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I'd also recommend talking to a CPA but I would think that by having separate LLCs, if someone sues the LLC you only run the risk of losing the value of the property owned by the LLC as opposed to losing everything owned by a single entity. That said, your/her mentor probably has good arguments on why everything should be kept together and by increasing your insurance you help cover yourself in the case of litigation. But again, you should be speaking to a CPA to make these kinds of decisions. There's a lot to deciding one way or the other that should be discussed with a professional.
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Sep 2, 2015 02:05
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But congrats on the inheritance and my condolences for the loss of your sister. It sounds like you are being very cautious about how to handle this. Continue that and seek the counsel of wise people to protect this windfall.
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Sep 2, 2015 02:37
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Showing the house for a prospective tennant just now and his brand new truck got hit-and-ran. Its a nice area too.
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Sep 3, 2015 22:20
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FlashBewin posted:Trimming this down to avoid needless details... Not sure if it matters or not, but it's in Michigan. When originally setup, that might have been the way to go but I can't imagine it being worth it now.
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Sep 4, 2015 00:48
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I talked to a CPA. Explained my situation, how things are set up now (Condos in LLCs, LLCs owned by INC) And he said that how i have it set up is how they recommend other people to do.
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Sep 4, 2015 03:09
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FlashBewin posted:I talked to a CPA. Explained my situation, how things are set up now (Condos in LLCs, LLCs owned by INC) And he said that how i have it set up is how they recommend other people to do. Can you tell us why it's setup that way and why the CPA recommends keeping it that way?
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Sep 4, 2015 15:58
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My guess is that each house functions as it's own business. Often times when loans are involved you don't want to expose your other holdings in the event one has a serious problem. I'd guess he could theoretically default on one loan and they can't come after his other assets. *This is all just a guess*
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Sep 4, 2015 23:30
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n8r posted:My guess is that each house functions as it's own business. Often times when loans are involved you don't want to expose your other holdings in the event one has a serious problem. I'd guess he could theoretically default on one loan and they can't come after his other assets. *This is all just a guess* Another great contribution to the thread. Why take a guess on something that's a technical issue you obviously aren't qualified to assess? I'll write up an effort post while not phone posting.
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Sep 5, 2015 04:59
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Hell, i'm not qualified to answer that question either. It's how my sister had it set up, and it's how the lawyer recommended to set it up. My understanding, both from the lawyer and other third parties (but not this most recent CPA, he didn't explain WHY--that would have needed a longer consultation) is that each condo is in it's own business, Condo# for corporate veil protections. I have Condo1,Condo2,Condo3,Condo4,Condo5. They are all owned by the same INC. I own/am CEO of the INC. I think that it's a layered defense. If someone gets hurt/condo goes boom/something horrible happens, "They"---whoever They might be--can only go after the assets involved with Condo#, Which at any given time is $Deposit(if there is one involved) + $Rent, if i leave any in the account, plus the actual ownership of the Condo. This protects me because they wouldn't/shouldn't be able to go after the assets involved in Condo#'s or the INC. If nothing else, it protects me---the physical person with a SSN--from being sued for everything i own. This is how it was explained to me. Two layers of defense, the Condo# is one layer, they have to pierce the corporate veil to find out who owns condo# (The INC), and then they have to justify (i guess that's the right word?) to the judge in order to pierce the second layer of corporate veil, the INC, to find out who i really am so that i could potentially be sued.
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Sep 6, 2015 04:46
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FlashBewin posted:Hell, i'm not qualified to answer that question either. It's how my sister had it set up, and it's how the lawyer recommended to set it up.
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Sep 6, 2015 07:45
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The INC comes up with the Resident agent on file, which is my lawyer. I'm not saying I understand why things are set up this way, just that this is why they are. I had informed people telling me that this is the 'best' way to do it, and i'm going with their informed opinions. Presumably the people who told me to do it this way know what they are talking about, so i'd be making a mistake to not listen to them.
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Sep 6, 2015 14:08
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FlashBewin posted:Hell, i'm not qualified to answer that question either. It's how my sister had it set up, and it's how the lawyer recommended to set it up. I totally forgot your do my effort post regarding this. You have it mostly correct. The only issue is that if you're the owner and landlord, anything deemed negligent on your part will absolutely pierce the corporate veil. Another benefit from it is hiding your assets from a shallow dive in records. If you structure it right (this is state dependant based on how you do it) , your name will not be connected in a basic records search, which is all a contingent fee attorney is going to do to see if it's worth it. Always tell tenants that you are the property manager, not the owner. It also buys you time with requests / issues. "Hey, tenant, I'll have to ask the owner if you can have a forth dog. I'll try to convince him/her, but no promises" and then "sorry, man. I tried, but the owner just won't remove his hard limits on dog numbers even for such a great tenant like you"
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Sep 6, 2015 15:14
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Well, the tenants that are in place are paying rent to "Condo#" Whichever condo # is associated with their condo. The condos were in the businesses my sister had/made. Then they were transferred to the 'Estate of....' and that's where the rent was being paid to (the account i opened for the estate) and now the rent is being paid to Condo#. I am their contact for the properties. The LLCs are owned 100% by the INC. I am the CEO (whatever term applies) of the INC. Doing the Michigan business search only brings up the name of my Lawyer.
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Sep 6, 2015 15:37
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In general, what's the best way to recover keys when terminating an agreement with a rental agent? My rental property is in NC, but I'm in CA so picking up the keys myself isn't an option. I can send someone to get them, however is it unreasonable to ask them send me the keys back via certified mail/trackable package? Someone suggested sending a SASE with the certified letter terminating the agreement, however that seems impractical since it can't be tracked. Would I be best served by just pre-printing a shipping label/envelope with tracking and including it?
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Sep 15, 2015 07:24
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Shrimpy posted:In general, what's the best way to recover keys when terminating an agreement with a rental agent? My rental property is in NC, but I'm in CA so picking up the keys myself isn't an option. I can send someone to get them, however is it unreasonable to ask them send me the keys back via certified mail/trackable package?
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Sep 16, 2015 20:20
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SiGmA_X posted:Have whoever is doing the move out walk through pickup the keys at the same time?? Simple enough. If it's really a concern, pay a local handyman to change the locks and send them to you.
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Sep 16, 2015 20:34
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I'm toying with the idea of moving out of state and buying a duplex or two in the next 5-10 years. Would it be better to buy outright or take a regular loan? I would probably have enough to buy one outright and finance another, or finance one or two in addition to a regular SFH.
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Sep 18, 2015 03:00
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FCKGW posted:I'm toying with the idea of moving out of state and buying a duplex or two in the next 5-10 years. Would it be better to buy outright or take a regular loan? I would probably have enough to buy one outright and finance another, or finance one or two in addition to a regular SFH. Depends on your philosophy regarding debt but there's no right or wrong answer. If you pay cash it's yours and your cash flow will be much higher but you are out the cost of the property and your money is all tied up in the house. If you take out a loan, you can keep your cash and your tenants will pay off the loan but your cash flow will be significantly reduced. Personally I'm happy to keep my cash liquid and have someone else pay the mortgage. If buying a $200,000 only costs me $40k I am a happy guy.
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Sep 19, 2015 03:32
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Anyone here got experience with umbrella policies for LLCs? I'm buying a few rental properties with some partners. Each property has its own LLC and its own landlord's policy with a good amount ($1M each) in liability coverage. But we're risk-averse and wary of litigation and would like an additional layer of liability defense. I'm not sure if we should get one umbrella policy that supplements all the LLCs, or one umbrella policy *per* LLC (meaning several umbrellas total), or what. And I'm not really sure which insurers do what we're looking for (I used Farmers/Foremost for the landlord's policy, but they don't do umbrellas for our case). The properties are in multiple states but all in the NYC area, in case that figures. Anyone here ever tried to do something like this?
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Sep 19, 2015 19:50
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If anyone has a perpetually late but always pays tenant and is tired of it here is what I did 3 months ago. My people in one property were getting later and later, and each month with a ridiculous excuse, and I just got tired of it. I took a piece of paper and wrote down each date in the lease with the fee and action step + date. So it was like 5 days late: 25 dollars 15 days late: Eviction filing fee (90) + 30 admin fee etc I called the family up and said we have to talk about the late rent. I explained in the past I have been lazy with the eviction on the 15th day but from now on I am going to the courthouse and filing. And I explained the way our leases work in this state, if I file even if you then pay I can refuse to accept and evict you (in NC you can write the lease where a late payment is a lease violation and you can continue eviction). edit - Side note: I have been told my lease is written this way but I have never actually done this and I am afraid the judge might tell to pound sand anyway if the tenant showed up with the money. I had them sign an agreement stating they understood all this. They have been on time every month since. It feels like you are treating them like children but it is better than a late rent check each month. Ribsauce fucked around with this message at 00:52 on Sep 20, 2015 |
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Sep 20, 2015 00:47
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Ribsauce posted:Good info and good policy. That's a really good policy and good on you for putting it in place. I don't think it gets stressed enough that landlording is a business just like any other. Just like you can't expect to pay your bills late and not incur a fee or penalty you should setup your contract the same way. It lets the tenants know exactly what happens if they fail to meet the terms of living in your home and gives you a policy to point to and follow when they don't.
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Sep 21, 2015 01:03
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Actie posted:Anyone here got experience with umbrella policies for LLCs? I'm buying a few rental properties with some partners. Each property has its own LLC and its own landlord's policy with a good amount ($1M each) in liability coverage. But we're risk-averse and wary of litigation and would like an additional layer of liability defense. Getting even more insurance would just be lighting money on fire for no gain.
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Sep 21, 2015 03:16
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Ribsauce posted:If anyone has a perpetually late but always pays tenant and is tired of it here is what I did 3 months ago. My people in one property were getting later and later, and each month with a ridiculous excuse, and I just got tired of it. I did this to a current tenant and they got better (but not perfect) about paying. Just saying the E word and putting a firm end date on things will really light a fire under most people's asses. I know what you mean about the excuses, there is a breed of tenant out there that will just continually try you with increasingly incredulous excuses and apologies until you put your foot down.
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Sep 21, 2015 05:40
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if you have someone who is habitually bad, it is worth it to make it as easy as possible for them to pay. I am not sure if your bank allows it, as not all do, but if you can get a commercial account that allows ach draft, it's easy on the tenant and you know it is going to draw from their account on the specified day.
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Sep 21, 2015 05:59
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Must be nice to be somewhere that allows late fees. In MA they have to be 30 days late before you can do just about anything. Ninja edit: we can't even take a pet deposit and the security cannot exceed one month's rent.
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Sep 21, 2015 12:38
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Dragyn posted:Ninja edit: we can't even take a pet deposit and the security cannot exceed one month's rent. I ran across someone who mentioned that you should never call it a "Pet Deposit." They said that they charge a "Pet Fee" as an upfront charge and a "Pet Rent" rate of $25 a month per animal. Their argument is that Deposits are refundable but Fees are not. Also that having pets in the home requires a higher level of cleaning so it pays for that service once the person moves out. I don't know if the guy who made the argument had ever been challenged on the wording or not but it might be an avenue you could look into.
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Sep 21, 2015 14:17
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TouchyMcFeely posted:I ran across someone who mentioned that you should never call it a "Pet Deposit." They said that they charge a "Pet Fee" as an upfront charge and a "Pet Rent" rate of $25 a month per animal. Their argument is that Deposits are refundable but Fees are not. Also that having pets in the home requires a higher level of cleaning so it pays for that service once the person moves out. Can't even get away with calling it something else: Massachusetts law prohibits landlords from collecting any money in advance of a new tenancy other than the first and last month's rent, a security deposit in an amount equal to or less than one month's rent, and the cost of installing a new lock. (Massachusetts General Laws, c. 186, s. 15B).
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Sep 21, 2015 15:08
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Dragyn posted:Can't even get away with calling it something else: You can just raise the rent for pets which would not violate that particular statute
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Sep 21, 2015 19:19
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Harry posted:Getting even more insurance would just be lighting money on fire for no gain. Why?
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Sep 21, 2015 19:34
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BEHOLD: MY CAPE posted:You can just raise the rent for pets which would not violate that particular statute It's an idea, but I feel like the conversation would be hard to get away with in court. It would be obvious that your trying to circumvent the spirit of the law if the price suddenly jumps up when we find out about "little Fluffy there, who totally doesn't poo poo in the house, I promise."
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Sep 21, 2015 20:51
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Dragyn posted:Must be nice to be somewhere that allows late fees. In MA they have to be 30 days late before you can do just about anything. 30 days? Realistically how long can someone not pay before you can legally get them out? Are you allowed to deny renting to pets? Tenants with pets usually stay longer, so I wouldn't, but I am just curious if it is legal.
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Sep 21, 2015 23:20
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Dragyn posted:It's an idea, but I feel like the conversation would be hard to get away with in court. It would be obvious that your trying to circumvent the spirit of the law if the price suddenly jumps up when we find out about "little Fluffy there, who totally doesn't poo poo in the house, I promise." No it wouldn't, the spirit of the law is to protect tenants from unconscionable fees and deposits, not to protect pets. Pets cost landlords money and they are not a class protected from discrimination. BEHOLD: MY CAPE fucked around with this message at 23:26 on Sep 21, 2015 |
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Sep 21, 2015 23:24
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TouchyMcFeely posted:That's a really good policy and good on you for putting it in place. You could try doing what my current landlord did. They advertised the place for $X, but my actual lease says the official rent is $X+$150. Then, in the lease addendum, it says that I can pay a discounted rate of $X if I pay on time. I was a bit peeved by this end-around, since they didn't disclose this until after I had put down a security deposit, but I can see how it's good for the landlord.
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Sep 22, 2015 01:19
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Ribsauce posted:30 days? Realistically how long can someone not pay before you can legally get them out? In Massachusetts, all evictions require a court order. A simple eviction takes about 3 months. If the tenant knows how to fight is and is willing to allege you broke landloring laws even if you didn't, they can drag it out a year or more.
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Sep 22, 2015 05:06
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Ribsauce posted:30 days? Realistically how long can someone not pay before you can legally get them out? What SlapActionJackson said, removing a tenant in MA is a herculean feat if they fight you. You can, however, deny renting to pets, but they can claim that the animal is an "emotional support animal" and boom, little Fluffy is in a protected class. Mandalay posted:You could try doing what my current landlord did. They advertised the place for $X, but my actual lease says the official rent is $X+$150. Then, in the lease addendum, it says that I can pay a discounted rate of $X if I pay on time. This is also explicitly illegal in MA, for the record. quote:Late Payment Penalty Why the hell did I become a landlord in this state? (I'll quit whining now)
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Sep 22, 2015 14:19
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Actie posted:Why? Because you have multi member LLCs and have them split out per property. Combine that with the fact that virtually nothing will cause more than a million dollars worth of damages makes it extreme overkill.
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Sep 23, 2015 00:13
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Harry posted:Because you have multi member LLCs and have them split out per property. Combine that with the fact that virtually nothing will cause more than a million dollars worth of damages makes it extreme overkill. Well, I wish this were true, but there are a great number of things that could, in litigation, result in over a million dollars of damages. Is it possible that you missed the fact that I was talking about liability insurance, not premises insurance?
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Sep 23, 2015 15:49
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Actie posted:Well, I wish this were true, but there are a great number of things that could, in litigation, result in over a million dollars of damages. Is it possible that you missed the fact that I was talking about liability insurance, not premises insurance? You've already made up your mind. Go get it.
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Sep 23, 2015 23:51
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Dragyn, have you had to evict someone? If I had to deal with all that I'd just lay a grand in front of them and say "be out in 15 days with no damages and this is yours." It would probably save you 3 grand by the time lawyer fees, missed rent, damages, and your mental energy and time are factored in.
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Sep 24, 2015 02:06
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Ribsauce posted:Dragyn, have you had to evict someone? If I had to deal with all that I'd just lay a grand in front of them and say "be out in 15 days with no damages and this is yours." Not yet, but we're just getting started with landlording, two properties, both have great tenants right now. It's probably not a bad idea.
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Sep 24, 2015 02:07
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