All Forum Posts by: Sam Masiello

I agree with the others who have recommended getting a policy. I setup an LLC and got a $1M umbrella policy when I got my third property. It's a very small amount of money per year (< $200) for the peace of mind it provides. My advice is to do it sooner rather than later. You mentioned doing it within the next couple of months. Any reason to not do it now? Things that tend to linger tend to not get done.

Hi BPers,

I came across a last minute snag related to renting to someone that I am not sure how to handle.  I had a guy come by to rent a condo of mine who filled out the application.  I ran the typical criminal, eviction, and credit checks that I usually do.  I thought it a bit odd that this guy (a professional, not a young kid) didn't have enough credit history for me to get a credit grade for him, but sometimes that happens.  So, although I thought it was odd, I didn't disqualify him for it as he was still more qualified than the other applicants.

Anyway, we went through the lease signing earlier this week where he gave me the deposit and tonight I was going to hand over the keys and he was going to pay the pro-rated rent for July.  All sounds reasonable so far, I guess?

Here is where it gets weird.

I got a text from his wife last night telling me that the SSN that he gave me on the app was wrong and that he transposed a couple of the numbers.  That would explain why I didn't get an accurate credit history.  

So, now I am kind of stuck in a dilemma.  His wife wanted me to have truthful information, but she doesn't want to get turned in that she told me this.  The only information that I have from him is the SSN that he gave me.  Can I run my checks again with this new, ill-gotten information?  I do have a clause in the application that says willingly giving false information invalidates any agreements that we have, but again the information was somewhat ill-gotten and his full SSN isn't something I could have just researched and figured out myself.  

Do I have an out here?  If so, how can I get out without potentially implicating the wife?

My understanding from speaking with the prospective tenants is that they are the only ones planning on living there over the course of the next year (maybe longer?).  I am not planning on negotiating the rent.

So, I am guessing from the lack of responses about actual experience with corporate leases that many people do not have experience with them?  I'm sorry, but I don't feel like we are near my original question at all.

I spoke a bit more to the prospective tenant and they said that they themselves (not the relo company) will be paying the rent.  So, the obvious question that came to my mind to go back and ask them is "Then why not have the lease in your name?"  Am I missing something there?  Again, this is my first request from someone to use a corporate lease so this concept is a bit foreign to me, but why would you want a corporate lease if a company isn't paying the rent?

--Sam

I was hoping that I could get some advice from the collective about a question that I received from a prospective tenant today.  

I am in the process of renting out my third investment property and I got an email from someone asking if I accept corporate leases.  The wife emailed and said that her "husband works in oil and gas and a relocation company is going to put the lease in their name (the relo company's name).  

This is not a situation that I have dealt with before, so I wasn't sure if doing something like this was riskier or safer than my typical person to person lease.  If I were to go through with this, what are some of the things that I need to consider or make sure are in the lease prior to moving forward?  I am not sure if the relo company would be paying their rent or if the tenant will be. Should I find that out?

Also, how do I deal with an issue where the tenant may need to be evicted (lack of rent payment, etc) ?  How do I evict "a company" ?  Or again, are there provisos that I would need to make sure are part of the lease that wouldn't put me into a pickle?  

As I talk through it, it sounds more complicated than I feel like dealing with, but wanted to get some thoughts from folks who have some experience in this matter.

Thanks in advance!

--Sam

Agree with James.  It is good sense to always re-key a property after a tenant moves out or after you purchase a new property.  You can't be 100% sure that the tenant doesn't have a duplicate key or worse yet, someone whom they may have had a fallout with having a duplicate key.  Speaking personally, re-keying a property is the first thing that I do.  It's easy and removes a potential huge liability and provides huge peace of mind for you and future tenants.

@Account Closed

Sorry for the confusion. My point wasn't to be anonymous, but rather to provide a legal shield so that if something were to happen that would cause someone to want to sue me, they would only be able to hold me liable based on the assets of the business, not my personal assets.

I hope that makes more sense.

BTW, here is another topic which may be of interest to you. Good advice from one of the posters on using a lawyer for the legal documentation. You can find plenty of free templates online, but your state may have specific requirements for things like your LLC Operating Agreement that the online templates may not provide. If your docs don't meet the minimum state requirements, they may not protect you in court.

https://www.biggerpockets.com/forums/109/topics/109516-llc

I am fairly new to real estate investing, but have recently setup an LLC. I primarily did this to create a legal shield between my personal assets and the rentals. I am concerned that someone could potentially slip and fall on one of my properties (as a freak accident) and have them be able to sue me and come after personal assets such as my home and savings.

That said, the mere creation of an LLC is not enough. You need to run the business as a business. What I mean by this is to do all of the things that you would generally do when operating a business: setup a business checking account, run the affairs of your rentals through the business, and possibly even transfer ownership of the rentals to the business through a quit claim deed (I am in the process of doing this myself right now).

Another important document to have is an LLC operating agreement that govern the rules of engagement between yourself as an individual and your LLC.

Food for thought from a newbie to BP as well as real estate investing. I am sure people who are far more seasoned in the space will be able to give better or more thorough advice and I look forward to learning from them as well, but this is the direction that I have been taking thus far.