All Forum Posts by: Tom Spaeth

@Zachary C.

If I was small and just starting out I might think the buildium accounting and report are OK. However I have been using Quickbooks for close to 20 years.  Quickbook is easily modified for your personal business. Additionally you can run any number of reports and modify them on the fly. I have found the reports in Buildium tedious to use and many times they don't quite give me the information I need. But then Buildium is built to manage properties and Quickbooks is built to manage money. Quickbook can do many (but not all) of the property management function that Buildium does. But it is very cumbersome.  So I guess I would say best to use the right tool for the right job.

Anisha - So many people get lost in this. Please don't get too concerned about the LLC structure. Just get out there and start doing the work it takes to make money. IF you make money without doing it with an LLC it makes no difference what so ever tax wise. See the next sentence. When you set up an LLC it will report on your taxes under you SSN for the IRS. So why have an LLC? Well to limit your liability. How much liability do you have? Are you sitting on a boat load of cash or other assets? If you are then the LLC starts to take on some importance. Prior to the LLC I would be more concern with a nice Umbrella Insurance policy. That will save you better than any LLC.

Now to the LLC.

1: Wholesaling houses - Try to do the contracts within an LLC and limit your liability.

2: Doing rehabs & Construction - Same as above.

3: Rentals and you have a boat load of cash, you're putting down large down payments and getting commercial loans - Same as above. 

4: Rentals and you're are getting a traditional loan - Then everything has to be in your own name and have an LLC does you no good. (Though you might manage the property using an LLC, but doubt that would actually get you out of any liability)

Good luck - rock it.

@Sam R. Be careful with the mortgage payment (or taxes & insurance) being made by the management company. If they get into financial distress and kind of forget to make a couple of your payments you could find yourself in foreclosure real quick. And the credit hit goes to you, not the management company.  And with all the autopays and autodrafts that are available, I do not see the advantage of the Management company actually paying the bill. This has never happened to me but years ago I heard about it more than once. Plenty of people have lost their houses and their credit by giving up to much control.  Just something to think about. 

No issues with management company paying all the other bills since they can't foreclose or typically hit your credit. FYI Here in Denver, we had a very reputable title company that had been in business for years suddenly go belly up because they were playing with the numbers. Not sure how many people lost their earnest deposits on that one.

Don't get to lost in the weeds. Entity setup can always happen at a later time. Just start getting a deal together. If you are new I assume you are not sitting on a boatload of assets. And if you have assets; get a real nice big Umbrella policy. That is your real protection against anything. Unless you are getting a commercial loan or are buying for cash most other mortgages and therefore the house deed also will be in your name. So the asset protection in this case is the fact that the bank has a lien and you have good insurance.

Now if you have tons of money that someone can sue you for; get a good asset protection lawyer first.

Otherwise Attorneys are expensive, start with the CPA but don't set anything up until you talk to both. The three of you need to agree.

Not sure of the issue. My loses from Real estate currently pass though to my W2 income. Though I suppose there could be a limit. There is a distinction between active and passive investing. If you are passive in your real estate,  there are some restrictions about losses. Passive real estate losses can not be deducted against active W2 income, or any other active income. As best as I can recall. I am an active investor as I manage all of my real estate personally. If all you do is collect the rent money from the property manager, then you will probably be considered passive.

So if you are going to live in in why do you need creative financing. Loans are not that hard these days. Unless you are non-W2 in which case off to creative ideas. Don't work off credit cards the monthly carry is to high. Likewise most hard money loans will eat you. But the are commercial loans that have better terms like 10% & 2 pnts. Not the worst. Can you borrow the money  from anyone. Make them part of the deal.

Sounds fairly typical. I have hit this issue a bunch of times. Go look for a local lender. They may position it as a commercial loan. Which means they will adjust interest rates 3-7 years from now. But it will get you into a loan. If your lender is looking for a conforming loan you have to wait 6-12 months. Any lender that keeps the loans in house will be able to refi on any terms the like.

Typically Husky are pretty good. After living with one for years she was always clean (and 2 days per year they don't even shed), and pretty darn mellow. Your yard is another story. Huskies will dig and they will climb. They love to travel. I have dogs in many of my houses. I have never had an issue. Big question is how often are the tenants away from their dog and if they are gone all day what do they do with the dog. My dog was always in a kennel in the kitchen. I think most dog owners are pretty conscientious. Now those three teenage boys. That's another story. Any one of them will do more damage than the dog. And you can't even ask for more security deposit for that. LOL

Needs a bunch of work. Complete remodel.