All Forum Posts by: Larry H.

Do you require renters insurance, and why or why not?

Nick L. That is the worst advice I've ever heard. Apologize for the misunderstanding? If you had an employee who violated a company policy would you apologize to them because they messed up? Absolutely not, unless you want your employees/tenants controlling you and not the other way around. I included the fact that they are low income tenants because there is a different way to deal with them vs high income tenants. I don't mean that I treat them disrespectfully at all, but they will run over you in a second if you give them the opportunity. This tenant has been late twice in 6 months on her rent and tried to skip out on the late fee the second time. This months rent was $20 short, which is why I went there to begin with. She's always trying to scam something, the dog issue is no different. We were going to do a new lease and work with her, but I'm not dealing with her anymore.

I did what Adam did. I didn't swap it over immediately, but I discussed it with the title attorney at closing with our banker in the room and told them that was my intention. I procrastinated on actually swapping it over but it is done now. The original mortgage company sold the loan to another bank so I don't know if it's an issue now, but I'm not asking at this point. I did need to notify my insurance company and add the LLC as an additional insured party.

I don't normally collect rent because we live 8 hrs away from our properties, but last weekend we happened to be there and I collected rent from one of the units. The tenant lets me in and a little dachshund immediately starts acting like he's going to bite my hand off. I ask "is this your dog?" "Yes" was his response. I tell him there are no dogs allowed, but I didn't continue the conversation because he had company over and I wasn't going to discuss it in front of everyone. The lease specifically says in multiple places "no pets." My wife and I discussed it and agreed to allow them to keep the dog and stay there but we were going to charge them a non refundable $300 pet fee plus $25 per month per rent, retroactive to their move in date. I thought that was fair since that's what we are paying in our apartment right now. I call the main girl we deal with and explain this to her and she acted like we were the bad guys and she shouldn't have to pay. I then let my wife call her because I have never dealt with the girl before and I figured my wife has rapport with her so it might go better. Nope. She said our maintenance guy knew about it and she made a verbal agreement with him to keep the dog (which is not true.). We explain to her the maintenance guy does not make decisions like that, then she throws out the "my cousin is a lawyer" response. At that point I tell my wife we are done with her. I don't want her money anymore, I want her gone. She paid in full for April and volunteered to move out at the end of the month. She still has 6 months on her lease. Should I go ahead and start the eviction process in case she decides not to move out by the end of the month? The process is really quick in Louisiana, but if she contests the eviction it could take up to 2 weeks. For info, these are low income, C level properties.

Just to update, I just called my property insurance company and asked them if changing the title voided the policy. They said it did not, but I needed to add the LLC as an additional covered party, just as if I were adding an additional person that needed to be covered.

I still need to find out about the title insurance  

this info is good to know. The title attorney is the person who told us to go the route we did. He never mentioned, and I never thought to ask, about it voiding the title and insurance policies. I will follow up with the insurance company to find out more. 

We tried to do the loan in the LLC name, but the mortgage company wouldn't do it that way.

I got a 30 year, fixed rate, conventional mortgage on both of my 4 plexes, just like you would get on a single family.  It can be done if you choose to go that route.  I believe the conventional mortgage is not allowed when you go bigger than a 4 unit property, but I don't have personal experience with that.

I also know an investor who does not have all of his properties in a LLC, but has some in a trust. I'm not real familiar with trusts and felt better going the LLC route.

With our investment properties financed with a 30 year conventional loan, we had to do the loan in our personal names. We contacted the assessor's office and they gave us a couple forms we had to get notarized, paid another recording fee, and transferred the title into our LLC. The recording fee was only about $80. We have two properties and transferred the title on both of them at the same time.

I asked our CPA about LLC vs Corp. and he told me he would do it in a LLC. He said he wouldn't do it any different than we did. He also told me some attorneys recommend getting a separate LLC for each property. So if you have 5 properties and something happens at 1 of them, the other 4 aren't at risk. I see the reasoning behind it, but we are going to stick with only 1 LLC.

I am currently formulating a plan just like this.  I want to buy a distressed multiplex to rehab then rent, but have no accessible cash.

I think my first plan of action is going to try to get a line of credit on my LLC to buy and rehab the property, then finance it into a conventional mortgage and pay off the line of credit and repeat.

If the line of credit doesn't work I have someone in mind to pitch the deal to.  I was thinking of offering a 7% return on the total money borrowed.  I already own rental property in the area so I know what it will appraise for, what I can borrow, and what it will rent for.