All Forum Posts by: Michael S.

The whole point of an LLC is to keep your LLC assets clearly separated from your personal assets. I would strongly advise against getting the loan originated in your name, and then transferring it subsequently to the LLC. In effect, you have basically demonstrated that the LLC and your personal assets are connected, and have given a lawyer an avenue to drag your personal assets to the table if the LLC is sued.

This thread is a great example of why I prefer to invest in my current city rather than OOS.

There is always unique factors that affect every market that OOS buyers just won't be privy too;  sure, an agent can be a wealth of knowledge (ours is), but there is still something said for knowing the area well.

I find some of the posts from OOS folks on Huntsville interesting, because it shows how little they truly know the market here.  Everyone assumes that houses in 35801 are fabulous due to various websites and experts on the area - there are some parts of 35801 you absolutely have to stay away from, and some parts that the rent changes by $200 to 300/month by simply moving one street over.  But that knowledge can't be gleamed from simply reading about the city or rentometer;  if your agent works mostly in suburb properties, they may not know these nuances as well.  You just  can't replace first hand knowledge of the location you are investing in.  

agree with @Al Pat - we also do not consider any SFH acquisitions that will rent for less than $1000/month. So far, this rule has served us quite well with the quality of renters we have

I would offer to let them out of the lease and move on immediately.  The relationship is fractured, and there is a high chance one (or all) of the following will happen:

1.  They blow up about every small thing that goes wrong (aka dishwasher is too noisy)

2.  They trash the place to "get back at you"

3.  You receive a summons to small claims court

Interesting thoughts.  I don't use the title landlord.  My title is "the dude who doesn't trust his retirement to social security or the stock market".  Not very catchy, but 100% accurate at least.  

For those of us who do not have years of experience in the real estate world, a really good home inspector can potentially save you thousands of dollars...it's unfortunate you had to find this out on your first purchase.  Definitely spend some time looking into other inspectors in your area before hiring someone for your next purchase.  

If it is a prime location in Hazel Green, I'm sure it will rent.  However, I don't think the property will appreciate much, and nothing like the property appreciation being seen in Huntsville, Madison, or even Athens currently.  I am also not as bullish on growth in Hazel Green, but that's just my humble opinion.  

I think checking for a gas leak is a very prudent idea.  If nothing else, it would show the tenant you are taking their concerns seriously.

I would also do a search on the property history;   it's very possible the tenants did this as well, and uncovered something disturbing about the house that is the root of this.  

For those that don't have experience with an LLC, I can't emphasize this point enough - you can NOT co-mingle your personal and LLC holdings whatsoever, otherwise your LLC could be worthless if a lawsuit were to occur. People keep referencing simply flipping their holding into an LLC - it is not that simple. To be done correctly, it needs to be done with a lawyer to show a formal transaction occurred between you (and your SSN) and the LLC (and the LLC EIN). The mortgage can NOT be in your name whatsoever - it must be in the name of the LLC. The bank account? You guessed it - LLC. The LLC must file a formal corporate return, and issue a K-1 to all shareholders. The lease agreement? LLC. You have to cross every T and dot every I to make the LLC "legit" so to speak. Also, your state has the right to audit your LLC to verify you are running it correctly - this happened to one of my colleagues recently.

This is not to discourage anyone from doing LLCs - on the contrary, we have all our properties in an LLC. But we do it by the book and air tight so it is clear the LLC owns and runs the properties.

And no, I am not a lawyer nor am I offering legal advise - LLC terms vary by state, so it is worth the money to verify you have set it up correctly.

I will split the difference here - ha ha.  As @James Lowery noted, there is opportunity in 35805 - however, as @Hamlin Caldwell alluded to, you absolutely have to know the area/neighborhoods. . .a house on one street in this zip could be a cash flow winner, where as the next street over house with the same square footage could be a disaster/cash flow negative.  I would not recommend this zip whatsoever for out of town folks who don't know the city (unless they have folks on the ground here they trust without a shadow of a doubt).