All Forum Posts by: David C.

I am struggling to find a property manager for a 3-family property.  Has anyone successfully "managed" a property of this size or larger remotely (ie requiring rent checks to be mailed or paid online, then having a local contractor available to make repairs as needed) without hiring an actual property manager?  

I'm deciding whether or not to get an umbrella policy (property is already in LLC) and will likely get one - but was wondering if anyone had any personal stories where something happened and the umbrella was needed and was effective? Just curious to hear cases. Thanks.

Does anyone know of an insurance company that will offer an umbrella policy for a 3-family rental property that has fuse boxes? I have a homeowners policy with a company but liability is small and they don't offer umbrellas so looking to have the extra coverage. Property is in an LLC but the property also represents 80% of my wealth so want to protect it just in case something ever happens.

I am going to finish building my first project, a large log home, in about a month. I built the home as an owner-builder and did the build in my own name, not an LLC. I don't have a contractor license as none was required. If I sell the house when finished (list with RE agent and put on the market), and never build another house again, do I need to buy some type of wrap-up insurance? I want to make sure I am protected from 1 - any lawsuits stemming from future issues with the structure, and 2 - having to pay for repairs for anything that goes wrong with anything at all from chinking to stain to insulation to everything. I am confident in the build, and it is extremely well-built, but I am paranoid, and log homes do tend to require additional maintenance further down the line. I want to be done with this project and never have to think about it again. Can I sell the property "as is" and put a clause in the contract indemnifying me from any future problems? Buyer can inspect all they want before purchase. Or, do I need to buy some sort of wrap up insurance? I know there are warranty products available... but I really want to make sure I am protected from all types of liability as well, since builders typically have insurance for this, and I wont, I feel very exposed. I hired individual workers in addition to contractors, so many of the workers don't have insurance (I have workers comp tho). Thanks.

If you build a new house, and rent it out with a 1 to 1.5 year lease, and the buyer is renting to own, but the sale takes place after the lease ends, is this treated as income or as a capital gain?  Would the rental payments prior to sale be treated as income and then the actual sale after 1 year (most of the amount) treated as capital gain?  Or do you have to treat the entire price as income because the contract was established before the 1 year period elapsed?

Separately, if the buyer has an option to buy, but not contract, and option is exercised after 1 year, is that a capital gain?  

If I decide later to start a construction business (actively building and selling new spec houses), assuming this is taxed as ordinary income with social security, etc and treating the homes as inventory - if you build a house, then sell it, then spend that money building a second one, but don't sell it until the next year, then sell it, then build another, can you effectively push off the taxes as you are rolling the sale proceeds into new inventory costs / construction costs?  Or do you have to pay the tax on all gains regardless of whether you spend that money on building a new home?  I thought with ordinary businesses you can subtract expenses from revenue and pay tax on the end result allowing you to keep reinvesting into the business?  I'm not talking about 1031 exchange here. 

Thanks,

Ok thanks!  I think I will stick to my original plan and rent it out long-term.  Maybe move in after a few years.  Thanks for the help.  

I am about to start building the house. My original intent when I bought the land (and is still my intent now) is to build the house and rent it out for a long time. However, in the event that I don't receive the rent I hope for, it could be possible that I sell the house instead and use the cash to build another rental property vs paying to borrow that equity (my income is going to be the limiting factor on the HELOC, which is the preferred option). Thanks.

@Nicholas Aiola

This is my first project.  If I build a house, pre-sell it when almost done, then actually sell it when done, do I have to pay social security taxes on the profit?  I know as a short term gain I would have to pay income tax, which is fine, but I am worried I would have to pay social security taxes as well?  I am already employed full-time and paying SS tax on that income too.  

Thanks!

So they would look at DTI after those are closed out right? This would be a brand new HELOC and a new construction so no existing mortgage.