All Forum Posts by: Account Closed

Are you bringing all cash to the closing or are you making this offer contingent on getting financing?

I know we like to laugh about the image of the lazy contingency lawyer looking for the low hanging fruit but I can guarantee if you, an employee, a contractor or anyone on the property on your behalf directly or indirectly causes serious injury to the tenant, or God really help you, a child, the existence of an LLC owning properties mortgaged to the hilt will delight the attorney looking to take the case. Why? Because he/she knows if there is not enough insurance that will be used as proof you failed to operate your business according to acceptable standards. That means if there aren't enough assets in the LLC they can get it pierced and take the assets of the owners.

The absolute best asset protection is to be responsible AND carry adequate insurance coverage. Adequate means what is normal and customary for your business risk profile, your insurance agent can help you.

It works every time, 100% of the time.

You need to read IRS pub http://www.irs.gov/publications/p946/index.html and consult your tax adviser.

Also, you might want to look into separating some items out and handling their depreciation separate from the structure.

Depreciation taken on the structure must be recaptured if you sell it for a profit. If you separate out things like appliances and landscaping using the IRS rules, you might be able to exclude having to recapture some or all of the depreciation you take on those items.

Don't believe me? The rent checks get deposited SOMEWHERE and someone or some entity controls that account. Tax bills get sent SOMEWHERE addressed to SOMEONE and the tax assessor receives payment from SOMEONE or SOME ENTITY. Asset protection is not rocket science but bad asset protection is like strapping yourself to an old Soviet rocket and taking your chances.

You want real asset protection no matter how you choose to hold title? Have a demonstrable record of being a responsible landlord and buy the appropriate amount of insurance to cover your risks. Your friendly insurance agent can help you with that.

With interest, you are renting money. Therefore, you must spend $1 to receive a 35 cent, at most, credit.

You could argue that renting the money to allow you to buy the asset would be a good deal and depending on the rate and other factors, it is very likely I would agree. But, to refinance just to keep the ability to deduct interest is dumb no matter how you try to run the numbers. Other factors may make a refinance the right thing to do, but the ability to deduct the interest is not the driving force a smart investor would use.

Deductions are not all that advantageous. You spend a dollar to get back, AT MOST, 35 cents. If you think that is the way to get rich, let me know, I will do that exchange with you all day long. Well, at least until you run out of money. :lol:

Depreciation is even worse in many cases. Yes, it is a phantom deduction, meaning it does not cost you any dollars out of pocket when you take it. But, in many cases you end up recapturing it at a higher rate than the write off it gave you originally.

Richard is absolutely correct. It is cheap to buy and expensive as hell if you need it and don't have it.

Just say'n. :cool: