|
Adiabatic posted:Anyone have experience with the legal hoops for adding a separate apartment to a property? We're looking at a duplex with a huge garage and would like to look into renovating the garage into one or two apartments. State is VA. I contacted my realtor for resources. He sent me a slew of links on the city's requirements which then had more links to other code stuff.
|
#
?
Dec 26, 2013 22:44
|
|
|
|
| # ? Apr 20, 2024 15:14 |
|
|
Anyone using AirBRB to rent out your place for shorter duration stays?
|
|
#
?
Dec 30, 2013 02:06
|
|
|
SeventhSeven posted:Anyone using AirBRB to rent out your place for shorter duration stays? Doesn't that have terrible implications with regards to your homeowners' insurance since it's a short term rental?
|
|
#
?
Dec 30, 2013 04:47
|
|
|
I'm considering buying another single-family home in a city a couple of hours from where I live to rent out, and would like an outside opinion. The home is a 4-bd SFR in a semi-rural area on a little over an acre of land. It's priced at $360k which, hey! is coincidentally what my first house cost me. The reason I'm considering this home in particular: - The house neighbors my uncle's home, and he would manage the property. He's a good handyman and has lots of contractor friends, so I'd be able to get renovations/fixes done on the cheap. I hope to rent to church friends of their family's so we know they'll be good renters. I've rented to lovely tenants before and I don't want to do that again. I would pay my uncle (if he lets me), but it's nice that he would be the property manager for me since I know and trust him. - The place is semi-rural, down a dirt road right now. However, the area it's in is surrounded on three sides by rapidly developing cities. The county is pushing to be more business-friendly and while the area got hit hard by the recession, it's coming out of its slump and the place is booming with new property development. While my home in San Diego is valued at 90% of its peak price a few years ago, this house (and the surrounding areas) are valued at just 60% of the peak. In my opinion this house is in an area ripe for development with corresponding value increases. However, if the economy crashes again and it stays undeveloped, it might make a nice home to retire to in the future since I would like to retire on a large, semirural property anyway. Financial deets: Savings I have $60k sitting in the bank right now as a possible down payment and could also get a home equity loan on my first home if I needed to cover any unforeseen costs (I owe $250k, it's valued at $540k, so I don't think that's a terrible risk if I need a little extra $$). I have $120k saved up for retirement and will be continuing to max out my IRA and 401k even with this new debt. Cash Flow Right now I make $6k/month pretax at my day job and approximately $8k/month from my side business (this is variable, though). My current mortgage is $2k/month with 14 years left on it, and my expenses are around $3k/month. The new mortgage would likely add an extra $1500-2000 to my expenses, and I'd want to rent it out for $2000-$2500 or so, giving me an 8% return renting it at full capacity. Of course this doesn't take into account tax benefits, etc. I understand that this kind of return is lowish for real estate, and am looking for ways to lower my down payment so that I have more leverage and a better rate of return. Any thoughts?
|
|
#
?
Dec 30, 2013 06:00
|
|
|
SeventhSeven posted:Anyone using AirBRB to rent out your place for shorter duration stays? I have a megathread about this the travel subforum. See the link under my avatar for.... The link. I do it, and love it. We've had 17 people over 3 months and have a 3 month renter starting through the site next week. FrozenVent posted:Doesn't that have terrible implications with regards to your homeowners' insurance since it's a short term rental? Maybe. AirBnB insures up to a million, though, so I'm confident our bases are covered either way.I
|
|
#
?
Dec 31, 2013 01:06
|
|
|
moana posted:I'm considering buying another single-family home in a city a couple of hours from where I live to rent out, and would like an outside opinion. Unless you have the financing already, it's pretty drat hard to get an investment property without 25% down. Which it looks like you don't have. I also think they will instantly reject you for having to take out a home equity loan for it (not sure on that one though). As for the rest, I wouldn't want to be stuck with a house several hours away in a semi-rural area dependent on upkeep from an uncle. I mean, you can take the hit financially pretty easily, but I think there's a much higher chance of it end poorly for relatively little extra cash flow. Harry fucked around with this message at 01:17 on Dec 31, 2013 |
|
#
?
Dec 31, 2013 01:08
|
|
|
Harry posted:Unless you have the financing already, it's pretty drat hard to get an investment property without 25% down. Which it looks like you don't have. I also think they will instantly reject you for having to take out a home equity loan for it (not sure on that one though). Ideally I would hold off on buying another property until I had more cash saved up, but the combination of low interest rates and a depressed valuation of the house (in my opinion) makes it very tempting to me to begin investing now. I want to take my big financial risks as early as possible so I have time to bounce back if need be, and I'm turning 30 this coming year 
|
|
#
?
Dec 31, 2013 01:33
|
|
|
I've got a new one from my renters! The electric bill is too high! Like I'm coming in and changing the thermostat every night specifically to gently caress with their electric bill. They don't speak English, so I'm sure they haven't noticed the fact that the thermostat is fully programmable, so they're probably leaving the heat on at 75 all day long. Either that, or they're running a laundry service out of the house. That wouldn't surprise me.
|
|
#
?
Dec 31, 2013 13:21
|
|
|
So I've begun to catch the landlord bug. I purchased my first home which had an attic apartment with a separate entrance a little over a year ago. I did a few short term leases to see if my wife and I were cool with someone living above us, sharing our driveway, etc. My wife does a lot of interviewing for her work and she has an amazing knack at picking people out. All the tenants have been perfect, and we've had 24-48 hour turn arounds from end of lease to the person signing the next one. We just had a longer term tenant sign up, as we're pretty sure we're fine with it until we need the extra space. As a percentage of the house value based on square footage, we're rocking 4% monthly rent. It's been all sunshine and loving rainbows so far. So we're looking to buy a single family home. Since we just bought our house and we've been putting all the rent money into restoring our house (cool old victorian) we don't have a ton of capital that's not earmarked for retirement or my stock portfolio. But I found a few homes that are nearby us and are in the Fannie Mae Homepath Renovation program. From what I gather, I'm looking at a 15% down payment as an investor (and you can get up to 35k to do some renos). Super long background story is irrelevant, but does anyone have any experience with getting a Fannie Mae Homepath loan/going through the process? E: Details: The property is listed for 42k, and I'd probably want to take 10k in addition to that to make it less slummy Bloody Queef fucked around with this message at 00:20 on Jan 2, 2014 |
|
#
?
Jan 1, 2014 23:24
|
|
|
moana posted:I'm considering buying another single-family home in a city a couple of hours from where I live to rent out, and would like an outside opinion. You'll probably need 20% down to get financing, 25% is for the best rates. As has been mentioned, on homepath properties you can do less after an investor exclusion period. Your numbers are too wide and likely optimistic on both ends. Your mortgage itself would almost certainly be more than 1500$ and that's without even factoring in taxes and insurance. If it were me I would budget 2100 but that's based on just a ballpark estimate, when this is something that you can know precisely. If you rent it for 2500$, and pay 2k even, that leaves only 500$ for all other expenses and your profit. Many months you'll have none but then along comes a month when you have to replace the roof and it costs you 10k which in this scenario is almost two years of profit. Then you have times when it's vacant, which people who do this for a living estimate costs you 8%. The expenses versus income part is only one aspect of the overall return as you mention. Each month adds some amount of equity, in your case probably around 500$ a month initially. Also don't presume you'll have huge tax benefits. While on paper all of my rentals are money losers in terms of the IRS when you factor in expenses and depreciation, there are restrictions on deducting that, that I could take advantage of in 2011, but boned me in 2012. They would bone you also because you can only deduct these loses if your income is < 150k or you or your spouse do 751+ hours of real estate related work. Even in the income case, it phases out starting at 100k and is capped at 25k in deductions. This means, no deduction for the interest, property taxes, expenses related to it etc. The only way this investment would make sense is if it's a long term, basically retirement play where you anticipate losing a few hundred dollars a month for at least 15 years (in theory rents go up but your payment doesn't), to have an income producing property when you are done working, ie when it is close to or totally paid off. As long as you know that's what you're getting into it's fine.
|
|
#
?
Jan 2, 2014 17:26
|
|
|
I have a random question inspired by some bar + property show I watched. (Called Bar Hunters of course.) If you rent a commercial storefront, then put a lot of money into refurbing it for your purposes (like turning a bank into a bar) are those improvements essentially just given to the landlord? How are you protected from them kicking you out and renting the improved property to someone else at a higher rate?
|
|
#
?
Jan 3, 2014 00:44
|
|
|
smackfu posted:I have a random question inspired by some bar + property show I watched. (Called Bar Hunters of course.) If you rent a commercial storefront, then put a lot of money into refurbing it for your purposes (like turning a bank into a bar) are those improvements essentially just given to the landlord? How are you protected from them kicking you out and renting the improved property to someone else at a higher rate? Your lease may or may not cover what happens to tenant improvements which occur during the term of the lease. Landlords will typically pay an tenant improvement allowance, above which the tenant is free to spend on improving the leased space. What is important here is the lease terms and length. If you sign a short term lease without renewal options, the landlord can jack up your rent upon renewal or keep the improvements and lease the space to someone else for more. Between lease renewals there is less lee-way, but upon lease expiry the improvements will typically revert to the landlord and they can do whatever they want with them. With that said, if the bar is a successful business, the landlord will likely increase rents because the tenant would rather stay there than spend the money to move and improve a new space, unless another landlord with a similar property is willing to offer a combination of tenant improvements and below market rents to win a prime tenant. The question boils down to: Is the bar successful because of the location, or is the bar successful because of the superior operations or branding aspects of the business.
|
|
#
?
Jan 3, 2014 02:47
|
|
|
You do have to factor in that commercial space can be vacant for a while and even a quick turnaround will take like 6 months of no rent.
|
|
#
?
Jan 3, 2014 03:13
|
|
|
Dazzleberries posted:This means, no deduction for the interest, property taxes, expenses related to it etc. Just want to add that you can always deduct these expenses to fully offset the income from all of your rental property, but may be limited to the extent that you can deduct these expenses against your other income. If you are limited in what deductions you can take, you get to carry forward any unused deduction for use in future years to offset rental income, depreciation recapture, or capital gains on rental property. Overall I agree with Dazzleberies assessment - this does not seem like a good income producing opportunity, but possibly a lower-cost way to acquire this house or speculate on its value.
|
|
#
?
Jan 3, 2014 03:52
|
|
|
Anyone know any specifics about renting in CA? Santa Clara county in particular (San Jose). I just bought a place and it's got 2 rooms I'm going to rent out as a live-in landlord. This is the form I was going to use, it's pretty generic: http://www.dca.ga.gov/housing/specialneeds/programs/documents/C-2SampleLEASE.pdf I'm having trouble finding details on what I need to include on a California rental agreement though.
|
|
#
?
Jan 3, 2014 20:03
|
|
|
SlapActionJackson posted:Overall I agree with Dazzleberies assessment - this does not seem like a good income producing opportunity, but possibly a lower-cost way to acquire this house or speculate on its value. The tax requirements for deductions I believe I'll fall within next year, since I plan on basically handing over my side business to my unemployed boyfriend so he can deal with all that money. I just got paid $20k for October's sales and will get an extra $10k next month for November, so I'll have a bit more buffer for a down payment by the time anything happens. The other possibility I'm looking into is buying a lot on Maui's west side. My mom's boyfriend has built up a commune in that area so he'd be able to build a house with me paying for materials and providing labor. We're visiting there at the end of the month so I guess we'll see if anything looks promising. I'm certainly not in a huge rush, but with interest rates so low and no other investment type looking good right now, it makes me a little fidgety just sitting on a big pile of cash. And maybe I should be looking into n-plexes for diversity's sake and I'm just nervous since I've never owned anything like that and San Diego's prices are back to pretty high levels. If I'm being really stupid by taking that off the board, feel free to slap me.
|
|
#
?
Jan 3, 2014 23:12
|
|
|
moana posted:Hmm. What do you think should be my primary goal as a 30-yr old hoping to maximize lifetime wealth? My thinking is to take on as much risk as possible early on so that if anything bad happens I can bounce back. I don't need extra income right now, and I don't want to spend lots of time managing a property, which is why I'm shying away from the traditional n-plexes that people seem to like to invest in. I guess I just don't want to be stuck with a rental that I don't want to live in, you know? I'm not sure how silly that is given that I want to hold onto my first home as well. You're thinking in terms of risk is reasonable although I would not advise you to take on as much as possible, but using the leverage you have now, could certainly lead to wealth in the future. In terms of a rental you'd want to live in, is that because you don't want to be a slum lord or something else? You don't have to invest in low end housing to make a profit, you just have to know what goes into making someplace profitable. When I was evaluating properties to purchase, I found that if I could not lease it for at least 1% of the cost, assuming I put 25% down, then generally they were not worth it. Even then the return on my money was only 10%, but in my particular area it is hard to find much better. It is enough to cover property management so you never have to deal with it, and you'd still make money in most cases. What I'd suggest is to just do some reading and start to evaluate properties. I had a spreadsheet where I could drop in the list price, the likely rent, and my expense ratio and it would spit out everything from the mortgage payment, to the profit numbers. You'll start to see what can work and what can't and can decide from there how to proceed. I have never bought a lot to develop but I've been looking and it has it's own set of issues. For example, does it have access to sewer, if not can you even put in a septic system? That's one of the many questions that you need to answer as a contingency on your offer, and to do so will cost you money, regardless of the results. If the land is not feasible to build on, the deal falls through but you're still out potentially thousands of dollars. I've had similar things happen to me on rentals and while it saves me money in one sense, it makes me want to vomit that I spent so much money and was right back where I started.
|
|
#
?
Jan 4, 2014 00:17
|
|
|
moana posted:I'm certainly not in a huge rush, but with interest rates so low You keep saying this but it doesn't make sense. If interest rates rise (doubt it), house prices will fall. Buying houses as rentals has been a really hot investment for a few years now. There's a lot more flipping than you think, and very few people actually hold it for any meaningful time.
|
|
#
?
Jan 4, 2014 01:31
|
|
|
Harry posted:You keep saying this but it doesn't make sense. If interest rates rise (doubt it), house prices will fall.
|
|
#
?
Jan 4, 2014 03:29
|
|
|
adorai posted:I don't think it correlates as well as you are implying it will. There are still many cash buyers, and some people who are selling simply aren't able to if home prices fall too much, keeping those properties off the market. I do agree that home prices do move in accordance with rates, but my house isn't going to lose 10% of it's value overnight if interest rates rise by 1% and either are potential investment properties. In fact, some investment properties may even rise in price as potential homeowners are priced out of mortgages and are forced to continue renting. I never said they'd fall that drastically if it goes up 1%. You sure as hell are going to have a drop in value if they go up to 6% though.
|
|
#
?
Jan 4, 2014 04:14
|
|
|
I think that correlating interest rates to short-term home prices is dangerous to do, especially in the California market. Harry, do you have any outside blogs/articles that you read about rental houses that you'd recommend? I'm definitely a newbie at this. Dazzleberries posted:In terms of a rental you'd want to live in, is that because you don't want to be a slum lord or something else? quote:What I'd suggest is to just do some reading and start to evaluate properties. I had a spreadsheet where I could drop in the list price, the likely rent, and my expense ratio and it would spit out everything from the mortgage payment, to the profit numbers. You'll start to see what can work and what can't and can decide from there how to proceed. quote:I have never bought a lot to develop but I've been looking and it has it's own set of issues. For example, does it have access to sewer, if not can you even put in a septic system? That's one of the many questions that you need to answer as a contingency on your offer, and to do so will cost you money, regardless of the results. If the land is not feasible to build on, the deal falls through but you're still out potentially thousands of dollars. I've had similar things happen to me on rentals and while it saves me money in one sense, it makes me want to vomit that I spent so much money and was right back where I started.
|
|
#
?
Jan 4, 2014 04:24
|
|
|
Depends how much time you have, but there's a thread on Fatwallet that's been active for like 11 years. http://www.fatwallet.com/forums/finance/59627/ Pretty much any site that deals with finances has rental property topics. Here's a good one on 2+2. Spex x goes into pretty good detail early on in the thread so I think it's a good read. He talks a little more about finances than the fatwallet one does. http://forumserver.twoplustwo.com/30/business-finance-investing/ask-me-about-real-estate-investing-99351/ Pretty much every site you look at they all say get a property that actually cash flows positive.
|
|
#
?
Jan 4, 2014 04:39
|
|
|
moana posted:Hmm. What do you think should be my primary goal as a 30-yr old hoping to maximize lifetime wealth? My thinking is to take on as much risk as possible early on so that if anything bad happens I can bounce back. I don't need extra income right now, and I don't want to spend lots of time managing a property, which is why I'm shying away from the traditional n-plexes that people seem to like to invest in. I guess I just don't want to be stuck with a rental that I don't want to live in, you know? I'm not sure how silly that is given that I want to hold onto my first home as well. First, a point of clarification (sorry if this comes across as pedantic): you don't want to take on as much risk as possible, you want high risk-adjusted expected returns and are OK to invest in risky investments to get them because of your time line. They aren't the same thing. "Investing" your retirement savings in lotto tickets would be extremely risky, but it's a terrible idea because the expected returns are so low. So what should you invest in given your high risk capacity (you're financially able to take risks because of your youth and income) and high risk tolerance (you're mentally OK with the idea of risky investments in pursuit of higher returns)? Or more to the point of the question here, is it appropriate to invest in this house given your situation? Learning more and being able to do more in depth analysis is definitely a good start. If you're interested in these because you think the value of the property will go up, recognize that what you really want is to speculate on land values, and that requires a different analysis than the usual cash-flow renal property mindset.
|
|
#
?
Jan 5, 2014 17:59
|
|
|
crazypeltast52 posted:Your lease may or may not cover what happens to tenant improvements which occur during the term of the lease. Landlords will typically pay an tenant improvement allowance, above which the tenant is free to spend on improving the leased space. What is important here is the lease terms and length. If you sign a short term lease without renewal options, the landlord can jack up your rent upon renewal or keep the improvements and lease the space to someone else for more. Between lease renewals there is less lee-way, but upon lease expiry the improvements will typically revert to the landlord and they can do whatever they want with them. Thanks! Makes sense.
|
|
#
?
Jan 5, 2014 18:24
|
|
|
Cross-posting from the home buying thread... Anybody have any thoughts on buying a house to live in myself and rent out a room or two? It seems to me that would greatly speed up the timeline for whether or not it's worth it to buy vs. rent. Is that a completely naive sentiment? I'm aware that being a landlord has its own risks and headaches (in addition to the usual ones that come with home ownership), but it seems like those particular risks would be significantly (not entirely) lessened by renting out individual rooms while still living in the house myself. Some obvious things I've already considered:
What are the other pitfalls I haven't accounted for? Also, anybody have any thoughts on how this would affect the mortgage process? Lastly, would that change the classification of the property for income tax and property tax purposes? (Denver CO if that matters.)
|
|
#
?
Jan 6, 2014 02:32
|
|
|
Cranbe posted:[*]Would only purchase a house that I could afford without any tenants As long as you do that one, none of the others really matter. In theory, you should apportion the house between rented areas and personal use areas to allocate expenses and treat the rental income as schedule E income. In practice, most people with a roommate or two simply wouldn't bother.
|
|
#
?
Jan 6, 2014 05:27
|
|
|
Cranbe posted:[*]Would need to account for the taxes on the rent paid to me First the mortgage process: Your bank doesn't need to know that you plan on renting portions of your house out. Consult your RE attorney, but you're not going to commit mortgage fraud by not telling them of your plans. As long as you're occupying the house, they won't be able to call the loan. Second the Tax bit: This is the best part. Owner occupied income properties have enormous tax advantages, they're absolutely amazing here. For the personal part of your return, as I'm sure you're aware, you can deduct property/schools, mortgage interest, and certain acquisition costs. However, you don't want to deduct 100% of these costs on your Schedule A. You just want to deduct the prorated portion of your personal space. Let's use an example where you have a 2 bedroom house and you decide to rent one of the bedrooms out. To make things easy, all the bedrooms are 250 sq ft and your house is 2000 sq ft (500 sq ft of bedroom and 1500 sq ft of common areas, kitchen, family room, etc). Your personal portion of the house is the 250 sq ft of bedroom you occupy PLUS half of the common areas, so 50% overall of all those expenses would go on your Schedule A, and the other 50% would be deducted as a business. Now since 50% of your property is business property, you can deduct depreciation on that. Here is where the real magic that only owner occupied investors can really get. Let's say you decide you want a nice 60" TV and a big leather couch to put in your common area (not your bedroom) because you want to have a super bowl party. This is a personal use asset that you would buy even if you didn't have a tenant and you wouldn't be able to depreciate it, right? Incorrect. Since it's being placed in a location that the potential tenant could use, you can also depreciate the 50% that's business. Any capital additions or repairs done in the common spaces (which benefit you at least as much as your tenant) are going to be deductible at the percentage of your property that's business use. If you plan on making home improvements or furnishing your house, you should be able to generate a tax loss for at least the first few years. There will be some slightly more complex tax calculations if you decide you want to keep the rest of the house to yourself down the line (potential for Section 1250 Depreciation Recapture) but TVM make those all pretty moot. Speaking of enjoying the tax benefits on a rental property, has anyone done a cost segregation study on their rental properties? If you're not buying an apartment building it probably doesn't make sense to hire a CPA to do it for you, but if you can do it yourself you can accelerate a ton of the depreciation on your rental properties. I'm doing one right now for mine, and while I've done a few at work for clients, I think it's fairly simple to do. And since it's only a timing difference, it's fairly low on the IRS audit tier.
|
|
#
?
Jan 6, 2014 13:02
|
|
|
Has anyone here ever owned a vacation rental near a ski resort? My husband and I had been talking a bit about wanting to build a cabin near crystal mountain ski resort. There's some nice property for sale for a price we can easily afford and I was looking at local vaca rental and it seems like the cabins stay pretty well booked when the owners allow it. Pretty great rate too - Usually $1300 a week for 2 bedroom places. There's land literally bordering the national park so it means nothing more could ever be build next door. Anyway - if anyone has - What were the challenges? Any unusual costs? Are vacation renters worse than regular renters?
|
|
#
?
Jan 13, 2014 20:49
|
|
|
Tigntink posted:Are vacation renters worse than regular renters? Yes. They are there to party and then leave. They have less time to mess it up though. The few people I know usually just have the same clients every year, but that obviously takes a while to build up. Just remember that its probably going to be empty a lot.
|
|
#
?
Jan 14, 2014 01:19
|
|
|
KoB posted:Yes. They are there to party and then leave. They have less time to mess it up though. Yeah, we are looking at the total cost to buy, build, the time we would use it ourselves vs the time we would rent and property management.
|
|
#
?
Jan 14, 2014 01:40
|
|
|
Tony Montana posted:That's 30 bucks, American. Yeah she washed it and dried it and folded it, but gently caress me backwards you cheeky little... I have no other option here, I'm looking at it now but it's probably cheaper to take my washing down to the train, get on the train and go to the next bigger town, do the washing in a coin-op laundry and ride the train back. If it works out even a little cheaper I'm loving doing it because screw you, you rip-off washer-woman.
|
|
#
?
Jan 15, 2014 05:37
|
|
|
So I looked at some properties today and I'm in a weird spot. The home values are 35k, I need about 7k worth of materials and hiring a plumber to run laundry hookups. The area is weird. It's a bit slummy, but not too bad. There are so many foreclosures that the prices are absurdly low. And a decently renovated place rents for $1k a month. So here's my weird position. I need 42k in cash to buy the house and renovate. I can get a home equity loan for about 35 and pay out of pocket for the rest. It's a Fannie Mae homepath, however, and they'll give you a loan for a reno plus the house for 15% or so down. But, no bank will issue Homepath reno loans for sub 50k, at least that I've found. So anyone know of a solution besides suck it up and do the HEL plus out of pocket cash?
|
|
#
?
Feb 2, 2014 01:18
|
|
|
Bloody Queef posted:So anyone know of a solution besides suck it up and do the HEL plus out of pocket cash? Do the HELOC and cash. It's way less trouble. You don't have to suck an underwriter's dick with mountains of paperwork to get a mortgage, you save a few thousand on closing fees, and you can usually negotiate a slightly better price because the sellers and bank know how much less of a hassle it will be. I just did the same thing to buy my second apartment, I closed a week ago and started renting yesterday. Now I'm getting a HELOC on this one that can almost pay for the next. I'm just daisy-chaining HELOCs to keep buying apartments in this building if it keeps working out.
|
|
#
?
Feb 2, 2014 20:40
|
|
|
Zero VGS posted:Do the HELOC and cash. It's way less trouble. You don't have to suck an underwriter's dick with mountains of paperwork to get a mortgage, you save a few thousand on closing fees, and you can usually negotiate a slightly better price because the sellers and bank know how much less of a hassle it will be. I just did the same thing to buy my second apartment, I closed a week ago and started renting yesterday. Now I'm getting a HELOC on this one that can almost pay for the next. I'm just daisy-chaining HELOCs to keep buying apartments in this building if it keeps working out. How many do you need to own before you can change the name of the building? Actually, I've been curious if a town would let you re-name a street if you owned the majority of houses on it.
|
|
#
?
Feb 2, 2014 20:42
|
|
|
With enough lobbying, a government will let you do anything.
|
|
#
?
Feb 2, 2014 20:56
|
|
|
Zero VGS posted:Do the HELOC and cash. It's way less trouble. You don't have to suck an underwriter's dick with mountains of paperwork to get a mortgage, you save a few thousand on closing fees, and you can usually negotiate a slightly better price because the sellers and bank know how much less of a hassle it will be. I just did the same thing to buy my second apartment, I closed a week ago and started renting yesterday. Now I'm getting a HELOC on this one that can almost pay for the next. I'm just daisy-chaining HELOCs to keep buying apartments in this building if it keeps working out. Yeah, you're right. Plus if I pay cash I can put the property in a trust for asset shielding purposes. Beneficiary of the trust would be an LLC, which I would be the sole owner of. Anyone want me to make an effort post about this? Bloody Queef fucked around with this message at 02:44 on Feb 3, 2014 |
|
#
?
Feb 3, 2014 02:41
|
|
|
Bloody Queef posted:Beneficiary of the trust would be an LLC, which I would be the sole owner of. Anyone want me to make an effort post about this? Please do.
|
|
#
?
Feb 3, 2014 04:27
|
|
|
Yes
|
|
#
?
Feb 3, 2014 14:00
|
|
|
 Shielding Assets: It's something the extremely wealthy do and something you as a rental property owner should do too**I am not an attorney and nothing below should constitute legal or tax advice. Please consult your attorney before employing any of the below strategies (you'll pretty much have to anyway) First: Why should you do it? Let's say you own 2 rental properties, you're not Donald Trump, but you've got some serious assets. On one of your rental properties, a tenant falls down the stairs and decides to sue the poo poo out of you. You're protected with an LLC, right? The tenant can't come after any of your assets outside of it, right? Nope. The corporate veil is pretty easy to pierce, especially if your tenant's attorney can prove negligence on your behalf. Stairs were 1/10" too short or too tall for code, carpet was slightly loose, whatever. So back to the tenant, he hobbles on in to an ambulance chaser's office and says that he wants to sue for a million dollars because his leg is broken and it hurts so bad. People in this position mostly are going to use an attorney who works on a contingent fee. So the attorney will run a title search on you, and BAM 2 rental properties and your primary residence show up. He sees that you have money, so he'll take the case! Now you're hosed. If, however you shielded your rental properties (and even your primary residence) the title search will yield zilch, maybe your car (depending on the state and how thorough the attorney is) The attorney thinks you're poor, thinks that you don't even own the tenant's apartment and sends the tenant packing. If he's not going to be able to recover a lot of assets from you, he's not going to take the case for 35% of a few thousand dollars. This scenario also applies to anyone in your life that may want to sue you, but this will NOT work if you're trying to hide your assets from someone that knows you. Your bitter soon to be ex-wife, a business partner, etc are all going to be able to figure out your full portfolio of assets relatively easily, since they know where to look, and they'd get it all in discovery and subpoenas anyway. Okay sounds great: How do I do it? Trusts are great. They're the primary step. This varies on a state by state basis (and you can get trusts in another state, Nevada is popular for this) but the beneficiary of a trust is impossible to find out without a court order. I would have an attorney set up the trust, tell you what type of trust you need exactly for your estate planning and tax circumstances, and he'll be the trustee. Who/what exactly do you make the beneficiary? If you bought the house in cash, it's easy. Make it an LLC/an LLP(if you have partners)/S Corp/whatever works out best for your business case, but don't be the beneficiary of the trust, you do want the corporate veil. If you used a mortgage to buy the house, your mortgage almost surely has a due on sale clause, which would trigger if you put the house's name in an LLC or almost any vehicle other than your name. However, the due on sale clause is NOT triggered by actions for estate planning purposes. You can tell your bank you are putting the house in an trust for estate planning purposes, but you'll have to be the beneficiary, you can't have an LLC be the beneficiary. Great! I just put all my investment properties in the Bloody Queef Trust, and the Beneficiary for each one is Bloody Queef, LLC! Anyone with moderate intelligence will be able to figure out who is the owner of the property. Here's were more strategy comes in. You don't want anyone thinking a business owns since they'll think the business has a lot of money, so Main Street Ventures Trust with a beneficiary of Main Street Ventures, LLC is out. But as above, you can't name it in your name, because that would ruin the whole exercise. So you can use a fictitious name (Ronald J McHengenberger Trust) or even better, the name of the person that was the previous owner of the house! Sounds kind of lovely, and it might be. But if someone is looking at your property's records, they'll see that Jim Smith bought the house 10 years ago, it was bought by some dude, and a day later is now in the Jim Smith Trust. They'll assume it was some kind of complex transaction and think that Jim Smith owns the house. They won't look too closely at the owner for one day, assuming he was an intermediary. In order to keep this up, you're going to have to tell your tenants that you're the property manager, not the owner (which is technically true, because the trust owns the house) Keep each property in a separate trust and LLC as well. This probably doesn't make a ton of sense if you're only going to get a property or two. Note, you probably will not have to file a different return for each trust and LLC, they'll most likely be treated as disregarded entities for tax purposes. Please consult your accountant on this. E: Ask any questions below and I can update the post to clarify things. I'll update the post to make it make sense if it doesn't. Bloody Queef fucked around with this message at 16:46 on Feb 3, 2014 |
|
#
?
Feb 3, 2014 16:39
|
|
|
|
| # ? Apr 20, 2024 15:14 |
|
|
If what you're saying is all accurate, then what's the point of the LLC being designated the beneficiary? If a court ordered is made to reveal the beneficiary of the trust, and it comes back as the LLC, finding the owner of the LLC is at that point trivial, is it not? So why not just skip that step and make yourself the beneficiary? I suppose the answer would be so that you can have one LLC per property, but I don't know, this all seems very easy to get around if you are sued by a competent lawyer.
|
|
#
?
Feb 3, 2014 16:57
|
|