All Forum Posts by: William Price

Reviving an old post here.  I recently purchased a property and title is in my name (favorable 30 yr. fixed rates).  @Bill Gulley had a great idea about a sandwich lease (leasing from me to my LLC and then the LLC sublets to the ultimate tenants).

I wanted to ask if I need to notify my insurance company that my LLC is the landlord per the rental agreement or if it doesn't matter to the insurance company since I'm still on title. @Dawn Anastasi - did you end up setting up sandwich leases and if so, do you have to involve your insurance company to make sure the LLC that is acting as the landlord is also on the policy?  I'm guessing the insurance company doesn't need to be notified since nothing is changing with the title.  Thanks for any insight.

Here's a link to IRS Publication 527 that talks about depreciation.  If you scroll down to the bottom, you can see the depreciation percentage for the asset placed in service in November.  As Brandon pointed out, make sure you break out the land and improvements and only depreciate the improvements.

https://www.irs.gov/publications/p527/ch02.html

@Dawn Anastasi - Congratulations!  Great success story!

For those who have your kids involved in the business, if you pay them, you can set them up for tremendous wealth later in life.

For example, if you pay your 12 year old $10/hr to paint, you can take the business deduction, and they claim the income. Let's say you pay them $3,000 for the year for painting and mowing, etc. They have $3,000 of earned income that they can then put into a Roth IRA.

You can actually fund the Roth IRA with a gift to them of $3,000 (their earned income). The compounding effect is pretty amazing (if you put in 3k per year with a 10% return, you'll have $6.7M by age 67 - that's 55 years of savings and contributions). And, it's a Roth IRA so that money will be tax free!

Make sure you check with your CPA b/cs you want to ensure you are doing everything correctly, but it's a great way to build generational wealth!

@Steve Myers - Thanks for the suggestions!  One of the tenants has asked to have these installed for her protection so I think as long as I have the camera pointed out at the street and at her front door I should be okay.  

I'll look into the various options based on your recommendation above and if I have any questions I may reach out to you.  Thanks again for the offer!

I want to have some security cameras installed at a duplex.  One of my tenants has kindly offered to let me piggyback off of her internet.

I'm thinking I need 2 cameras out front, 1 on the side and 2 out back.  Does anyone have any recommendations as to what system to put in place, name brands, cost, etc.  Also,  I'm guessing I need an electrician to install the cameras, but perhaps they are wireless now.  

I'm starting from scratch with the research on this so any insight other can provide would be most welcome.  Thanks!

We are assuming the seller will take the 80K lower offer.  What if they don't go for that.

If they don't take the 80K price reduction, you could offer their asking price; however, you could get the seller to hold a 2nd for 80K.  You could structure the deal with a 20 year note with interest only payments on the 80K and if the city ever requires you to convert, the note would be forgivable or they would agree to pay for the conversion.

A win-win - they get their asking price, but the risk is on them if there is a conversion in the future.  Hopefully they will take the 80K reduction initially and as others have said, you save your cashflow in a reserve account.  If the city requires conversion, you can deal with that problem later - don't let this deal get away from you!

I actually did this on one of my rentals.  I contacted my HVAC guy and told him I was in the market for a new hot water heater and wanted to be proactive.

I let him know that whenever he had some down time or a slow period to add me to his schedule.  He appreciated the flexibility to schedule it in his slower times and I think it has paid dividends because he is always very responsive to any immediate issues I have with heating/AC.  

@James M. - I would have a phone call with the tenants and ask them what they thought about the condition of the carpet.  They may surprise you and tell you that they realize the dog tore up the carpet and it has to be replaced.

If they don't admit any fault by their dog, you can ask them what they think is fair and send them the pictures of the torn carpet and then maybe you can find a middle ground with them.

I just went through a similar situation with my tenants when they moved out (huge red wine stain and water damage from a utility sink that overflowed because they left some clothes in there to soak).  After initially pushing back, they finally agreed to have the carpet replaced.  I think the discussions went better when I asked them what they thought I should do and what they thought of the damage/stains, etc.  

I've had much better luck when I can talk them on the phone and get their buy in as opposed to just deducting from their deposit.

Good luck - let us know how it works out.

Check out IRS Publication 527 (Section 4).  I think this addresses all of your questions above.

http://www.irs.gov/publications/p527

Feel free to post any follow up questions.