All Forum Posts by: Sara Klaus

Absolutely - I have a client consult at 10, but can chat before then if you're free. 

 Hey Michael!

I'm the broker/owner of Sactown Real Estate Inc & Wild Rooster Property Management - couple of questions for you:

- You mentioned what you think you can get for rent & your net if you sell, but have you talked to a management company or agent for a net sheet? Rents have softened in Sacramento over the last couple of years, so just be sure that you're looking at current & accurate estimates when projecting your income. For your sale estimate: keep in mind that 33% of active listings in the region have had a price drop. If your neighborhood doesn't have a lot of comps (normal right now, with the lack of inventory), you'll want to look at historical data. Most neighborhoods are selling in the fall 2021 range. 

I have a spreadsheet that helps calculate an estimate of net gain over time that I've shared with clients debating the sell vs rent scenario, let me know if that would be helpful and I can send it to you. :) 

Hi Natalie! 

I just wanted to add one other piece of advice here that I didn't see mentioned. It's possible your loan officer had factored this in already, but you will typically need to have a signed rental agreement in order to show that your existing property should not count against your DTI. If you won't be renting to someone you know, it can be difficult to get this as you're transitioning into a new property (hard to sign a rental agreement, if you don't know when the property will really be ready). I would ask your loan officer if they had factored in the funds coming in to offset your existing mortgage. If they haven't, verify that a signed lease agreement will be counted towards your income. From there, I'd recommend reaching out to some of the smaller property management companies in your area. They will have lists of people that have been looking at THEIR rentals and may be willing to help advertise yours for a fee (assuming you want to manage it yourself).

There are also a few community loan programs in Sacramento that would help you qualify with lower income. You'd want to connect with a local broker on that front, but a few of them have programs based on the census-tract you're either selling or buying in. 

Let me know if you need to bounce any questions around! Always happy to help.

I helped a client purchase a property in Roseville (Not Rocklin.. but close) that had an ADU they rented as a mid-term rental. The previous owner exclusively rented to traveling nurses, and they continued to do the same for the first couple of years after purchasing. I may still have their rental data, if you'd like to see it.

The size of your house will make a big difference on your success in Rocklin as well. The clients I've worked with had issues with parties for their larger homes and ended up leaning towards traditional rentals or mid-term. Requiring a longer stay will help decrease your issues with parties. 

We purchased a condo last year in Princeville, HI. It is owned by an LLC Partnership. The property is a leasehold, we pay about $16k each year for the 'ground rent.'

I am interested in purchasing the existing lease from the leasor, however I do not want to refinance and create a fee-simple property at this time. The goal is to finance the purchase of the ground lease, and continue to lease the land to the LLC. I've spoken to a few lenders, and none of had solutions to this. Any suggestions?

That's what I thought before the consult, and was surprised that Anderson said otherwise. They also said that if each LLC (one for each property) is owned by the one Wyoming holding LLC, we'd be able to file only one return instead of doing a return for each LLC. Instead of paying the $800 minimum for each property then, I would only pay it once for the active LLC. I think that was the idea.

My understanding is that I would not own the LLC, the Trust would. So the structure would look like:

Hawaii LLC - owned by Wyoming LLC (holding company) - owned by Wyoming Trust. 

I talked to a business consultant that suggested owning the companies through a Wyoming Land Trust, with us as the trustees. According to them, this avoids the CA LLC registrations. Any thoughts on this?

Thank you, I'll check them out! 

My thought is that if we can't avoid doing business in CA, then we might as well form the LLC here. It's one less hoop to jump through.

We are purchasing our second investment property in Hawaii. Our first property in Hawaii is owned by "Property 1 LLC," which was formed in Hawaii. This is a multi-member LLC. We live in California, and self-managed the property so we had to file taxes in CA as we were seen as doing business in Hawaii. We made some mistakes when forming this business, and we're trying to clean up the situation.

Current Set-Up

Property 1 LLC has business bank account, all profit and expenses go through that account. Tax docs are filed in Hawaii and California.

New Set-Up Plans:

I own an S-Corp that is a real estate brokerage and property management company. We have now opened a trust account for managing vacation rentals, and will pay ourselves a management fee from this account, just like we do my PM business. 

Rental income goes into trust account - expenses paid from this account, including management fee - then owner disbursements will be sent from trust account to owners personal accounts quarterly with these profits.

In this scenario, the LLC is strictly a holding company. Owners are receiving profits based on the rental activity of the property.

Question: Would the LLC still be considered 'doing business' in California? Owners live in CA, but the properties are now being managed by a company rather than being self-managed. Is this a question for a CPA or a business attorney?