All Forum Posts by: Account Closed

I'm not an expert on nonprofit law although I sit on many boards. From the very little I know, my understanding is that the answer to your question will depend on several factors including...

I think you either misunderstood the question or just plain missed it. The IRS defines what is rent expense and what isn't. It has nothing to do with whether you need rental space or not but whether you own the property. I am well aware some board members can be just as clueless about nonprofits or worse. Nothing prevents anyone from renting space to a nonprofit. The water starts getting dirty when the donor and the donee happen to be the same person and you have these attempts to work in all these deductibles in transactions involving disqualified persons.

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Soliciting funds from investors in some cases may trigger both state and federal securities law and criminal charges for securities fraud if they want to get technical. And why are investor funds going into your personal account?

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Before you get into financing, the corporate structure is a recipe for trouble... 3 partners in a rental business, no LLC, written agreement of any sort or attempt to ensure personal liabilities don't place at risk business assets... and you are thinking about taking on more debt and to expand acquisitions to include out-of-state multi units?

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Originally posted by @JJ Mayer:

Question - would love to get a lender's perspective on this...

We have 3 partners that each own a 1/3 interest in our "rental business", but we do not have a formal partnership agreement or an LLC or a Corp set up. So, in effect, we treat it as 3 cooperating sole proprietors.

Now we are looking to take on more debt to expand and buy a bigger, out-of-state multi-unit property. We've had all of our existing properties cash flowing for more than 1 year, so we can show ongoing "business" profits, but how will lenders look at this?

Without a LLC or Corp, will the lenders evaluate the loan request based our individual credit? or will they take into account our good track record?

Thanks!

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Originally posted by @Gulliver R.:

If a mortgage is in my name (for a rental property) can I transfer it into my LLC? I heard via Quick Claim Deed is the way to go. But I just wanted to hear what some mortgage professionals or attorneys have to say about that.

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Adjustable rate mortgages (ARMs) can be risky unless you have a way of knowing what future market rates will be in year 5 of the loan or better yet (and perhaps more importantly), if cash flows will make sense for any type of loan. Your primary concern should be on cash flow.

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Originally posted by @Abad Marroquin:

In my first mortgage, I got 5% fixed rate with a 5 year balloon. After year 5 they will adjust the rate to market level. How could I negotiate better terms next time. I am not banking with them yet. Could that help me negotiate better terms? What other ways could I negotiate better terms next time? Thank you guys!

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Originally posted by @Jonathan D.:

Hi All,

My partner and I have started our businesses flipping homes. We have our main LLC (call it LLC-1) and then each property we purchase and flip gets their own LLC (for risk reasons). We have a general loan for all of our business activities which has been deposited into LLC-1 bank account. When we do work on each flip, we pull the funding from LLC-1 to pay for expenses and track everything separate. So this poses a couple questions:

1. Do we need separate bank account for each LLC we register or can it be centrally managed by a single one as long as we track expenses

2. How do we allocate the interest from the loan as a carrying cost to each of the flip properties?

3. How do we account for overhead and general operating expenses? i.e. we have a business dinner, we pay for cell phones, etc. Since our main LLC (LLC-1) isn't really doing anything (no properties will be associated with it), how do i distribute those expenses against the flip properties?

Thanks!

Jonathan

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Did you say an enrolled agent suggested this? Review the IRS publication regarding rent expense and clarify what you meant by "what do you charge your LLC".

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Originally posted by @Nicole A.:

Hello BP!
I'm a little behind the curve on this, but my Enrolled Agent suggested that I rent my personal home office to my LLC. This way, similar to when I used to rent out extra bedrooms, I can write off a portion of things such as maintenance/repairs.

For those of you that do this, what do you charge your LLC? Something really cheap per month or full-market rent value? I was hoping/leaning towards cheap.

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All Forum Posts by: Account Closed

Account Closed has started 17 posts and replied 170 times.

Post: Legalities of renting to self / Rent expense definition

Post: Tax/Legal Implications of Large Deposits into Personal Bank Accou

Post: Lending to the Individual vs the LLC/Inc.

Post: Lending to the Individual vs the LLC/Inc.

Post: Transferring a note to LLC

Post: How to negotiate better terms with my Bank

Post: How to negotiate better terms with my Bank

Post: Multiple LLCs and Handling Loans/expenses

Post: Renting your home office to your LLC/entity

Post: Renting your home office to your LLC/entity