All Forum Posts by: Vince Greenland

Great info James- curious on the type of flooring you are using for your upgrades.   It looks like vinyl plank, is that correct?  Would you be willing to share the type of flooring you are using and where you get it.

Thanks in advance

Are you included as an employee in LLC #2 at $50/hrs?

Also, how are you doing one tax return with 2 LLC?

We have 3 buy and hold LLC's that have properties in blair and Cambria counties. We did 2 flips last year and will do 2 this year. Our accountant is pushing to move to scorp.

Very interesting topic thanks for posting

Thanks what company do you use?

I have a couple of companies that have a significant escrow account for security deposits that seems almost crazy to keep that amount in escrow.  I can't believe large companies with several hundred units carry that in a separate escrow account.

I am located in PA which allows companies to utilize bonds in lieu of escrow accounts. Curious if anyone else uses this technique as I am considering it as well. Thanks in advance for any comments.

Vince

We currently have been in the RE business since 1999 and now have over 170 mixed use units.  We also have been extremely aggressive on paying off our debt and now own several properties free and clear.  This proves to be extremely valuable in increasing our portfolio through leveraging equity with new loans.

However, as we approach the 20 year anniversary on some properties and getting toward the back end of available depreciation, i am still struggling on what is the best approach from a tax standpoint.  

• We would prefer to keep these properties as they have excellent cash flow.
• Some have suggested to take out a loan, however this is troubling to me as we dont need the $$. 
• 1031 exchange is an option, but finding another property is a problem.

Does anyone know a good attorney/tax advisor in PA that has experience with large real estate holdings?

we historically ask for a holding fee when a prospective tenant wants to rent an apartment.  We give them a receipt that states the deposit is non-refundable.

We then hold the apartment until the tenant moves in and the deposit rolls to their security deposit. Has anyone been challenged on this. It seems pretty clear we should be OK however you never know how a judge may rule.

We just had a person back out and is demanding her deposit back. This particular complex was just purchased and had a high vacancy rate. We took over and began remodeling.  The units have been going fast and we have a waiting list and have been adjusting our remodels based on which one has a deposit.

We have met the demands regarding when will be ready, but she doesnt want it now. We feel the deposit should not be returned.Thoughts?

i had sent her the security deposit prior to the hearing. Essentially, she wanted double the security deposit plus September rent back because she thought I changed the locks in early sept.

My argument was her lease clearly showed till 10/31, I kept the apartment for her and did not rent it out till 11/1 and mailed the deposit back within 30 days of the end of the lease.

Judge agreed with me. Good guys won, but i did learn some things regarding early moveouts. I also left my guard down a little, which won't happen again.

Thanks sam and shaun for this situation she did not break the lease except that she turned off then electric a month early. I viewed it that since she paid for October I could not rent it to anyone else. My earlier question was for future tenants that move out early ( say 6 months) and would be breaking the lease. I assumed I had a hammer that legally they owed for the rest of the lease, and would negotiate with them accordingly. Obviously I never went to court and usually came up with something that we both could live with.

Just to clarify, with them leaving early and effectively breaking the lease they wouldn't be entitled to the deposit (although like you i would still try to give them a carrot to minimize damages. but i would need to send the itemized charges to them within the 30 days of surrendering the apartment.

I understand where you are coming from where sometimes it is better to cut your losses and punt, especially with vagrants. however, what is surprising to me is legally it appears that they are not obligated to the lease term.

The funny thing is i am not a newbie. been doing this since 1999 and have over 80 units, just never have run into this. Goes to show you, you still learn something new every day.

Thanks for the replys. Although i am still somewhat confused. if a tenant calls to move out prior to the lease ending and wants to meet to do a walkthrough. I am guessing you do NOT want to do that to make it crystal clear that you are not "accepting" the surrendered apartment. Previously, i had always been willing to do this and begin marketing the property immediately, which helps the tenant because it gives them a release quicker.

i had always thought the lease had governed but now i am not sure. Also, there was no negotiation as she never called, complained, etc. she went right to the magistrate 30 plus days after the walk through but only 7 days after the lease expiration.

the hearing was postponed today and will be rescheduled. i will let you know how it turns out. the main point of my post was what to do in the future if a tenant elects to move out prior to the lease expiration.