at all). I'm wondering the best way to handle applications and collection of application fees, as well as selecting the most qualified tenant. Note that this is a low income rental in a C-class neighborhood that is beginning to gentrify but still has a few years before it attracts very well qualified tenants. 

I have a pretty detailed application, so I'm hoping I can rank the applicants based on the application, and then verify information through a background check starting with the strongest. I won't know that until I collect all applications, and I won't have all applications until the 3 hour open house ends. 

I can collect fees and then try to return for those that I don't run a background check on, but this could be a hassle and I don't want to take people's money away from them for a period of time while they would need it to get another place if I don't choose them. Do I just take applications, rank them, and then call the most qualified, meet up with them to collect the application fee, and then run the background check? That seems like the best option, but just causes more work for me and the applicant to try to meet up again at a later date. 

Any recommendations on how best to handle? Thanks!

Looking for advice on landlord insurance - actual cash value vs replacement cost. I have a single family home rental that I paid $22k for a couple years ago. I have it insured for $24k under an actual cash value policy. The property, as is, is probably now worth ~$60k. A new build (assuming it was rebuilt under a replacement cost policy) would probably go for ~$150k. - Should I keep the policy as is at $24k to just cover my initial investment? (cheapest option) - Should I increase the actual cash value to $60k to cover current market value of my investment? (slightly more expensive) - Should I get replacement cost coverage since the market has picked up so much for a new build? (most expensive) I know this depends on the cost of the premiums, but I'm just hoping to get some insight from any of you who know insurance or may have been on a similar situation before. Thanks for your input!

Hello BP!

I just bought my first rental property (closing in a week). A tenant has lived there for 3+ years, but has indicated that she is planning to move out whenever she gets a chance to search for and secure a new place (could be a month, could be several months). The previous landlord has indicated that the tenant is month-to-month with no current lease in place, and there was no security deposit collected at move-in. I'm fine continuing to collect rent until she moves out (and I plan to get her to sign a formal month-to-month lease), but I'm not sure how to handle a security deposit. This is a low income area so I assume the tenant does not have residual income that she can fork over suddenly just because the property ownership changed over to us, but I want to try to protect myself as much as possible. Making demands for more cash without the security of a deposit doesn't seem like the best idea. 

Does anyone have any advice for a newbie such as myself? Any insight is MUCH APPRECIATED!

Thanks!

Hello! I'm a Columbus native ready to get into real estate investing with a focus on buy and rent investments. I'm looking to start with a small duplex or single family home. I'm considering either lower-middle class neighborhoods (i.e. Whitehall, Far-East Columbus, North Linden, Groveport, etc) or betting a bit more on some of the up and coming areas (Franklinton, Olde Town East south of Bryden where it's still dirt cheap, Reeb-hosack, etc). I've read some people here on the forums warn that investments in properties at less than $40k/unit usually turn into money pits, so I'm cautious of the latter option, but would love to be able to capitalize on the appreciation that has made some early investors in the Short North and German/Merion Village areas rich. Just looking for feedback, first hand experience, or advice as I get into the business and try to narrow down my focus.