All Forum Posts by: Jennifer Rysdam

 Yes I suppose those things are true. However I don't see what they have to do with providing you a measurable benefit as a landlord by moving this person out right now.

Suppose this person commits a crime involving one of the neighbors. What does that have to do with you? Really nothing. To unrelated things. If you are thinking that the measurable benefit to you is that you are doing a good deed by removing a potential criminal threat to these neighbors I disagree with that notion as well. You aren't lowering a  potential criminal threat to the neighbors. You are just moving a potential criminal threat to different set of neighbors.

@Axel Meierhoefer Just a quick add to all the valuable input.

LLCs are for limiting liability. Other than that they aren’t needed. If you are broke and have no assets, run it all as a sole proprietorship. No worries.

If you have personal assets, form an LLC so when your renter sues you, he can only go after the LLC contents. Yes you CANNOT co-mingle funds or you ruin the protection.

Once you have one LLC, then how many properties in each is again all about liability. Basically how much money do you want on the table with one play of the cards. I personally don't want my entire bank roll on the table waiting on the turn of the cards. If you have SFHs and you are ok with risking 3 properties each, then property number four starts a new LLC. Maybe your number is 10. Maybe it is one. Whatever your risk tolerance is. I would say that people new to business tend to overanalyze and over complicate things. One property per LLC for a SFH seems excessive but that is just me.

As for lawyers suggesting multiple LLCs to milk you for dollars, I don't buy it. For one, you can set up your own LLC. Literally five minutes on Google and 10 minutes on the Secretary of State website and you are done. Renewing the LLC each year takes about 5 minutes as well. No lawyer required. Both of those transactions do require filing fees though and they can add up. It's $202 here in NC, each. So one for my farm business, one for the airplane partnership, one for the other airplane partnership, one for the holding Company, one for the residential LLC, and one for the commercial LLC. So that's about $1200 per year. That's on an 11 million dollar net worth or roughly $100 annually per million of net worth. Maybe compare that ratio to your structure and see if it seems overly complicated for the dollars at risk.

Personally my lawyer, when we discussed structure, asked me if I wanted to set the LLCs up or to have his assistant do it. He really couldn’t care less as long as it is setup correctly. I set them up. Took a grand total of 30 minutes, including finding the stamps I’d misplaced.

As for tracking and accounting, I set up my LLCs as single member disregarded entities. The disregarded entity status LLCs don’t need individual tax returns and all the transactions flow up to my personal return. No more work for the CPA than if I was a sole proprietor. Actually it is easier because at least all the business transactions happen in a business account instead of being mixed all up.

If you can use Excel, use it. I don’t, and use Quick books online. Actually Google Docs is even better to me. I hate Quickbooks and spend way too much time fixing stupid junk that it does. Plus there are constant ads to borrow money or upgrade. I already pay you, stop showing me ads! However with a CPA and a bookkeeper involved, I won’t leave QBO. But the simpler the better.

Lastly, for the comments that you don’t need liability protection. You don’t need anything.... till you do. You don’t need a fire extinguisher till you are on fire. You don’t need a gun till you are being robbed. You don’t need insurance till somebody trips and falls. You don’t need LLCs till someone comes after you. I’ve been sued, multiple times. At those times you will be glad to have any and every protection. It still sucks and it is still expensive. There is no getting out of that. But at least you can compartmentalize the damage and limit what they can reasonably pursue you for.

LLCs are like bulkheads in a ship. Nobody wants to start taking on water. But each bulkhead is there to save the ship. Inside that bulkhead, you are toast. Everything floods and everything is a write off. But maybe the ship can be saved. If you co-mingle your funds, then you are the Titanic and the water just flows from one bulkhead to the next taking the whole thing down.

If you are sailing a dingy, then sail away without need for bulk heads. If you ship starts having some size, then you need to start breaking it up into manageable chunks so one single point of failure can’t sink your whole operation.

@Jennifer Rysdam continuing on the same topic, in terms of my next move, if you were in my shoes, what strategies would you put into play if you’re interested in possibly purchasing some more properties? How would you use your current investment to move forward. Not too much equity currently in the properties.

Long-term for me as a landlord with working properties, it doesn't usually make good sense to cover up extensively cracked plaster. I break failed plaster out and screw in 3/8 in. or 1/2 in. drywall into the exposed wood lath. I finish the repairs with 6 in. fiberglass tape, usually sold as "wall repair fabric," and multiple coats of mud. Where I have plaster coming off the wall which hasn't cracked yet and on the borders of repairs, I screw in plaster washers and cover them with mud. I tend to use small batches of 45 min. hot mud rather than premixed mud until I get to the final coat(s). This costs a bit more, but saves me time when I'm working alone.

But if I were you in your position, it would be 1/4 in. drywall screwed in to cover up the cracked plaster all day long, and if the appearance of the trim suffers a bit by being a bit more deeply submerged into the wall, so be it.