All Forum Posts by: Julie Williams

Hello all. I just read an article on commercial financing that said commercial lenders would consider rents in the decision when financing a multi-family if there were leases. I am going on a three-day car trip tomorrow and looking at nine multi-families. Some have leases in place, some have month-to-month tenants and some have one or both units vacant. I actually liked the buildings with vacant units, because they are already beautifully renovated and many of the tenants in occupied units have been there for a long time and are paying far below market rent. If I ask them to leave at the end of the lease, they could refuse and I could be stuck with them because of the eviction moratoriums. (My real estate agent is a landlord and flipper and he says to raise the rent to market over three years and he has always had them leave on their own.) With the vacant units I can charge market or close to market rents and screen applicants heavily to try to pick ones who work in stable sectors of the economy. Has anyone had experience in getting a loan for an empty duplex? I'm not asking about LLC/commercial lending vs.residential loans, a topic I have looked in to thoroughly. I need to protect my assets and want to buy with an LLC.

Hi Mike. I'm looking at investing in Western MA, but more interested in buying multi family rentals. I would also consider  an airbnb or a flip, but with the current crazy market have not found a good flip. 

This is a very helpful thread. Thanks everyone. 

Hi @Moshe H. that is not a lot of money to form an LLC for. What did you end up doing? One thing nobody mentioned and why I am weighing in years later is, as an out of state investor, if you sell it instead of hold it and rent it, you pay capitol gains tax to the state. Yes, you have to pay income tax in both states. You might want to consider long distance investing in a state with no income tax, like Texas, or a state with anonymous LLC's AND no income tax...Wyoming! I am forming a Massachusetts LLC myself soon, to put my first investment property in (which I hope to be buying soon), but I don't have a partner. I hoped to form an LLC in Wyoming (to get the anonymity) and perhaps have a child LLC in Massachusetts. I looked it up on the Massachusetts state website: If you are doing business in Massachusetts you have to have the foreign "parent" LLC register here. That's two LLC's instead of one, plus the more modest Wyoming costs. I would have had to have a resident agent here which means even more cost, if I wanted to protect the anonymity of the Wyoming LLC. I could have formed a Wyoming LLC and registered it here, but without the new child LLC, my information would be on the Massachusetts registration and I would still pay $500. So I plan to form one LLC, in Massachusetts AND have a big liability policy.

@John Menton Ok, it took me three years to show up, but nobody made this point yet. Properties in trust don't go through probate. They go straight to the heirs. They are still subject to Massachusetts estate taxes, but the estate doesn't have to pay those taxes except for on the portion of the estate worth over a million. 

@Yuzi Stha did you buy the multi-family? I agree with Cal about the importance of putting a property in an LLC. Umbrella policies do not cover all type of claims, including environmental. Environmental includes black mold and COVID-19. It all depends on your assets and your tolerance for risk. One successful lawsuit where the payout is greater than the policy limits of your insurance or if it is a type of claim not covered by your insurance, you could lose everything. I am 58 and I am not about to risk having to start over. The advantages are as stated- that you can get better loan rates and have lower down payments. You also won't get the $250,000 capitol gains tax deduction when you sell. Even given these advantages, I still will put properties in LLC's. Each LLC will contain a single property, although I may choose to group two or three inexpensive properties in one LLC. That way if someone successfully sues you for an incident at one LLC, the others are not under threat as well.

I am grappling with this same issue,@Mike Jones. Don't you have to register a foreign (Wyoming) entity in Massachusetts if it owns an LLC doing business here?

@Noah Lomax I wish I could give two thumbs up to your very helpful response. The town is safer than Houston and less safe than Boston. I think the core problem is it isn't that big and going there you don't expect there to be a problem with crime and there is. This is a newer problem all over new England in most small cities because of the opioid epidemic. I don't know if crime is trending down. I will have to check. It is definitely gentrifying and the arts are growing. The restaurant/brewery aspect has been hard hit by the pandemic, and previously very successful restaurants are hanging on by a thread, but that will recover. I forgot to mention that there is a college and a hospital, creating a guarantee of people needing rental property. This is also definitely the case: "If the area draws people that are more comfortable with risks or that has comparable risks to the other places they would consider (e.g NYC vs Boston) then it’s a different story." 

@Paul Sandhu Not Coffeyville. Let me make it clear that I am not offended, but I have lots of friends in the yogic community, which is a big thing now (chanting, yoga, meditation, volunteer work) and not a single one of them is an addict. Many of them are very successful professionals and would make great tenants. Most of them own property. If I put on Indian clothes to go to a special event, I am sure you would think that I am a hippie too. 

@Cheryl Mack very good points. Thank you.