All Forum Posts by: Michael Lebeau

Hello other local investors!.. I am looking to up my portfolio in the Bristol area by purchasing additional multis (preferably 3+ units). Also open to rolling my current properties into something bigger if possible (10-12 unit). Hoping to connect with local agents including lenders. Thanks!

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Hartford, Connecticut

Originally posted by @Joseph Ambrose:

Wondering the same thing.....next time around can you put the house directly in LLC or does the property have to be transferred from your name?

Talked to my attorney on this one and he said no need to draft up new lease or a lease amendment... just send them a letter saying who to send new payments too and change the lease out when the lease is up.

1 Vote

Update: Went ahead and set up the LLC on my own... forget legal zoom or any other similar sites! Really easy to DIY. I went to CT gov website and filed it, 3 hrs later and 120$ later I got the "Welcome" letter by email. Filed the EIN through the IRS website.. easy!

I did however talk to my attorney and have him switch the deed over to the LLC (Did not want to take the chance of screwing this up) - 150$ for his time and paperwork and 60$ from the clerks office.. so all in 330$ and maybe a few hours of exploring how to set this up on my own!

On top of it I opened my first "business" checking account and will be seeing some money back from that since signing up as a new customer! :)

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I am changing the deed of my 3 family rental to a LLC....finally!... getting my name away from this property!

How do I go about "Revising" the lease? Should I just edit and re-print the lease with updated info (LLC) / payment instructions and have them re-sign and return?

TIA!

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Originally posted by @Kevin Dureiko:

You don't need legal zoom to file the LLC. Walk into the Secretary of State building and go to the second floor.

A nice lady will take the form you’ve already completed from the states website and stamp it.

You’ll pay her $70 and you’ll walk out with your articles of formation.

It’s ridiculously easy.

I set it up online from CT SoS website for $120 and got the approval letter back in 3 hrs! - That was easy!

70$? Is their a next step I'm missing? I know I have to now go through the IRS to get a tax ID number but didn't think that cost anything.

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Originally posted by @Cathie Kovacs:

I just filed the quit claim to move one of my rentals from my name to an LLC this morning. Clearly I see some benefit in doing so.

An umbrella policy or large liability policies will not protect your assets in the case of a discrimination or other such suit, only liability claims. The only thing you can do to insulate your portfolio is to compartmentalize by property into individual LLCs, in my opinion.

I have been the defendant in an unsubstantiated/bogus discrimination claim. If you Google this in Connecticut, the payouts are huge! It scared the crap out of me and I won’t leave my other properties at risk again.

Assuming you're talking about a single member LLC, there are no tax benefits or costs different then you're doing it now. A single-member LLC will still appear on the schedule E on your personal tax return, as before.

Oh wow! Sounds like a nightmare I haven't even considered.. does a LLC cover this? Sounds like you didn't have yours setup when the suit originally came through

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Hello all!

I have been back and forth on the idea of setting up an LLC for 2 rental properties (each 3 units) I currently own. I live in one of the units with my family.

I've been doing some research on pros and cons of setting up an LLC and I'm seeing the cons > pros at least here in CT... I would love to hear some advice from locals if I have any info wrong

The cons I am hearing;

1) Cost - Creating this on my own through legalzoon I'm seeing a minimum startup cost of $525. CT (245$ Annually cost)

2) Lending to a LLC - I read a source that mentioned banks would not lend out to a property that is in an LLC - for example; I took a 2nd mortgage on my 1st property in order to have a down payment on the next property. Would I really be unable to do this again if my properties are in a LLC?

3) Taxes costs - Costs extra to do taxes

Pros;

1) Protection of Assets - I have an umbrella policy on my 2 properties.. would this defeat this benefit? I understand the umbrella is under my name and the LLC would be separated from my name if anything ever happened but what are the chances of a lawsuit exceeding my umbrella

3) Tax advantages - Would love to hear how this is helped others locally

So my real question here to others in CT... have the pros outweighed the cons and how much at the end of the year have you really put up roughly out of pocket to run an LLC?

Thanks in advance for the feedback!

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Originally posted by @Dave Foster:

@Michael Lebeau, Yep the 1031 exchange is the way for you to defer paying tax on the gain from the sale of those properties. It's designed for those who buy and hold investment property as a way to sell and then buy replacement investment property. If you follow the 1031 process then you will defer all tax on gain and depreciation recapture. The process starts with the sale of your old property and you must use the services of a qualified intermediary. But the power to use that tax to buy additional property is tremendous. Of course the devil's in the details of timing and reinvestment.

Thanks! Is this essential a property swap? Like do I have to have 1 property lined up to purchase while having a buyer setup with my current one or does this need to happen within 1 calendar year for tax purposes?

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I currently am researching my options on potentially selling 1 or maybe 2 of my 3 family properties and rolling them into a new/bigger multifamily.

One of the deciding factors is will I have to pay 20%-25% in property taxes if I roll the profits into a new multi-family property?

My initial answer I got was "yes, I will have to pay taxes on all capital gains" - but then I found this - Like-Kind Exchange...

Anyone familiar with this? https://www.irs.gov/newsroom/like-kind-exchanges-under-irc-code-section-1031

Thanks in advance!

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Originally posted by @Nick Payton:

@Michael Lebeau

It can vary greatly based on which town you're in since we're just outside of Philadelphia. I'd say the typical 2 bedroom can go for $1200, 3 bedroom probably arond $1500. I've seen as much as $2,000 for some 3 bedrooms but thats on the high side.

I haven't seen too many 3 units on the market that are appealing as of now. There is one in Haddonfield, NJ that I love but it has already been completely renovated and I would be buying it at its max potential, which I dont want to do. It is on the market for $440,000. I could probably get around $1500 per unit. If I were to live in one of them, that means $3000 per month before the 50% rule and the mortgage alone would probably cost around $3600 per month. Not the right investment, but that's an example.

200k duplex vs 440k 3 family.. thats a huge gap! Don't stop looking though! I bought my 3 family and put months of work in myself. Installing 45 windows, complete demo of 1st floor bathroom and kitchen are just a few to name, and I have very little knowledge in construction. You'll come across properties that are priced right with little work needed.

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All Forum Posts by: Michael Lebeau

Michael Lebeau has started 8 posts and replied 45 times.

Post: Investing in Bristol

Post: Revising an Existing Lease - Name change

Post: Forming an LLC in CT - Worth it?

Post: Revising an Existing Lease - Name change

Post: Forming an LLC in CT - Worth it?

Post: Forming an LLC in CT - Worth it?

Post: Forming an LLC in CT - Worth it?

Post: Like-Kind Exchanges - 1031 - Experience?

Post: Like-Kind Exchanges - 1031 - Experience?

Post: First multi family investment