All Forum Posts by: Lucas Miles

@Joseph Cipriani the LLC you create will need to be registered to do business in the state in which the rental is located. Easiest way to do this is to create an LLC in the state where the rental is in. I'd recommend having an attorney, ideally an asset protection attorney create this LLC for you. There is a lot of online services that advertise cheap, easy, fast LLC creation, don't fall for these scams. Issue with these is there is a lot of other formalities that have to be in place for the LLC to be formed and maintained properly (good operating agreement, meeting minutes, etc) so that it will hold up in a lawsuit.

@Alec Hilliard each LLCs needs a separate bank account. Make sure to "follow the lines" when taking contributions vs distributions. So if you want to make a contribution to rental 1 LLC: You need to pay your holding LLC, then holding LLC transfers to rental 1 LLC rather than you paying directly rental 1 LLC. To take money out, first transfer from rental 1 llc to holding llc, then holding llc to you personally.

Often people will setup a separate LLC that is the "property management LLC". This is convenient as all your tenants will pay the property management LLC bank account, and you can transfer the money around from there as you need to. Property management LLC is generally owned by you personally (so it doesn't point back to your holding LLC).

The amount of properties per LLC really comes down to your risk tolerance and your risk of getting sued with each property vs the additional costs and complexity of separate bank accounts. If they are SFR or small multi-families having several properties in one LLC is probably preferred. If you get into large commercial one property per LLC may make more sense.

---I'm not a attorney, just my opinions. 

@Dan Ross if you haven't done anything with your LLC, I'm assuming that means the property in your personal name, and not owned by the LLC. If this is the case there isn't any benefit to passing money through the LLC,and although having a separate bank account for your rentals is generally a good idea for organization and make it easier on your CPA at tax time. Single member LLCs don't file their own tax returns, but rather the profits and losses of your LLCs will show on your personal tax return.

The purpose of an LLC is asset protection, whatever your LLC owns should be protected if you personally would get sued, and if your LLC gets sued they shouldn't be able to come after your personal assets. Whether you should have properties owned by and LLC or not is a whole different discussion, lots of posts on BP about this.

@John Lyszcyk I currently use Cozy and it works pretty well. Pros are its extremely easy to setup and easy to use. Cons are its fairly limited to what it can do, and electronic payments using take 5-7 days before they are transferred into your account which is the main thing I don't like. 

I'm in the process of switching to buildium as I wanted the best (IMO) and most advanced software management software I could find, is expensive tho. If your just looking for a more basic electric rent collection and maybe some property management features I'd look into either Cozy, RentRedi, or TenantCloud each have their pros and cons depending on what your looking for.  

@Michael Taylor keep looking for cash flowing, value add properties. With Covid I'm sure there will be more motivated sellers looking to get rid of some of their headaches. Buying a property with occupied with current tenants there is always the challenge to either evict or wait until the lease ends to get rid of problem tenants regardless of Covid. If you can find great deals now I'm sure you will be happy to deal with getting rid of the tenants later. Short term problem to deal with for long term cashflow, loan pay down, and hopefully appreciation.

@Dylan Bruner good to hear your starting out the correctly and spending a lot of time learning before diving into real estate. Real estate (flipping houses especially) has inherit risks, educating yourself through BP, books, podcasts, etc is a great way to start. Build your foundation of knowledge and then get started. At some point you will have to take action to get started! 

Great way to get started is to meet local investors and talk to them about their investing, and learn from them. Take them out for lunch, investors love talking about their investments! Learn from them and understand the local market from the experts. Learn how to analyze deals and finding good deals is key. 

I would reach out to a smaller local bank (probably several actually), and verify that you can get approved for a loan. If not, ask for their criteria and figure out how to meet that criteria. Generally banks will want to see consistent income from the past couple years, along with certain debt to income ratios. I've had better luck talking to commercial lenders rather than residential lenders at a given bank (even for SFR).

I would not generally not recommend using someone else's money for your first deal (especially friends/family), and banks probably won't either. You don't want to ruin a friendship or start with a bad reputation by screwing someone out of money if you aren't successful on your first deal. Save up some money, figure out what investment strategy you would like to pursue, educate and learn that strategy, find a great deal and take action! 

@Nathan G. Thanks for this post, some great information and discussions. On the refundable deposit rather than the pet fee (along with additional rent). Wouldn't refundable deposit give tenants more incentives to minimize pet damages if they can get this deposit back if there aren't damages? End of the day it's the landlords discretion on damages to refund this deposit or not. Curious what other landlords have had success with regarding fee vs deposit.

@Eric Anderson welcome to BP, I'm investing in southern Minnesota, would love to get a VRBO in Alexandria area eventually for cash flow as well as personal vacation use. Been vacationing to the area since I was a kid. Feel free to reach out, always love talking real estate!

@Austin V Nguyen good for you to be thinking ahead at your age and while in school. I wish I would of bought a house and lived and rented it while I was in college! Find a decent property in a good neighborhood close to campus you won't regret it!

@Chad Maschke welcome to BP! Great site to learn and connect with fellow investors. Depending on your situation "house hacking" is a great way to get started if your looking to get into rentals. Buy a small multi family, live in one unit rent out the rest. You can get a FHA loan for only 3.5% down, and u generally only have to live in it for about a year.

If your looking for more active investing, wholesaling or flipping people have success with. Flipping is probably more risky if you don't know what your doing. Finding below market properties is really key!