All Forum Posts by: David Schuster

Hello BP Community,

My wife and I currently own one rental property in the North Phoenix area and are looking to scale our real estate business. We purchased the property in 2020 as a primary residence and then turned it into a long-term rental in 2022. Prior to purchase the roof was replaced as was the water heater. During the time we lived there we made some minor upgrades/repairs- renovated upstairs bathroom, replaced carpet on 1st floor with LVP flooring, added artificial turf to the backyard, replaced pool pump, and replaced the HVAC system. We have had the same tenants since we leased it in 2022 and fortunately they have been great- minimal maintenance requests, very easy to communicate with, and pay on time.

We have a 30 year fixed mortgage on the property at 2.875%, the property cash flows about $1,200/month, and there is roughly $200,000 in equity in the property. My wife and I are interested in expanding to help bump up our cash flow to help at least one of us exit our current W2 jobs but are hesitant to do so given the current market climate. The rental property is in a HOA community that has a 30 day minimum lease term so converting to a STR isn't an option. We do have access to a HELOC on the property which we leveraged to purchase our current primary residence (balance borrowed has been fully repaid at this point) but we would rather not pull that lever to roll into a new property given current interest rates and the adjustable nature of the HELOC. We have discussed selling the property and rolling it into a multi-family but again feel like we may be trading a fairly hands off property with good cash flow for one that may be a bit more labor intensive and only yield marginally better performance.

Any advice on how to expand our rental portfolio/maximize its performance is greatly appreciated! 

@Chris Seveney

Thank you that makes sense! Since we file jointly it really doesn't matter if the LLC is manager-managed or member-managed as long as one or both of us are listed as member, and yes I was referencing depreciation.

@John Mocker

That is a very good point I haven't crossed that bridge quite yet with the rental property but I will discuss with my agent to let them know the rental property will be moved into the LLC at some point. Currently both homes, and vehicles are listed under the umbrella in our names.

@Angie Cal

Both properties are mortgaged. Currently everything is insured in my and my wife's names as the LLC hasn't been formed yet, once the LLC becomes official I'll circle back with the info I receive from my agent with regards to whether or not the LLC can be listed as insured on the umbrella.

Lots of feedback really appreciate it! I guess I'm still a bit confused on why Manager-Managed is the way to go as opposed to Member-Managed? Since the LLC will only consist of my wife and I (we have no intentions of taking on any additional employees or investors in this LLC) we would be the sole member/owners right? It sounds like a Manager-Managed would make sense if we had investors, employees, etc. that we would need to vote/sign off on decisions and wanted to designate a Manager to handle the day to day ops. Am I missing something here?

Also wanted to note we plan to keep the LLC finances 100% separate from ours, the goal is to make sure we are both listed on the LLC appropriately so we can use the property/LLC to help minimize our tax liabilities within the law...that is where the CPA will come in.

With regards to building a team, various insurance coverages, etc. I have those pretty well in hand, I just can't justify spending and additional ~$700 on an attorney to check a box when I have access to all of you wonderful intelligent and helpful people! 

Hello all, my wife and I have recently purchased a new house and plan to rent out our current home when we move out. I am working on setting up the LLC to move the soon to be rental home into and I have a few questions:

1. My wife and I will be the only members in the LLC should it be filed as Manager-Managed or Member-Managed?

2. Do I need to file the LLC in both our names to enable us to take full tax advantage?

Thanks in advance for your help!