All Forum Posts by: Graham Mink

I would do what you suggest in your last post. But after the money is in your account I would only take lump sum withdrawals on an annual, quarterly or monthly basis. For example:

1)You get rent checks made out to your LLC and deposited into your LLC's checking account.

2) All expenses related to the property are paid directly from this same account. (For tracking purposes)

3) Every quarter you write a check from the LLC account to yourself personally and deposit it in your personal checking account.

4) You spend the money in your personal account as you wish.

This way you track all your LLC income and expenses easily. This way you also track all the money you take out personally so you know how much money you have made, lost, etc. There will only be 4 checks per year withdrawn.

If you use the LLC account for personal purchases at tax time it is going to be a lot harder to sort everything out. Of course none of this is mandatory, it is just my opinion. I would recommend speaking with your tax preparer about this.

Hi Wes,

It does sound like you are in a pickle. I am an Insurance Agent and Real Estate Investor in Vermont. I would go talk to a different agent and be completely upfront and honest with them. Let them know what is going on and ask if they are able to help you. They should work hard to want to earn your business, if not, go to someone else. Calling on the phone and asking might not be as effective as showing up at their office. When someone stops by my office I know they are serious and ready to buy, as opposed to a phone call that may or may not end with a successful outcome. An independent agent will be able to work with multiple companies and may have more luck finding a place for your property. Good luck and let me know how it works out!

Graham Mink

Hi Azeez,

I am a licensed Insurance Agent in VT and also a buy and hold long term investor. Your coverage looks fine, but it is hard to judge without knowing more specifics about the property. A common misconception is that the value you insure for is the price you paid for the property or the appraised value, this is false. You should be insured for the cost to rebuild the property from the ground up. This can be roughly approximated by a price per square foot cost (3000 sq ft building $175sq/ft = $525k building coverage). This cost varies depending on construction costs in you area along with the style and quality of your building. Insurance agents have online cost estimators that can calculate how much to coverage to have.

My suggestion is to make sure your limits are adequate! This is one area where you don't want to be pennywise and pound foolish. Find a good agent and ask questions. The price difference between $500k and $400k in building coverage is generally not that much, no more than a couple hundred dollars a year (or less). I also advise that you get an umbrella policy to increase your liability limits. Umbrella policies are inexpensive and provide a lot of coverage for the price. If, God forbid, someone dies or is seriously injured on your property $500k won't go very far if you are found at fault. I would recommend at least a $2 million umbrella over the $500k for a 4 unit property. The added benefit of an umbrella is when you buy more property you can add it to the policy, so it covers all of them.

I suggest you shop around for Insurance. Find an Independent agent who can give you quotes from multiple companies and recommend the best one. State farm is also competitive but they only sell State Farm Insurance. Get a quote from State Farm then bring it to another agent and see how much they can give you the same coverage. You can let them know how much your other quote was for or not, it's up to you. Also, as in anything, there are good agents and bad ones. People view Insurance as a commodity these days but if you have a problem you will be glad you found someone you trust and can work with.

I am not a tax professional so I recommend you speak with one before doing anything. Terry is correct that all the LLC profits flow through to your personal income tax return anyway. To keep it simple and easily trackable I would suggest limiting withdrawals for personal reasons annually, quarterly or monthly. It would get quite confusing and difficult to locate your deductions if you are using the account for lots of miscellaneous personal purchases. Just my 2 cents.

Hi Bill,

I would open a Business Checking account in your name and the LLC's name so you can cash the check and then document everything you spend from that account. How much money are you talking about?

Graham

As a real estate agent I always recommend that the buyer gets their own representation, even when I am representing the seller.

Would you go to court without your own lawyer?

When a buyer does not have representation it brings up a host of issues and assumptions that sometimes work out fine, and sometimes don't. As the seller's agent I feel like I can do my job better (representing the seller) if I know that the Buyer is getting professional advice on their side. When there is no Buyer Agent I feel that Buyers over trust (is that a word?) the listing agent and when things don't go as planned animosity and problems often arise.

Agents are not supposed to make the ultimate Sell or don't Sell decision. They should facilitate the sale, but not make decisions for the Seller. This is taught day 1 in Realtor training. I have read Gladwell's book and I liked it a lot. I disagree with his assessment that all Real Estate Agents only look at the bottom line and ultimately don't care about their clients. Maybe bad agents do this but ultimately my success as an agent comes from not how many sales I make, but how satisfied my client is after the sale.

My advice is to find a good buyers agent. Ask around and the same names will probably come up. Select 2 or 3 potentials and have interviews with each one to make sure it's a good fit.

Best of luck!

Hi Michael,

Sorry to hear that you got ripped off, I've been there and it is definitely no fun. I agree with the other posters about getting a couple of credit cards to start a credit history. Credit is the most important tool/asset a Real Estate Investor can have. Make sure you don't carry a balance, use it then pay it off asap. I know that Capital One has an entry level credit card that is easy to obtain.

I also agree that you should look for a job in the real estate field to get started. It's like getting paid to go to college! I got my real estate license up in VT 7 years ago and it has been invaluable in teaching me the ropes. Look for job postings at Real Estate brokerages around you area, hopefully one of them is looking for help. Try and get your foot in the door anyway you can and your natural curiosity and drive will take over and help get you where you want to be. If you have any questions don't hesitate to ask and good luck!

Graham Mink