All Forum Posts by: Jake Hottenrott

@Eric P. whoa whoa whoa slow your roll on fly over states.  I know you are investing in these areas but still.  Plenty of people in the Midwest have the discipline to save the prerequisite down payments on homes.  The rate of renters in New York City is around 64%, sounds pretty high to me too. There are tons of renters all over, that's why we are all able to have a great forum like this where we can work together to make our lives better.  Sad but true is that you would make a comment like that.

@Peter Aziz being from St. Louis (which I'm sure is similar to other midstate markets) I can let you know that I typically can find investments that are around the 2% rule and cash flow quite well.  The price to rent structure that you are used to seeing is changed because we have a plethora of land still near city/job centers.  I live fifteen miles from downtown St. Louis and we pretty much have cornfields surrounding us.  Prices don't appreciate as much locally (except in pockets around the city) because new housing stock is plentiful and the land to build that housing stock is even cheaper.  We also have a very fractured government with multiple unnecessary layers that can slow and impede development.  

Other things to consider are that St. Louis City can be good to bad by neighborhood and even by street.  There are also a lot of areas where the schools can be terrible, but it doesn't make a difference because the typical tenant in that area doesn't have children but has a nice job and disposable income and the people that have children of school age and are in areas send their kids to private schools.

If you would like to have a conversation more about the area, feel free to connect and I'd be happy to let you bounce ideas off of me and to ask me any questions you have about the area.

@William E. See the attached image for an example from the excel template I send out to my clients.  It has the main categories as drop downs in each month and it automatically totals each month and drops it in the summary.  It makes my life much easier come tax time.

@Daniel Hyman you are exactly right.  Quickbooks is a great program and can be customized to suit nearly anyone's needs.  I prefer to let my clients do their own bookkeeping at first and set them up with a basic system.  That when they understand what is needed and what goes into it when it comes time for my team to take that task off their hands as they grow.

As a CPA at the end of the year, i don't care if it's excel, a sheet of paper or a QuickBooks print out. As long as you have a way to track it and properly file the receipts. The key is for you to have a system that is easy, makes sense and is repeatable throughout the year.

Originally posted by @William Howley:

From a tax perspective my thoughts are.... it is wise to put the future properties in my own name because I will be able to use the building depreciation against my personal income. thus paying less taxes at the end of the year.

If I were to put the properties in my LLC would I be able benefit from the depreciation?

Any thoughts? 

You can depreciate the properties whether they are in an LLC or owned in your personal name and get that benefit. LLC's are used more for asset protection than any additional tax benefits, especially when first starting out.

When I first started out, I wish I had bought the initial properties in my name so I could have benefited from better financing. I also would have purchased a larger umbrella policy ($2M-$5M) as my de facto asset protection. EVERYONE should have a $1M umbrella whether they own properties or not. Then as I outgrew any benefit of financing properties in my personal name, I would have moved to the LLC protections.

Areas for you to look into (or have a real estate attorney look into) that aren't my areas of expertise but I'd like to share (I'll try to find the post I read with this information - 

Some have mentioned that a quit claim deed can potentially set off the due on sale clause of a mortgage.  

Also, a quit claim can make it harder to get a clear title in the future.

Best of luck!

Justin Lloyd the top rate in Missouri is 6%, but yes that just covers state taxes. Talk to a CPA about your specific situation and tax planning.

@Jay Hinrichs as funny as it may sound since this particular project has been a nightmare, I actually have looked into park ownership and think it would be a great addition to my portfolio down the road.

@Thomas S. hits the nail on the head, I was fully aware of the rules, they were posted and I have a copy that I've also sent to all prospective buyers.  The only thing that is a moving target is what the park owner requires to actually get someone accepted and in the park.  This is a well kept senior living community but that is also really limiting my available market for sales.  

Good evening!  I've ran into a little bit of a stumbling block and I'm looking for additional options for my next move.  I appreciate all answers in advance.

I have a signed contract to sell a mobile home but the park owner denied the buyer due to them not meeting their credit criteria.  The buyer offered to prepay the first year of lot rent and have a cosigner (who has excellent credit).  The park owner rejected that offer as well.

Any suggestions on a next move?  Has anyone run into a similar stumbling block before?

@Priscilla Davenport in my Allstate Agency, we work with a lot of apartment complexes and landlords to make sure that their tenants have renter's insurance.  We list the complex/landlord as an interested party so that if the policy is cancelled, they are informed of this action.  The rental insurance amount can vary based on credit/prior losses/value of possessions so I make each tenant have their own policy in place.

@Michael Karl, I'll professionally disagree that it will not affect @Priscilla Davenport if her tenants do not have insurance and she is adequately protected with her insurance.  While I agree she should not collect/pay for tenant's insurance, she should require it.  There are a multitude of situations that can cause landlords headaches if renter's insurance is not maintained by tenants.  If your property catches fire due to no fault of the tenant and their personal property is destroyed, where will the tenant turn to replace that property, you the landlord (headache).  If they cause bodily harm/property damage/loss to a neighbor/neighbor's property then the renter's insurance will step up and pay.  If there is no renter's insurance, the determination of liability can be pointed at both tenant and landlord and left to courts/lawyers to try to decide to cover the losses (headache).  The renter's policy will cover personal losses above the deductible, provide liability coverage and possibly save your renter on their auto insurance.  Protecting your tenant's assets and cash flow is a good business decision for yourself and for them (even if they don't realize it).

@Meghan McCallum that coverage for spoilage of food in the freezer/refrigerator due to a power outage is included in our Allstate policies in Illinois without a special rider, the caveat is that the deductible must be satisfied first before insurance pays so make sure your tenants don't pick the highest possible deductible to lower their monthly payment.  Other states and insurers can be different, so of course work with a referral partner to make sure you have an understanding of the policy you recommend to your tenant and make sure that they are offering the right coverages.

@Paul Amegatcher is right that you don't need a different LLC for each property. Make sure you DO talk to an attorney about getting it structured properly and a CPA to make sure you know not only your income/expense on each deal but also your tax liability and tax minimization strategies to employ before the end of the year. The under $40K suggestion deals more with tax liability than professional liability. With that being said, if I were wholesaling I'd make sure to have the additional layer of an LLC set up.

As far as your liability, don't think that someone can't come after you because you don't have any assets right now.  In New Jersey, you can have up to 25% of your disposable income (anything over 30 times the federal minimum wage/week) garnished.  Again, make sure to structure your entity properly and you may want to look into making sure that your insurance needs are covered with a professional liability policy and a personal umbrella.  If you need a referral for someone in NJ, let me know.