All Forum Posts by: John N.

Some of you might have seen my other posting regarding a LLC with a relative of mine.

She will purchase a house in cash for $35,000 and lease it back to me at $235 per month. The current tenant is paying $800 per month. I will be responsible for the tax, insurance and upkeep (basically I’ll be a property manager). After paying the lease and everything else I keep what’s left. Tax is about $950 per year, I’m figuring about $1,000 to 1,200 per year for insurance. Might be a little low on that number though.

The agreement that we have written up so far is that I can keep maintaining the house, renting it out until a day that either of us want to sell it. At the time of selling, for what ever price I sell it at I return her $35,000 that she invested and again I get to keep the rest.

It sounds like a win-win situation. I know it can get very complicated trying to get lawyers and accountants involved, but since it’s “in the family” I think it should be pretty easy. I’m sure something like this happens all the time.

But looking at my numbers, I should be able to sock away a few hundred per month but the main goal is to get some experience from her since she’s been doing this for more than 20 years.

So, my question is, if anyone would like to chime in and throw some scenarios out there I’d be happy to listen.

Thank you everyone for the input. I'm glad that I've been spending the last 2 years reading books and this forum rather then just jumping right in.

It would be an investment (mostly for the future if and when we sell to upgrade). Money is not a problem and don't need the extra cash for living but it would be nice to get a better truck (can be a used one) or upgrade my phone but my partner says she will not use any of the money for these things unless it's used 100% for the company.

My real goal would be to stock away as much as possible and after a couple of years use some of that money towards another house or duplex and repeat it again in a couple more years.

Here's another interesting question. If money collected as rent is taxed on the company and if I was to take, lets say $50 a month for myself for my troubles and time. Doesn't that money get added to my income? So basically it is taxed twice?

I’ll try to keep it simple and straight to the point.

My mother has owned several rental properties for more than 20 years and I’ve always wanted to use her as a mentor.

We're working on a deal to create an LLC partnership. She will buy a distressed home and I will front the man power and money for all the repairs which might end up being equal to the amount of the house. The plan is to buy, hold and rent it out. I will also end up managing it since she lives out of town.

I feel very comfortable doing this since she is always a phone call away, or a 3 hour drive back to town when a newbie question should come up. I think it’s a good way to get my feet wet.

We'll also open a separate bank account for the LLC which the rent will be deposited and all the repairs/maintenance and taxes will come out but neither of us can or will touch it for personal things.

My question is. How does a person get paid? She’ll be putting up a lot of money up front for the house, I’ll end up putting a lot of money for renovations, appliances and updating and then more of my time to manage the property. She doesn’t need to worry about money, but on my end I need to since I will be putting a lot of sweat equity back into the house and the time to manage, listings, meeting potential tenants and such.

Re-reading my own posting I kind of answered my own question. What I get in return is a great mentor that has been at it for a long time, but just wonder what monetary ROI would be, if any.

Thanks

The cost of cleaning the carpet was in the lease, so that's something that I can not dispute, but when my lease was up they asked for a check since they said it will not come out of the deposit. When I received my deposit back with the itemized list of deductions they subtracted the cost again. It's not much but I think the management company is double dipping by asking the tenants for money when it's already being taken out which I'm sure the company that owns the apartment complex is not aware of.

It's past its 30 day mark, but something I want to know when I become a landlord in the future.

I rented an apartment, then moved out. Rent was paid 2 or 3 days before it was ever due for 2 years straight. I feel I was the perfect tenant.

The management office asked for money to have the carpets cleaned, which I wrote a check. Then when I received my deposit with the letter of deductions I noticed that they subtracted it again plus another $10 for normal cleaning.

I read a blog that was written in '07 that cleaning cost can't be deducted from the deposit, only repairs. Is this right?

I can understand the company that owns the apartment building wanting the money for cleaning the carpets but I think the management company is double dipping and asking for money to clean the carpets.

What are your thoughts on this?

I just bought (in cash) a small 700 sf ft foreclosure (move in ready) for less then the cost of a new car. Plan is to live in it for 2 years (min.) and save for another house or duplex, moving into that one and rent out the first one and the other side of the duplex. Since there won't be any mortgage on the first house I feel it'll kick my income up a notch.

Some questions might need to be asked to an attorney, but thought I could ask here first.

When I buy the 2nd house, can I create a LLC and do a quitclaim deed so my wife is not involved with any work. She's a worry wart and just wants to sell the house for a 1031? Thinks it's too much of a hassle to deal with tenants.

2nd question is when I open up a new bank account for the LLC, can I use some of the funds to buy a used truck? Or am I wrong in thinking that a LLC is like a company and can use the company money for company expenses?

I've already figured a percentage each month for maintenance/repairs, tax and insurance. So what does a person do with the extra money left in the bank account for the LLC when it's not really personal funds to be used?

Thanks for any advice and open to all suggestions.