All Forum Posts by: Ryan D.

Income - expenses = Profit. You pay taxes on your passive income profit at your personal tax rate, doesn't matter if its inside of, or outside of, an LLC. LLC's are called "pass-through entities", which means the profit (or loss) will pass through it (i.e. the LLC itself is not taxed) to you & your person tax returns.

Putting the property in an LLC wont save you any money on taxes - that's just not the purpose/function of an LLC. The function of the LLC is to limit your liability exposure, and in this regard it will ABSOLUTELY offer you a benefit (though there are other ways to achieve the same goal, such as additional insurance, etc).

For example, if someone hurts themselves on your property, they can/will sue the OWNER of the property, and go after the assets of the OWNER OF THE PROPERTY. If the owner of the property is the LLC, and the only asset the LLC has is the one house, then the most you stand to loose is the house (in the event there is a judgement against the LLC). If the owner of the property is YOU PERSONALLY, then a tenant can sue you personally and go after all your personal assets (YOUR house, YOUR car, YOUR bank account, etc). That is what an LLC is for, it is a LIMITED LIABILITY COMPANY.

@Adolfo D. having an LLC to hold your properties will not save you any money in taxes. Using an LLC is for asset protection - limiting liability exposure to only those assets held in/by the LLC, and for corporate structuring. You wont save any money using an LLC, so if that is your sole goal here you should pursue other avenues.

it can also less professional than using a more corporate-type name.

"Bob's fix & flips" will evoke a different reaction from people (banks, other investors, etc) than will "Smith properties" or "XYZ Holdings", etc.

@Tone Church - I'd say the best action is straightforward: factor in the additional monthly cost of insurance into your cashflow/performance analysis, and then see by how much you need to lower the purchase price to still meet your minimum ROI criteria. If this number is realistic, then negotiate with the seller, otherwise walk away.

Invest in sketchy, D-class areas, and you end up with sketchy, D-class tenants and all their drama & headaches. Not worth it.

Absolutely, positively, number 1 rule to being a good property manager - PICK UP THE PHONE! Never ever ever make your clients (the property owners) have to chase you down. If you do this, in all sincerity, you are better than 50% of your competition. You would be shocked how many PM companies don’t answer their phones when the property owners call.

If your lease states no subletting, then the tenant has violated. You don’t need to evict, b/c they have already abandoned the property (it sounds like they never actually took possession of it), so you can reclaim it any time (change the locks). Alternatively, you can confront them, renegotiate the lease terms, and raise the rent accordingly. This seems like a win-win strategy.

I put in all my purchase offers a separate addendum that states the seller agrees to release EM without any further signatures in the event we cancel the contract during the DD period. We learned this the hard way after having to fight for the deposit on a misrepresented property.

Wait - where is San Francisco do houses only cost $650k????