All Forum Posts by: Douglas B.

there's also the issue of personally secured debts. If you own an LLC but personally guarantee a loan, the LLC will not protect you. You personally owe the money or debt.

Now, there's a whole other angle to LLCs beyond liability. There's the tax angle. It is my understanding that owning the LLC provides tax benefits that would not be available if I just owned properties personally. This is slightly tangential to the main discussion but is a form of asset protection (tax exposure).

@Account Closed , I still think an LLC is important if you have partners or employees. I will likely have both. Plus, the benefits of corporate tax write offs seems good. I don't know what type of investing you do personally, but for me, I think the LLC is the right move. The key now is for me to be a good landlord and not be found liable for ...anything. Notice I didn't say anything about being sued. I probably will be. I'll just it really hard to find me negligent because we will run a tight ship.

Ok, I found the answer. It's all here in the nolo.com article entitled

I cannot verify the accuracy of the information within, but I'm inclined to believe it. I'll summarize the key points:

1. An LLC does protect my personal assets if my partner or an employee is negligent and/or causes the LLC to be named in a suit. Essentially, it protects me from my partners and employees negligent actions.

2. The LLC DOESNT protect my assets if I personally am found negligent and the LLC is sued. This part is important and is the part I didn't know. It is my understanding that if I fail to maintain a property and a tenant falls and is injured, it could be established that I was negligent and therefore I could be held personally liable for damages paid to the injured party. Basically, if I do anything negligent or illegal, the LLC won't protect me. That makes sense, but I guess I always thought (incorrectly) that even if I somehow unintentionally ended up being negligent that the most I could be on the hook for is the max value of my position in the LLC. I was wrong.

So, for a smaller scale investor like myself, it seems like an LLC doesn't protect me very well at all. I guess it's a small amount of protection if my partner were to do something wrong, but for me, personably, it doesn't seem like there's much difference whether I'm in an LLC or not. That might change someday if we end up having employees. Then the LLC protection would become instantly immensely valuable.

For single member owners, it almost seems like you'd have no protections unless you have employees.

I'm not sure exactly how the liability protection works, but I'll be looking into it now. @Sharon Tzib brings up an excellent point: what happens if you're sued: does an LLC protect your personal assets, such as your personal bank account, investments, or home? Maybe someone out there knows the answer. If so, please chime in. Otherwise, I'll be researching and I'll be back with an answer ASAP.

My wife and I decided to partner and form an LLC. My attorney recommended it for our situation to "protect our personal assets". However, she also advised against landlord style liability/ property insurance and simply recommended we get an umbrella policy on our personal home insurance. Without the LLC, I wonder what would happen if we were sued in excess of the value of our insurance limits.

@David Lee that looks like just what I needed. Thanks. I recommend that app for others also.

Thanks Bryan. Anyone else have a formula for estimating repairs? This is very helpful.

@john chapman said in a prior post:

In our area, costs can really vary widely and guys with full time crews can beat my numbers any day. My general rule of thumb is that $10/ft is the minimum amount in rehab. I don't care what a motivated seller says, the place always needs work. $20/ft is a pretty decent rehab (some mechanicals, foundation, paint, flooring). $30/ft is a complete gut job. I emphasize, these are just my rough rules of thumb, and I'd insist on seeing the place first before making an offer and basing it on actual repairs. If they want an offer before you can see it, just tell them you'll assume the worst and your offer will be low as a result. In that situation, I use a $30/foot number.

That's pretty helpful for me as a newbie. I'm sure as I get more experience it'll be more specific. For example, on my third buy, I might say" I've got a guy who will sand, prime and paint for $X

this is a post for the SUB30kCLUB and anyone else who can help.

When buying a property in need of some rehab, what do you estimate for cosmetic rehab costs vs major rehab costs? I know that costs will vary widely by region, who is doing the work, property condition, etc. but I'm looking to get a feel from people about what is a reasonable ballpark for various projects. For example, a kitchen that needs cosmetic rehab such as painting, minor updating, new linoleum floors, etc, might cost $X, whereas a total kitchen overhaul including new cabinets, etc might cost $Y. Same with bathrooms and living spaces.

Let's also discuss major repair items, such as utility costs including separating utilities on a multifamily, new roofs, window, etc.

I'm not a handy guy so I'll be relying on contractors to do the work.

Sharad and Pyrrha, excellent points about using the listing agent and the idea of RETURN ON TIME.

@Troy Fisher , good question.

I will likely be renting to section 8 tenants. Section 8 won't let me collect more than one month security deposit.

Lower income area duplexes.