All Forum Posts by: Raj S.

@Bill S. You're right, its not worth the lower return I'll get by paying myself.  I'll have to just stay on top of it to make sure the tenant is paying

@Shawn Holsapple Thanks for your response.  Have you ever had a problem where the tenants didn't pay and you got stuck with the bills?  Also do you verify that the bills have been paid on time?

This is exactly what my property manager said he was going to do.  He did put a stipulation into the lease, and told me the exact same thing you just said.  I was also told that I can setup alerts with the utilities asking them to notify me if the bills went past due.  

I just purchased a rental property in Fishers, Indiana.  Is it normal to have the tenants pay for sewer, water, and trash?  In Hamilton county all of these items are paid for separately.

My property manager is telling me that we can have the tenant's pay for these items by putting that into the lease.  I'm worried about what happens if the tenant doesn't pay.  I know with items such as electric, phone, cable, etc the tenant is responsible and I won't be affected by whether or not they pay their bills.  However with sewer, water, and trash I believe that the homeowner is liable if those bills are not paid.  I would appreciate any advice.  Thanks in advance.

@Shawn Holsapple I tried several lenders and could not find any who would loan to me under the LLC. I felt like there were just too many problems with doing it any other way.

When you purchase a property personally and then transfer to the LLC, this does several things. First you're technically violating the due on sale clause, as well as other lending clauses. The bigger problem is that if you fail to maintain a formal legal separation between your business and your personal finances, a court could find that your LLC is really just a sham. In other words, you're personally operating the business as if the LLC doesn't exist. Its no different than if you pay your personal bills from the business checking account, or you ignore other legal formalities that an LLC must follow. If you're ever sued, a court can decide that you're not entitled to the limited liability that the LLC structure would ordinarily provide.

I'm not an attorney and I'm only relaying to you what I was told when I sought legal advice.  Obviously you would have to seek your own legal advice.

@Shawn Holsapple 

I agree with what you said. My only question is how do you get the financing through the LLC? I've tried a bunch of lenders and none of them seem to be able to do it. That was the only reason I went the umbrella policy route.

I know some investors on here purchase the property personally for financing and then transfer to the LLC afterwards, but that creats a lot of issues as well. I'm not sure that would even protect you in the event of a lawsuit. Any advice would be helpful. Thanks

I'm not an attorney and I'm only offering you my opinion. One of the biggest benefits to buying a property under an LLC is to limit your liability and protect your personal assets. If you're able to buy a property under an LLC and get financed through the LLC, I think thats always the best option. The problem is that getting financing through an LLC isn't always easy to accomplish.

The easier route is usually to get the financing personally and take title to the property under your own name.  This leaves you open to the risk of your personal assets being compromised in the event of a lawsuit.  To combat that risk its a good idea to make sure your homeowner's policy has a high amount of liability protection.  I usually take $1 million per event ($2 million aggregate).  You can then take an umbrella policy to further protect yourself above and beyond what your homeowner's policy covers you for.

The following post will probably be of help to you: http://www.biggerpockets.com/forums/51/topics/157675-indianapolis---how-can-i-change-the-title-from-my-name-to-my-llc-when-the-loan-is-in-my-name

This whole 1099 thing is strange.  I know at one point I was required to issue a 1099 to the property manager as well since I was paying them over $600 a year in fees.  However, I believe this part of regulation was repealed at some point since I am only a landlord and not a real estate professional. 

That was a little confusing with "you the owner" and then interchanging between "you" and "he" but I think I get what you're saying.  Thanks

That is exactly what I receive from my property manager in Nevada every year.  I was getting confused because of some wrong information i was given by another property manager.  Thank you for your response.