All Forum Posts by: Rob B.

Hi @Kyleigh Morgan - If you own your property as an individual and someone files a lawsuit against you, then your personal assets may be at stake. However, if you create an LLC, then the only assets at stake are those owned by the LLC. In other words, your rental property is the only asset at stake and not your personal finances.

In addition to separating the rental property from your personal assets, you may also want to separate your rental properties from each other. If you own multiple properties, you can “insulate” each property from liability claims by setting up separate LLCs for each property. If you have all of your properties under separate LLCs, then if someone files a lawsuit pertaining to one of your properties, then the rest of your properties will not be affected by the lawsuit. This effectively separates and protects each of your properties. Additionally, Pass-through taxation is a benefit. 

With an LLC, you get the benefit of the company's income "passing through" to you as the business owner. Essentially, all income made by your LLC (your rental property) will flow through to your individual income tax return. This minimizes the amount of money taken out of your income for taxes.

It may be better to create an LLC before you buy a rental property so you can avoid having to notify your mortgage holder that you are transferring your title to the LLC, in which case they may choose to close the loan and issue you a new loan. Additionally, you'd probably need to notify your tenant that the property is now owned by the LLC and update your rental lease whereas doing it beforehand can save you some of that headache. Lastly, converting the property to an LLC after the property purchase may trigger new taxes, specifically a Title Transfer Tax. 

Just a few things to consider/think through. I hope this information helps! Let me know if you need anything else.

I'm in agreeance with Eric on this. It is all about setting expectations and from the sound of it, this tenant has a penchant for bending the rules. Set those ground rules and use that pet fee per animal to get her on your page, or get her out. Best of luck! @Shel D.

I don't want to pile on too much to what others have already stated; I totally understand what you mean though. It feels kind of sneaky that they'd not mention this but honestly there should have been some sort of contract; yes, it is good that a guaranteed portion of the rent is covered every month via Section 8, however, still frustrating if that wasn't part of your initial equation when you were taking things into consideration. I don't believe there to be any recourse either but feels an awful lot like a major misrepresentation if there wasn't really any information notating the Section 8 contract. I hope everything works out! @David Campbell

Honestly, I am so sorry to hear that you are dealing with this type of situation. Changing property managers can be a challenge especially when one decides to ghost on you with no real sense of responsibility for the people/business he was leaving behind. There are other options out there though and depending upon the number of units you have, you may see a better fit in going with a prop. management software to make the process manageable and easy for you to do (save yourself the 6 - 10% of rent charged + that 1-month rent fee). I hope you're able to get everything sorted out. Best of luck!

Hi Andres! Welcome to BiggerPockets. There are a lot of tools out there which can help to automate some of this process for you (ie. uses the property address to pull that local residential lease, including all of the necessary clauses, disclosures, and pamphlets). If you need any recommendations, please feel free to reach out. Again, welcome to the BP community!

Best,

Robert B.
 

Hi Norma, 

Since it sounds like you provided 30 days notice that you're vacating, the landlord is in the right as far as being able to show the property, they just need to make sure to give you adequate notice beforehand. Having said that, as others have mentioned above, really take a look at that lease. And if you're worried about the landlord keeping your deposit, there are plenty of resources you can use (sounds like Brandon has that covered in his comments above!). I hope things work out! And best of luck on your search for your next rental. @Norma E. Vega Sanchez
 

Hi Anthony, generally no, unless that rental has been on the major listing sites for some time. Usually, the landlord has set a competitive price based on local market rental pricing; you can try, but chances are there won't be a substantial change even if you're able to negotiate them down (and if there is, kudos to you for being able to get that done!!). A landlord may come down on the price if they're afraid they won't be able to secure a tenant prior to peak rental season coming to a close. Still, some landlords have compromised only to have it hurt their bottom line. Best of luck to you with this situation though. I hope things work out for you! @Anthony Triano

All depends upon the lease (as stated above), but also make sure it is in accordance with state law; sure it can be in a lease clause, but if this is something that is stated explicitly in your state law then no matter what language you use, state law takes precedence. I think some of it also depends upon timing (ie. when the infestation happens/became noticable).

In many instances, there's a lot they can do to try and mitigate some of that risk of another infestation happening (ie. sealable, odor containing/closed trash cans, taken out regularly; regular cleaning of the apartment space; ensure food is in tightly sealed containers, even if in the refrigerator; early communication about any standing water or wood rot; wash bedding frequently -  a lot of people eat in bed, and this is an easy way to attract insects and pests because oftentimes most people don't wash their bedding nearly enough). I hope this helps!

Definitely important to make sure you have a dedicated team in place if you decide to invest out of state. Additionally, there are some tools available to you where you can bring a certain level of automation to that rental management process (ie. automatically syndicating a single listing to 10+ major listing sites, thorough tenant screening with full background checks, digital lease creation, automated online rent collection, and maintenance tracking). If you're looking for a recommendation I'd be happy to share more information. @Francisco Jasso

Hi Mike, a good question to think about as you're getting started. I know there are a lot of stigmas attached to renting to individuals who hold Section 8 housing vouchers; it is easier to think through the cons - however, some of the pros might be that you open up the property to a bigger pool of potential applicants. In many instances a large portion of the rent is almost guaranteed to hit your pocket each month - again, this may not cover the full amount but they are consistent payments coming in (paid by the government). Typically the tenants are already prescreened and you're much more likely to have a lower vacancy rate. However, there's always a certain level of risk that you take in accepting Section 8 vouchers and for you, you need to decide how you'd like to proceed - I know a portion of the rent is guaranteed, which is great, but I also wonder if the portion that the tenant is responsible for is considered riskier when compared to non-section 8 tenant candidates. 

Additionally, there are a lot more regulations that you'll have to abide by as far as the level you can set the rent at, and I don't believe HUD pays Security Deposits either. Other downsides to going this route: the process to get the unit approved can be long and tedious; the apartment has to pass section 8 inspection - they are thorough, and go by the book. Section 8 doesn't manage the tenant, so if the tenant isn't paying their portion of the rent it's still your responsibility to evict them. All you can do is report it to Section 8 and there's a possibility they can lose their voucher. I'll defer to others though to keep the pros and cons coming! Still learning about this myself but happy to share what I've learned thus far. @Mike Medhane