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Maybe just start smaller on your own and work up to a larger multi family. I think a lot of the complexities of running rental property are overblown anyway...particularly for small operations. It's more like just a bunch of normal common sense mundane poo poo. In other news I'm getting ready to combine what I did in a previous career (I owned and operated a residential construction company) with one of my current careers (rentals) to build a set of three duplexes. It all comes down in the city planning & zoning commission, but I don't expect any trouble with that (famous last words). If they don't approve the rezone I'm just going to put very cheap-to-build rental houses on the lots. I'm tired if owning these lots and not getting anything out of them.
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Sep 23, 2017 19:14
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Thermopyle posted:I think a lot of the complexities of running rental property are overblown anyway...particularly for small operations. It's more like just a bunch of normal common sense mundane poo poo. On one hand, I think you're right. Running the two properties that we have is pretty straight forward, especially since we're using property management for the day to day stuff. ...buuuut on the other hand look at the kind of reputation that landlords have developed over time and the kind of horror stories you come across fairly regularly. I can see how someone could get the impression that landlording is not only hard but you have to be a heartless bastard as well.
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Sep 23, 2017 21:41
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The thing with landlording is that it's not rocket science, but you just have to be willing to do the work. There's an important difference between something being complicated and something requiring work, perseverance, and attention. Anyway, what I was trying to get at is that I really wonder what someone with experience can bring to the table when you're dealing with a small operation that can outweigh the costs of partnerships. Landlording/property-ownership 101: 1. Be responsive to your tenants needs. 2. Maintain the ability to pay for repairs and other costs. 3. Make sure you can make more than it costs. 4. Pre-purchase, be conservative in your estimates on vacancy rate and other costs. 5. Bonus tip: I always stand to the side of a door I have to unlock when someone might be home because I don't want someone to shoot me! I don't want to make it sound like owning rental property is easy. A lot of people shouldn't do it because It actually sucks in a lot of different ways, I just don't think the suckiness comes from its nature being some sort of arcane mystery that requires knowing the secrets of the trade. It requires common sense and the ability to be responsive to your tenants needs. The part I hate the most about landlording is lying, lovely tenants. 95% of my tenants I never have any communication with because they're normal adults who pay their rent and don't cause a fuss. The other 5% are: 1. Not paying their rent. 2. Fighting/drinking/disturbing the peace. 3. Breaking poo poo in their apartment all the time. 4. Lonely. 5. Just drama queens all the time. I've been to court for eviction 4-6 times this year and twice people just refused to move until the sheriff department showed up at their door. Usually it just takes an eviction letter, but some people just want to be a pain. Thermopyle fucked around with this message at 00:12 on Sep 24, 2017 |
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Sep 24, 2017 00:06
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I would be very hesitant to use a partner as well, even if they are a friend. My father and his former business partner were great friends and everything was great while the company was doing well, but as soon as serious problems arose and the company started declining, that friendship went into the garbage fast. The other partner didn't want to cut back on his own bonuses or pay when the times were tight, started doing less work, etc. and it ultimately ended with an acrimonious split and the two never talking again before my father died. Even if you and your friend are aligned in goals now, what's to say 5 years from now you are both at different points in life with vastly different goals? If you can do it by yourself, I would highly recommend you doing so.
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Sep 24, 2017 16:26
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Partnerships are like marriages in that respect. With lots of work and the right people they can be beneficial, but the amount of sex often declines as time goes by. (many/most of them go bad even with the best intentions)
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Sep 24, 2017 17:20
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I got a call from the condo association today - my tenant apparently has a live in boyfriend with several cars. They ran the plates after getting some complaints, two are registered in his name using my condo's address, the other is unregistered with the state. I called my tenant, she said he was just her boyfriend who stayed there sometimes. I put it to her plainly - if he doesn't live there, his cars have to go. If he does live there, I have to have him on the lease and have him and his cars registered with the condo association. She opted to put him on the lease. I'm okay with this as she pays rent and doesn't complain. The neighbors are pretty annoyed with his cars though, but I'm lolling at the one guy complaining who has a really lovely fart can Honda Prelude as his family's third car, that I had to listen to his alarm go off every time it thundered or a motorcycle drove by when I lived there. So any advice on terminating the current lease mid cycle and creating a new one to include the boyfriend? Do I have to do that? Or can I just add his name to the current lease and have him sign it?
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Oct 18, 2017 18:32
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I don't know if this is the correct answer (and hopefully I'll be corrected if I'm horribly wrong) but I would just take in a new copy of the lease with the adjusted start date and have everyone sign it. Or you could see if they want to renew for another 12 months (since they're signing paperwork anyway, why not?) and just start the lease all over again. You might take in another document that says something about the new least replacing the old lease but I would think that the lease with the latest dates would do that automatically anyway.
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Oct 19, 2017 11:04
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I was thinking of adding a lease amendment document that says something along the lines of everyone agrees to add this person to the lease and they agree with everything in the lease etc.
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Oct 19, 2017 17:07
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You should be able to find a boilerplate roommate addendum somewhere online and tailor it to your needs. Get new and existing tenants to sign addendum. New roommate added on x date for remainder of current term and is subject to all terms on existing lease. All lessees are jointly and severally liable. I’d get an accounting of who the deposit is owed to (50/50 and/or jointly) in writing. I think it’s good practice to issue the security refund check to all parties anyway, even if it’s a pain for the tenants. Probably a good idea to get new tenants to initial and sign the existing lease, too.
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Oct 20, 2017 00:27
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I'm curious if any of the landlords here have tried any smart home products for their rentals and if so, how did it turn out? The only thing I can think of that might be a benefit (but expensive) would be a robomower to replace a grass cutting crew but they're awfully expensive and not quite ready for prime time. Other than that I can't really figure out anything out that would benefit both the tenant and landlord that goes beyond the "wow that's neat" factor.
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Oct 24, 2017 02:04
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TouchyMcFeely posted:I'm curious if any of the landlords here have tried any smart home products for their rentals and if so, how did it turn out? I've thought about it, but I'm positive most smart home things are too complicated for your average tenant to bother with. Heck, I provide basic wifi at one of my complexes that is nothing crazy complicated and I regret providing it sometimes because of all the customer support it raises merely with connecting.
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Oct 24, 2017 02:12
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Thermopyle posted:Heck, I provide basic wifi at one of my complexes that is nothing crazy complicated and I regret providing it sometimes because of all the customer support it raises merely with connecting. There’s a reason rentals don’t have garbage disposals. Tenants break everything so keep it simple.
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Oct 24, 2017 03:34
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My friend has a rural trailer/cabin a couple hours from his home that he rents out on Airbnb from time to time to help with the mortgage. It's got slow satellite internet & wifi, plus a wifi door lock so he can unlock it for tenants (using expiring codes) or cleaning staff remotely without having to worry about key drop off.
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Oct 24, 2017 04:51
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TouchyMcFeely posted:I'm curious if any of the landlords here have tried any smart home products for their rentals and if so, how did it turn out? Oh man I can just imagine the liability of having a robotic mower operating on my rental property with unknown children and animals possibly present, it makes me shudder to think about doing something like that. Plus of course the virtual certainty that tenants will break or abuse something expensive like that. Only smart anything on my rental property is a wireless lock that can grant access to whomever may need it, for example maintenance or repair people. Wi-Fi locks are on basically every AirBnB I've ever been to at this point.
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Oct 24, 2017 14:41
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Jealous Cow posted:There’s a reason rentals don’t have garbage disposals. Tenants break everything so keep it simple. A complex I bought years ago had garbage disposals and dishwashers. As they broke I took those bitches out. Nothing but headaches. I almost never get comments from applicants about garbage disposals or dishwashers, but people are constantly asking after our apartments with wifi. Though, this particular complex is geared towards low income people so not having a bill for internet is a big deal to them.
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Oct 24, 2017 15:36
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I got a garbage disposal because I'm charging the kind of prices where the renters should certainly expect one... My tip is to get the kind I picked up: https://www.insinkerator.com/us/en/evolution-cover-control-plus-garbage-disposal#76944 The "Cover Control" type is the one where you stick the cover into the sink and turn it. This makes it basically impossible to turn on the disposal while utensils are sticking in the drain, or for some idiot kids to grind their hands off, etc.
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Oct 24, 2017 20:01
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Oh, now that's cool. I have disposals in both of my units and haven't had any trouble so far but if/when I do I'll be replacing them with those. I also don't have dishwashers but that has more to do with the age of the houses than anything else. In other news my wife went and looked at another house today. For some reason the ceiling was short. Like super short. Like the door trim touched the ceiling and they still had to cut 3-4 inches off the bottom of the door to make them fit. We're going to skip that one.
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Oct 25, 2017 01:12
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SpelledBackwards posted:My friend has a rural trailer/cabin a couple hours from his home that he rents out on Airbnb from time to time to help with the mortgage. It's got slow satellite internet & wifi, plus a wifi door lock so he can unlock it for tenants (using expiring codes) or cleaning staff remotely without having to worry about key drop off. This sounds awesome.
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Oct 27, 2017 13:43
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My landlord asked me to look into electronic payments for rent. He is hoping to find one without a fee. He only has 3 units, so scalability isn't really a huge concern. Any recommendations?
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Oct 28, 2017 16:23
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PayPal friends and family, cozy.co, venmo
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Oct 28, 2017 16:44
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The Slack Lagoon posted:My landlord asked me to look into electronic payments for rent. He is hoping to find one without a fee. He only has 3 units, so scalability isn't really a huge concern. If the e-payment system doesn't collect a fee, how do they stay in business? IIRC even big-name credit card companies, which you'd think could survive off of charging interest to their customers, also get 2-3% of all transactions made with the card. My credit union lets me do electronic checks -- I fill out a webform, the recipient gets an email, they plug their account info in, and they get the money. I think something like that is about the best you can hope for for no-fee transactions.
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Oct 28, 2017 17:10
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TooMuchAbstraction posted:If the e-payment system doesn't collect a fee, how do they stay in business? IIRC even big-name credit card companies, which you'd think could survive off of charging interest to their customers, also get 2-3% of all transactions made with the card. They sell data about users and charge for accounts over a certain size.
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Oct 28, 2017 17:38
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lampey posted:PayPal friends and family, cozy.co, venmo The issue with Venmo is that transactions can be reversed by the sender within a couple days, so it can be less desirable if you are concerned about collections instead of convenience.
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Oct 28, 2017 17:38
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lampey posted:PayPal friends and family, cozy.co, venmo Cozy.co collects a fee for CC payments, except they collect it from the tenant. Bank transfers and debit card transfers (IIRC) are free. They make money by charging the tenant for credit and background checks on top of the fee for CC payments.
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Oct 28, 2017 17:42
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When we were managing our own properties we used Cozy. No complaints from the landlord side.
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Oct 28, 2017 21:10
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Has anyone bought a property specifically with giving it away as a gift in mind? My wife and I are debating purchasing a multi-family to use as a way to teach our son the landlording/property management business and, when he turns 18, give to him to do with as he pleases. We're trying to figure out 1) is this a good idea and 2) if it is, what's the best way to go about it? Just buy and keep in our names and then gift it to him, put it into a trust and hold it, or maybe there's some other option we're not aware of that would be worth looking into.
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Oct 29, 2017 17:08
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TouchyMcFeely posted:Has anyone bought a property specifically with giving it away as a gift in mind? If you want to teach him about owning rental properties you sure as poo poo shouldn't be teaching him that holding one in your own name is a good idea. You should be forming a corp to own and operate it. You can hand over the corp if and when it's time.
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Oct 29, 2017 18:30
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TouchyMcFeely posted:Has anyone bought a property specifically with giving it away as a gift in mind? Wouldn't gifting it to him trigger a massive income tax hit? Talk to an accountant maybe?
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Oct 30, 2017 03:18
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devicenull posted:Wouldn't gifting it to him trigger a massive income tax hit? Talk to an accountant maybe? For whom? Receiving a gift is tax free. Giving one is also tax free if you're under your $5.49 million lifetime. You can even get more out of that if you give under $14k a year per person which does not count towards your lifetime max. At no point does the receiver have "a massive income tax hit".
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Oct 30, 2017 03:27
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Motronic posted:If you want to teach him about owning rental properties you sure as poo poo shouldn't be teaching him that holding one in your own name is a good idea. This is poor advice for most people and offers little protection. A liability policy and umbrella insurance protects you from losing your home if you are sued
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Oct 30, 2017 07:58
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lampey posted:This is poor advice for most people and offers little protection. Could you please explain this assertion in detail?
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Oct 30, 2017 14:27
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Motronic posted:Could you please explain this assertion in detail? Talk to an attorney in your state, blah blah blah, but in general if an LLC exists for the sole purpose to shield assets and protect the owner against liability, and it is a single or limited member LLC with assets and liabilities personally guaranteed by the owner, the protection will be quite limited if challenged. If you are the typical smalltime landlord with a handful of properties acting as an owner/property manager and personally guaranteeing all your mortgages, holding all of your properties in an LLC is much less meaningful than having substantial umbrella protection. This is the advice my attorney gave me as both a smalltime landlord and a high earning professional.
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Oct 30, 2017 14:33
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TouchyMcFeely posted:Has anyone bought a property specifically with giving it away as a gift in mind? Seems like not that great of a gift quite honestly, why does he have to own the property in order to learn how to manage it? If he's not interested it is a huge expensive albatross to deal with and presumably there will be a lot of money tied up in this building that could be used to do something else he may want to do at age 18, for example go to college or start another business or get a jumpstart on his retirement. Also having a title to a multiunit rental property handed to you by your parents doesn't exactly teach you the business of RE investing but it might make you a good property manager at some point.
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Oct 30, 2017 14:37
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BEHOLD: MY CAPE posted:acting as an owner/property manager and personally guaranteeing all your mortgages So what you're saying is that the corporate veil doesn't work when you pierce it. Yeah, I think that's pretty well understood.
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Oct 30, 2017 16:31
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Motronic posted:So what you're saying is that the corporate veil doesn't work when you pierce it. Yeah, I think that's pretty well understood. Well yeah, but you acted like "well duh you idiot you need to incorporate" which doesn't really demonstrate that you understood it. The reality is that in many, maybe even most, circumstances people are just as well served by insurance. (talk to your lawyer and accountant)
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Oct 30, 2017 16:56
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TouchyMcFeely posted:Has anyone bought a property specifically with giving it away as a gift in mind? My mom has a duplex that she rents out and pulled my brother and I into the maintenance of the property when we were growing up. Have it as another set of chores/employment for him to help you take care of the them and just tell him that he'll end up with the places one day. The exact ownership structure I would say is a lawyer question to do it in a reasonable manner, but unless he is going to go to college near home, don't put the property in his name unless you are going to be transferring piles of assets over the years and want to do it while they have lower values (this is probably also an estate planning question). 18 years seems young for that, if you are going to give him the property I would say 25 or graduating college are two benchmarks that would work better. My parents keep me in the loop on their estate planning and if anything happened to them while I was younger, 25 was going to be the age things came out of trust. Thankfully it didn't come up, but 18 seems kind of young to transfer significant amounts of wealth to kids. Your friends with older kids may have or start having stories of transferring wealth too young, with the kids buying corvettes and dropping out of college, so the two pieces of advice my parents got were tie it to later in life and don't make it enough to get addicted to anything good.
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Oct 30, 2017 17:19
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Motronic posted:So what you're saying is that the corporate veil doesn't work when you pierce it. Yeah, I think that's pretty well understood. Apparently, actually it isn't, because there are thousands of smalltime landlords out there handling all of their own business thinking that they are immune from liability just because they have their properties titled in an LLC. As always, seek advice from an experienced attorney in your state and buy inexpensive umbrella insurance.
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Oct 30, 2017 17:45
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BEHOLD: MY CAPE posted:Apparently, actually it isn't, because there are thousands of smalltime landlords out there handling all of their own business thinking that they are immune from liability just because they have their properties titled in an LLC. As always, seek advice from an experienced attorney in your state and buy inexpensive umbrella insurance. No doubt, but that's because they have poor legal advice or none at all because they formed their LLC with a legalzoom template. I'm assuming a base amount of care, knowledge and due diligence from people in this thread. Perhaps I shouldn't.
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Oct 30, 2017 19:33
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Motronic posted:Could you please explain this assertion in detail? There is value in protecting investment properties with an LLC, but I don't think it is worth it for small time landlords. If you own many properties and you can get financing based on the rental income instead of your personal DTI it would make more sense to protect the property with an LLC. If you have substantial assets outside of the property Owning the property in an LLC could be the difference between a lawyer taking a case to sue you on retainer instead of on contingency, or it could discourage a lawsuit entirely. This isn't going to stop someone with significant damages. In many states owning a property in an LLC requires you to use a lawyer to handle evictions instead of showing up yourself in court. The setup and yearly fees will vary from state to state but they are non trivial. In CA it is $800 a year plus some other fees to maintain an LLC, and most other high population states are $300-$500. To avoid piercing the corporate veil requires extra care with your finances, not having a mortgage that is paid from your personal income, not using the business income to pay for personal expenses, not commingling other assets, potentially extra work at tax time. It is complicated to finance a property in an LLC. You could buy a fourplex with 3.5% down as an owner occupant, but as an LLC you would need 20-30% down, and you will get worse interest rates. If you are grossly negligent you can still be held personally liable for any judgements. If you are personally managing the property you could be personally liable for something like a slip and fall because you failed to maintain the property. Illegal eviction, fair housing violation, slip and fall or other personal injury, lead paint posioning, and other lawsuits will be well under the insurance limits unless you were grossly negligent. Single member LLCs can be liquidated if you are personally liable in many states. Catastrophic liability like this that an LLC protects against relatively rare so it is not worth the cost of forming an LLC for small time investors
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Oct 30, 2017 20:27
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Behold: My Cape posted:Good info against You make a good argument but our thinking is that a rental property with 18 years of equity (or more depending on timing) offers more opportunities than just handing him cash. If he's not interested he can always turn around and sell it. But if he hangs onto it he can live in it while going to school or if he doesn't go to school in the area or at all he'll at least start off with an income stream and a trade that he wouldn't have had otherwise. crazypeltast52 posted:Good info for We wouldn't be putting it in his name, but likely into a trust. Your recommendation to speak to a lawyer is on out to-do list. I was just curious if anyone had gone down this road and might have some tips on things to make sure you ask, avoid, etc. Thanks for the additional thoughts and feedback. It's worth considering and we'll keep it in mind.
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Oct 31, 2017 02:00
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