All Forum Posts by: Frank S.

True.  In Chicago we have combined sewers, storm sewer backup always has blackwater.  If this happened once, it may happen again, so a recurrent moisture problem is a concern here.    He is probably better off removing the drywall as noted. 

Do you have your downspouts connected to the sewer?  Can you remove them by letting them spill to your yard? You may want to video tape your sewer ($400) or rod it ( $250) to confirm there is no cracked pipes or roots.

Best of luck, 

Frank

Caleb, 

I am so sorry to hear about this.  I have one basement unit and this was a wake up call to get an insurance call. I have hardwood floors there, so at $8 S/F, it can hurt.

Depending on the damage and call me a crazy cheapskate, but you may not need to remove the drywall and trim if you move fast and get fans, dehumidifiers, etc. ASAP.  Same for the cabinets.  If you control humidity and moisture, a little water won't be the end.  Then, you can consider using a fogger with Concrobrium, paint with mold resistant primer, etc. 

Once again, I am very sorry to hear you are going through this. 

Frank

All, 

Thanks for the great information. 

I got answers to my questions, I truly appreciate your help.  If I go the LLC route, there are more costs:  yearly filing (a few hundred),  commercial insurance, and attorney representation (even for code violations).

The new research is related to "business pursuit" and my umbrella without the LLC structure. I assumed I was fully covered as I discussed this with the underwriters.  A few calls are in order.

Thanks a lot, 

Frank

Got it.  The business pursuit conundrum.  This is going to be fun. 

 I will call my underwriter to see if there are any activities that may be currently excluded from self-managing my units.  I carry insurance based on rental, tenants have insurance, and a personal umbrella on top of that. 

Business pursuits or business property of an insured unless covered by primary insurance described in the declarations. Our coverage is no broader than the primary insurance except for our liability limit.

I I see your point. The pizza guy is screwed, as it is the uber kid, etc.

Will driving back from home depot with parts for a repair be consider "business pursuit"?  I don't know.

Will a lawsuit related to making calls to possible tenants be covered? I don't know.

The list goes on and I don't have all the instances.  A health check is in order.

I may not understand your comment regarding managing my rentals.  My umbrella covers the process because I the umbrella covers me.  Is there something I am missing?  If so, what insurance is needed.

https://www.geico.com/information/aboutinsurance/u..

 Yes, I will consult with an attorney, eventually.  This is preliminary research.

Thanks, 

Frank 

Ignore the title of the post, please. I can't change it. 

Hi, 

As I research structuring, I have a few questions.   Any help is greatly appreciated.  

Assume a sole prop Owner moving property management to member managed LCC in Chicago. My wife and I will be the LLC member managers and property Owners. I'm not interested in discussing "liability protections" offered by LLCs, this is related to attorney involvement. 

I can manage my own properties as sole prop, but what happens when the LLC is established in Illinois?

*  Do I need  a licence to manage my properties if I move management to my own LCC in Chicago, Illinois?   If so, it seems I would need additional business insurance  My  personal umbrella may not cover a business. 

* If I receive a city violation and want to contest it, can I attend the hearing or do I need to hire a lawyer? 

* What if I face an eviction, do I need to hire a lawyer to represent me or can I do so? 

* Are there any other hidden expenses related to management by having the LLC vs. sole prop? 

Thanks, 

Frank

Hi, 

You will not  necessarily avoid taxes by living in the house for 3 years.  The recapture tax will bite no matter what.  The only difference is that you can't depreciate anything on your primary house, therefore,  so you won't pay those years that you lived there.  You can't escape the recapture tax this way. 

You could  pass the property to a land trust, and sell the rights to be the beneficiary of the land trust.   For this option, you need an accountant and lawyer.  If the property is encumbered, you have to find more creative solutions. 

Another option, is to wait for the next stock market dive and do a TLH.  Not fun.

https://www.investopedia.com/articles/personal-fin...

Recapture Tax

https://www.nolo.com/legal-encyclopedia/taxes-when...

Recapture of Depreciation Deductions

Converting a rental into your residence will not eliminate all taxes when you sell it. While the home was a rental, you should have claimed a depreciation deduction for it each year. The total amount of depreciation you claimed during the rental period is not eligible for the exclusion. Instead, you must "recapture" all your depreciation deductions--that is report them on IRS Schedule D and pay a flat 25% tax on these deductions. This can have a significant tax impact. In the example above, if Jane had taken $10,000 in depreciation deductions during the time she rented out the home, she would have to pay a deprecation recapture tax of $2,500 (25% x $10,000 = $2,500).

Good luck 

 Yes,  you could glue Part D, near the trap weir as a temp solution. This is the leak, correct?   It doesn't  matter that much, you can still remove the trap by disconnecting Part A and Part E.   We are talking about a $3 part, why don't you replace it, instead?   Otherwise, glue it to kill the gremlin and make a note to replace it next time you are there.  Oh, consider using metal p-traps, not plastic, and provide the traps with the p-traps with the drain plug at the bottom. 

Any pipe dope would do

https://www.homedepot.com/p/RectorSeal-T-Plus-2-4-...

Good luck, 

Frank

Get a new p-trap. The plastic ones are cheap.  That elbow doesn't need washers. Did you try Teflon paste? 

Well, you can also glue it to save yourself a trip to the hardware store. 

Nice work, congrats! The place looks very clean and professionally done. 

The budget is very impressive for electrical, plumbing, floors, painting, cabinets, baths, tile, windows, and exterior work. Keep your workers.

Your cost in utilities is great too, I noticed I burned a several hundred dollars  in electricity and heating in Chicago, power tools use a lot of juice. 

Looking at the insurance, I assume this took you 3/4 months. Did you pull permits?