All Forum Posts by: Glenn Cross

Good morning BP Community, does anyone have a suggestion for a reputable and reliable maintenance individual that has a skillset to perform some modest repairs and maintenance for a 4 family unit, in the Boston area? The work would be fairly recurring as I would rely on this individual for preparing for inspections, and restoring units as tenants turn over.

Thank you!

Quote from @Joseph Beilke:

Everyone here has giving great advice.  The only thing I don't see is open lines of communication with the tenants.   In my experience some tenants have in the past had bad landlords or property managers.  When something goes wrong or breaks a tenant will just let it be due to past bad experience with repairs/fixes not being done at all or just a bandaged to a bigger problem.  They won't tell you and when it comes time for a turn you have laundry list of small on going issues that could have been addressed much sooner.  I encourage you to make your tenant aware that you want to keep them happy so they pay on time and want to remain in place.  So finding out about little problem sooner and fixing them is key.  

 Thank you Joseph, that is really great advice. I really appreciate it. I will most certainly communicate that to the tenants. Thank you.

Quote from @Luke Eastman:

Hello I had a question, my father passed away a few years ago and left us two rental properties in Virginia. Both properties owned free and clear by our mother but my brother has the power of attorney. We are trying to get everything in order and are thinking about forming an LLC for them. We live out of state. I was wondering, should the LLC be registered in our home state or in the state where the properties are? Also, should it be a separate LLC for each house? And on a different note, each property has had the same tenants for 10+ years now but we haven't raised rents in maybe 7 years and they are way too low, is there a legal process you have to go through to raise rents or can we just tell the tenants that rent is increasing by a few percent? In case you couldn't tell, we are new at this and any help is much appreciated. Thanks!

 Luke, I am not an attorney. Take the below with a grain of salt.

When deciding whether to form an LLC in the state where your real estate property is located or in the state where you reside, several factors need to be considered:

1. State Laws and Requirements

• Local Laws: Real estate is generally governed by the laws of the state where the property is located. Having an LLC in that state may simplify compliance with local regulations, tax filings, and property management.
• State-Specific LLC Requirements: Each state has different requirements for forming and maintaining an LLC. Forming the LLC in the state where the property is located might be more straightforward, avoiding the need to register as a foreign LLC in that state.

2. Tax Implications

• State Taxes: If you form an LLC in your home state, but the property is in another state, you might have to file tax returns and pay taxes in both states. Forming the LLC in the state where the property is located may help avoid double taxation or the need for additional filings.
• Franchise Taxes and Fees: Some states have franchise taxes or annual fees for LLCs. These costs can vary significantly by state, so it's important to compare the financial impact of forming the LLC in either state.

3. Liability Protection

• Asset Protection: The primary reason for holding real estate in an LLC is to protect your personal assets from liability. Forming the LLC in the state where the property is located may offer clearer legal protections under that state's laws.
• Corporate Veil: Courts tend to respect the corporate veil (the legal distinction between the LLC and its owners) more when the LLC is properly formed and operated in the state where the property is located, reducing the risk of personal liability.

4. Operating Convenience

• Administration: Managing the LLC might be easier if it's formed in the state where you reside, especially if you plan to handle administrative tasks yourself. However, you would still need to register it as a foreign LLC in the state where the property is located, leading to additional paperwork and costs.

5. Foreign LLC Registration

• Dual State Requirements: If you form the LLC in your home state, you'll likely need to register it as a foreign LLC in the state where the property is located. This involves additional registration fees, annual reports, and possibly hiring a registered agent in the state where the property is located.

6. Privacy Considerations

• Anonymity: Some states allow LLC owners to maintain greater privacy by not requiring public disclosure of the members. If privacy is a concern, consider the state's rules on anonymity and how they align with your goals.

7. Professional Advice

• Consult with a Professional (both an attorney and an accountant)! I highly recommended you consult with a real estate attorney or tax professional who understands both states' laws. They can provide specific advice based on your situation, goals, and the nature of the property.

Sorry this post is a lot longer than I intended. 

Quote from @Alecia Loveless:

@Glenn Cross Just to help clarify 99% of the time I do not pick up rents or allow them to be dropped off to me. I require electronic payments or a check to be mailed.

Every now and again a situation has cropped up and then I will pick up a rent.

You just have to learn to train your tenants to pay on time whatever method you choose.

 Thank you Alecia, greatly appreciate the context. Really helpful. 

Quote from @Nathan Gesner:

Quote from @Glenn Cross:

Create a maintenance schedule so you don't skip something. Mowing, trimming, fertilizing, pruning, cleaning the hallway, cleaning the laundry, etc.

Schedule at least one inspection per year for each tenant. This will be a detailed inspection of every room, ceiling, floor, plumbing, smoke/CO2 detectors, window treatments and screens, etc. Figure out how to inspect and document, what to do if there's damage or violations, etc.

I could go on. Do yourself a favor: buy "Every Landlord's Legal Guide" by NOLO. Written by attorney investors, it's full of practical advice about the management of investment property, has sample forms that can be edited, and - most importantly - tells you what your primary state laws are and where you can read them. It's updated yearly and is the best $40 you'll spend as a Landlord. You could also read Brandon Turner's book on Managing Rentals, found in the BP bookstore or at Amazon.

Thank you Nathan, I appreciate the advice and book recommendations. Interestingly, I have the lease agreements and other legal documents from NOLO but not the book you recommended. I literally just ordered it. Thank you again for the suggestion. 

Quote from @Clayton Silva:

Systems, systems, systems.  I would be focusing on cleaning up bookkeeping, communication portal with client, vendor list management, payment processing, etc.  At the same time, it is ok to enjoy the fruits of your labor and relax too!

Thank you Clayton, this is terrific. I greatly appreciate your advice. Super helpful. 

Hi Michael,

I have read a number of books on this subject and others. I do not feel my post warranted sarcasm (re: needing to be spoonfed). I was asking in earnest. You made an incorrect assumption that I was being lazy and not reading or studying how to prepare for this venture. 

I do appreciate your feedback on picking up rents. Thank you for your advice. I will adjust accordingly. thank you again. 

Hello BP Community,

I am a newbie to multifamily investing. My property just very recently became fully occupied. I spent so much time getting tenants for the property, and getting them moved in, that I am now curious how to transition my efforts to a fully occupied property. So far, no calls for repairs, so what should I be thinking about and doing to maximize the time I have each month. I don't have a property manager, so I do all of the outside maintenance myself. Would be really grateful for guidance and thoughts on how to be productive between picking up and depositing rents. Thank you in advance.

Quote from @Jonathan Greene:

You are making a grave mistake by looking too far ahead right now, without capital, because that usually means you aren't focused on upgrading and securing your first asset. Is this 3-family free of cap ex for the next five years? How is the roof, the mechanicals, water issues?

It's not difficult to find financing solutions for your next property, you don't have any capital so why would there be financing solutions? You are rushing to get somewhere that you don't have the capital to get to. You are probably looking up seller finance and sub to and ignoring getting the best tenants into your existing property or finding ways to upgrade the cash flow.

 Thank you Jonathan! I often need to hear the advice and counsel to "slow down". I really appreciate it. That is such sound advice. It is hard because you feel like you are falling behind, but you are so right that I need to ensure that my foundation is stable. I really take this to heart. Really appreciate the words of wisdom. Thank you again!

Team, I am a true newbie. Just bought my first 3 family in Boston, and I have caught the bug. The only problem is that my liquidity is now completely tied in my property. What should I expect as far as timing where I will have the capability to make my next purchase. My cashflow (right now) is neutral (I plan to refinance down when rates drop), and my initial plan was for appreciation to grow my net worth. After really listening to the BP podcasts and reading these forums, I am learning and identifying all of these different strategies. It seems like I have sidelined myself with this one purchase. Is that true? Are folks able to manage to get to that second property, when they have high debt service in one property. I don't really have the skills to BRRR. It also seems with multifamilies in the northeast that rehabbed properties (multi's anyway) are experiencing significant valuation increases from rehabs. I am finding it extremely difficult to be able to find financing solutions to land the next one. I would be grateful for any tips and guidance you would be willing to share. Thank you all!