Landlording & Rental Properties

Pros and Cons of Old vs. New Rentals

Expertise: Landlording & Rental Properties, Personal Finance, Personal Development
28 Articles Written
Brand new houses just after construction on real estate market.

It’s no secret that old houses require more TLC than new. But that’s not necessarily a reason to avoid them.

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If purchasing a property to rent, investors have to think about more than just maintenance, though. In some cities, rental properties need to pass inspections and thus may need even more updating than an old property you’d buy to live in.

As someone with experience buying old and new homes, here are my thoughts and considerations, which depend greatly on how you purchase the property and for what purpose. The reigning advice is to ALWAYS get an inspection and consider purchasing home warranties—on older properties especially.

Considerations When Purchasing Old or New

Settling/Foundation Issues

Older houses have issues related to settling that hopefully previous owners haven’t neglected. There are ways to combat issues related to settling, such as installing joists. Sometimes these fixes can be a relatively cheap way to maintain the structural integrity of the house. Other times they can be very costly.

New houses aren’t necessarily “safe” in this regard, either. They are in the process of settling. This is one reason you should always get an inspection, whether the property’s new or old.

Additionally, many older homes have poor gutter networks, if any at all. This allows water to penetrate the foundation and possibly create cracks. There are remedies to fixing foundation cracks, but again, they can set a buyer back unexpectedly if they aren’t aware of it.

Toxic Chemicals

Unfortunately, toxic chemicals are usually present in houses built before 1978.

Oftentimes, you’ll find waivers where owners choose not to inspect for lead-based paint and claim no knowledge of its presence. In fact, in all the deals I’ve done, I’ve yet to find an owner who has wanted an inspection for lead-based paint, as mitigation and removal methods can be costly.

If you purchase an older property with the intent to renovate it, be aware that it’s likely you’ll find asbestos. It can be in the walls, the flooring, you name it. Mitigating asbestos exposure can also be expensive, so the presence of this toxin is something you’ll want to know about prior to purchase, too.

Fortunately, asbestos and lead paint were banned and are not present in new construction.

Related: The Simple 6-Step Process for Estimating Rehab Costs

home renovation with electrical wires

Electrical

It’s not uncommon to find outdated and even dangerous wiring in older houses. Knob and tube wiring was frequently used in late-1800s/early-1900s homes. But if maintained properly, these materials are still safe.

What are the chances, however, that the home you purchase has always been maintained properly? Again, inspection is key.

Plus, changes in electricity demand may create a need for an updated electrical panel and/or wiring regardless. Outdated electrical should therefore be a safety concern, so upgrading is highly recommended (and in some cases required).

Unsurprisingly, the cost of these upgrades can add up quickly.

New construction outfitted with modern electrical panels offer peace of mind in terms of electrical fires and a steady flow of electricity to prevent power surges, blown fuses, tripped breakers, etc.

HVAC

HVAC concerns pertain particularly to multifamily housing. In some cities, owners have to replace an outdated HVAC system that’s servicing the whole building with separate vents, electrical, etc. for each unit. Be sure to look into and comply with requirements.

I purchased a duplex that had one HVAC, unaware of the fact that when it went out I would need replace the single system with one for each unit. That would’ve been even more expensive had I not had a warranty (see below for more on warranties).

Newer homes sometimes come with cheap appliances, so it’s not always the best way to go, either.

I have two townhouses that have AC calls every summer because the contractor used cheap alternatives. Again, being aware of what's in the home you purchase is crucial.

Opportunity’s in Your Corner

Cash Flow

I’ve purchased many older homes and given them a refresher before renting them out. There is so much opportunity in these old homes—the cash flow can make it all worth it. But before getting started, perform an analysis to ensure that once you’ve completed the updates you intend to do, you’ll have equity in the home. Otherwise all of your work will amount to little.

Warranties

This is possibly the most crucial aspect of buying an old home. Most home warranties cost $400 to $600 and cover appliances, HVAC, plumbing, and electrical.

Of course, there are things they won’t cover. However, in my experience, older homes (which have often been neglected) have ended up paying for themselves within just a few months.

So, Which One? Old or New?

Honestly, it depends on your portfolio, location, and general market. Certain locations have plenty of older homes (most often seen in or near college towns). And some markets are way hotter than others.

I’ve invested in slow markets with extremely cheap, neglected older homes. Some of my markets have extremely expensive, mediocre older homes. I’ve purchased plenty of new homes, as well.

Brand new houses just after construction on real estate market.

Related: It Might Be Time to Switch Your Niche to New Construction – Here’s Why

In my experience, it comes down to the numbers. Get an inspection so you know what you’re getting into labor-wise and cost-wise. Think about:

  • How much will you cash flow?
  • How much time and effort will need to go into maintaining the home?
  • How often do you anticipate tenants contacting you with issues?

I’ve remodeled older homes and rented them out, only to have a string of little things that tenants wanted fixed over the next few months. It’s not uncommon; take it into consideration.

Does it mean the house will forever be a nuisance? Absolutely not. It’s simply that buying older homes may come with additional work, depending on how well they’ve been cared for in the past and how well you care for them going forward.

And let’s face it, new construction can have its own set of issues. Regardless of whether old or new, real estate can be an extremely great opportunity with fantastic returns on investment.

Why do you want to wake up earlier? What’s standing in your way? 

Leave a comment below.

A longtime writer and consumer of all things related to the FIRE (financial independence retire early) movement, Sarah went from working 50+ hours a week to less than 20 thanks to her real estate investment portfolio and side passion projects. Investing since 2015, she reached financial independence in 2016 and was able to retire in 2017. Articles about her journey and information about her current projects have been published in LinkedIn, BiggerPockets, Kiplinger, and many other financial news sources. Prior to the FIRE movement, Sarah worked as a Program and Acquisitions Manager on various projects and started a successful, world-renowned non-profit organization. Today, she uses these skills as a real estate consultant to help others reach their FIRE-related goals on a regular basis.

    Angelou Masters Investor from Oakland, California
    Replied about 1 year ago
    I see the series LLC can be an excellent way to protect yourself from lawsuits or reduce your liability. But is it also true that once you own more than a couple of properties especially rentals it can get quite expensive because of the $800 filing fee per year for each LLC and the cost for your accountant or CPA to file income tax for each? I’m sure that if any of us were sued we wouldn’t care about the $800 filing fees but some investors on BP own dozens of rentals and/or do dozens of flips per year. Your thoughts? Thx
    Scott Smith Attorney from Austin, TX
    Replied about 1 year ago
    Hi Angela, This is a common concern but the good news is that the Series LLC has a one-Time filing fee—you do NOT need to pay the filing fee to create a child Series. Sally used a Texas Series LLC, which can be used by investors in any state. She paid a one-time filing fee of $300, but can create as many series as she likes at no additional cost. We made her first one and handled the property transfers, which most legal professionals do charge for. But she also doesnt have to pay taxes on the Texas SLLC. The only requirement is filing “no taxes due” with the state Comptroller annually. Some investors pay for this service to be taken care of for them; others do it themselves. So setting up the entity is the only time you pay a filing fee—at least in Texas. Other states may have different fees, but this is one reason I love the TX SLLC. Delaware is also a great choice. You mentioned $800–does that mean you are in California?
    Angelou Masters Investor from Oakland, California
    Replied about 1 year ago
    Yes I am in California. I will check the requirements for my state. The series LLC would be an excellent tool for me I’ll go and read your other articles and look forward to reading your future articles. Thanks for educational lesson.
    Scott Smith Attorney from Austin, TX
    Replied about 1 year ago
    Angelou, I’d actually recommend the Delaware Statutory Trust for a California resident. California has specific and far-reaching legal requirements for real estate investors, and even more red tape for out-of-state entities. The DST confers many of the same benefits as the Series LLC. In many ways, the DST helped set the stage for the birth of the Series LLC. And I’m happy to help. Thanks for your thoughtful comments.
    Isaac Agbolosoo Rental Property Investor from Grosse ile
    Replied about 1 year ago
    What’s the process of setting up a series LLC with trust? Why not a living trust instead of anonymous Trust? Filling fees are costly, what state will you recommend?
    Scott Smith Attorney from Austin, TX
    Replied about 1 year ago
    Hi Isaac, Texas is my personal favorite for reasons I mentioned in the comment above. You can use an agent trust, but anonymous land trusts confer the benefit of additional anonymity. The point of using an anonymous trust is to conceal ownership of the Series LLc structure (individual anonymous land trusts may also secure the assets within the child Series). Most states require the members and managers of the SLLC to be listed on the public record. The benefit of ownership with an agent trust is that when someone searches the record, they see the name of the trust and nothing more. Anonymity makes you even more difficult to sue. An opposing lawyer who sees this type of ownership will usually give up. Why? We like easy paydays. If there aren’t any juicy assets to seize upon judgment, that lawyer can only get paid if the client fits the whole bill. Since this structure is so difficult to pierce, it effectively stops the lawsuit before it even starts. Does that make sense? You can look forward to my upcoming article on my top picks for which states to form your SLLC in. It will spell out the specific benefits for Texas, Nevada, and Delaware. In the meantime feel free to check out my previous article on using trusts to disguise company ownership. If you click my name at the top of the page, it will take you to my previous BP articles. Thanks for the comment and I hope that helps!
    Ashley Pimsner Rental Property Investor from Saint Charles, IL
    Replied about 1 year ago
    It would be informative if you mentioned why opposing attorney did not pursue case and also further explain the benefits of what I assume is a land trust which assigns beneficial interest to serial LLC. What is risk of serial LLC and what is necessary for owner to perform so you don’t risk opposing attorney piercing the corporate vale? How is trust anonymous through use of a registered agent? Details are important to BP community so we can educate ourselves and protect our investments. This is a great article that could allow us to dive deeper into the benefits of asset protection and your services. Thanks for a stimulating discussion.
    Scott Smith Attorney from Austin, TX
    Replied about 1 year ago
    Hi Ashley, thank you for your kind comment and thoughtful questions. I’ll take them in order and stay on me if I miss anything. The other lawyers might not love me answering your first question, but I aim to please. Here’s the inside scoop: the first thing a lawyer does when a client comes in with a case is check out the defendant (Sally in this case—but it Could easily be you given 90% of us investors are sued in a 20 year career). Anyone can run a public records search to see who owns the property. If it’s in your name, you’re getting sued—because that asset is tied to you and therefore easy to seize in the event of a judgment. It’s hardly a state secret that attorneys love money, and look forward to payday. Most RE suits aren’t paid out of pocket by the plaintiff. Judgment and seizure of assets is where the big payday comes from. I worked in litigation before transitioning into asset protection, and can tell you this is one of the first thing any attorney checks. But an opposing lawyer who sees that an SLLC owns the property will usually give up. Why? We like easy paydays. If there aren’t any juicy assets to seize upon judgment, that lawyer can only get paid if the client foots the whole bill. Since this structure is so difficult to pierce, it effectively stops the lawsuit before it even starts. Traditional LLCs Do not compartmentalize assets and have many established methods for being pierced. Properly structured series LLCs Isolate each asset, and preserve the client’s anonymity. The structure can be beefed up further with anonymous trusts, and some moves we make when filing the entity as well as the investor separating their business operations from the series LLC. Ideally we want the series LLC to simply hold assets and never conduct business with the public. All of these combined make it very hard to relate you the investor to the property attached to the incident. The structure can be beefed up further with anonymous trusts, and some moves we make when filing the entity as well as the investor separating their business operations from the series LLC. Ideally we want the series LLC to simply hold assets and never conduct business with the public. All of these combined make it very hard to relate you the investor to the property attached to the incident. Essentially We are just making it very difficult to sue you and win. Attorneys also love winning. If you take away both money and winning, there really isn’t much motivation left to pursue the lawsuit. Most lawyers will move onto lower hanging fruit. Does that make sense to you?
    Scott Smith Attorney from Austin, TX
    Replied about 1 year ago
    Also, the registered agent requirement does not need to compromise your anonymity. In Sally’s case my firm served as her registered agent, which meant she was protected by attorney-client privilege. You can pay registered agent or use an attorney. I have discussed these options in yet another article for bigger pockets called “All About Registered Agents for Your out-of-state LLC.” Feel free to check that out by clicking my author page above. It was a few articles back but elaborates on ways to meet this requirement.
    Scott Smith Attorney from Austin, TX
    Replied about 1 year ago
    Hi Ashley, thank you for your kind comment and thoughtful questions. I’ll take them in order and stay on me if I miss anything. The other lawyers might nuot love me answering your first question, but I aim to please. Here’s the inside scoop: the first thing a lawyer does when a client comes in with a case is check out the defendant (Sally in this case—but it Could easily be you given 90% of us investors are sued in a 20 year career). Anyone can run a public records search to see who owns the property. If it’s in your name, you’re getting sued—because that asset is tied to you and therefore easy to seize in the event of a judgment. It’s hardly a state secret that attorneys love money, and look forward to payday. Most RE suits aren’t paid out of pocket by the plaintiff. Judgment and seizure of assets is where the big payday comes from. I worked in litigation before transitioning into asset protection, and can tell you this is one of the first thing any attorney checks. But an opposing lawyer who sees that an SLLC is the owner is unlikely to even file a suit. Assets to seize upon judgment are how lawyers who sue investors get paid (mostly). That other attorney is only going to get paid if the client is spiteful and wealthy enough to pay for all of the legal fees associated with the suit. Lawsuits are long and expensive, and very few landlord-tenant plaintiffs will pay simply to satisfy spite. Making assets difficult to seize By using and effectively structured SLLC Not only would make it harder to win the case, but harder to get paid. As to your other question, traditional LLCs do not compartmentalize assets and have many established methods for being pierced. Properly structured series LLCs Isolate each asset, and preserve the client’s anonymity as well as masking relationships between properties. The structure can be beefed up further with anonymous trusts, and some moves we make when filing the entity as well as the investor separating their business operations from the series LLC. Ideally we want the series LLC to simply hold assets and never conduct business with the public. All of these combined make it very hard to relate you the investor to the property attached to the incident. The structure can be beefed up further with anonymous trusts, and some moves we make when filing the entity as well as the investor separating their business operations from the series LLC. Ideally we want the series LLC to simply hold assets and never conduct business with the public. All of these combined make it very hard to relate you the investor to the property attached to the incident. Essentially We are just making it very difficult to sue you and win. Attorneys also love winning. If you take away both money and winning, there really isn’t much motivation left to pursue the lawsuit. Most lawyers will move onto lower hanging fruit. Does that make sense to you?
    Dave Chow Investor from KS
    Replied about 1 year ago
    The example looks good. As for how to do it, would need to pay for legal services to get it resolved.
    Scott Smith Attorney from Austin, TX
    Replied about 1 year ago
    If I’m understanding your question correctly yes you generally do want to pay an attorney to set up your series LLC. This is because you want to be sure you’re using the entity correctly and that it is formed in a way that preserves your anonymity and fully protects your assets and other interests. Does that answer your question?
    Annabelle Lopez
    Replied about 1 year ago
    Hi: I have a Texas series LLC that was created about 3-4 years ago. However, just recently I’m going through revisions because I had never transfer the deed of my properties to individual series. I’m in the process of transferring my 3 rental houses from my name to individual series. I also own 2 commercial real estate (offices) and I was told by a lawyer that it’s better if these were not in the series LLC but in their own LLC because it’s better not to mix rental properties with commercial properties. What do you think about that? Also, I was going to work on creating a managing LLC to do business with my renters and keep the series LLC as the holder company but that wouldn’t give me anonymity. Would a trust work better? I’m a doctor and I would benefit from my tenants not linking me to the properties Thanks
    Scott Smith Attorney from Austin, TX
    Replied about 1 year ago
    As a general rule, it’s best to keep one asset per series. I also think it’s a good idea to listen to your lawyer about your personal situation. If this lawyer knew you and your circumstances, their advice would be worth considering. However if this was someone who was *a* lawyer but not *your* lawyer, take with a grain of salt. My personal opinion is that it’s a great idea to use a Traditional LLC as a shell company, while your Series LLC functions ONLY as an asset-holding company. Investors should not risk doing business with their asset-holding companies. You also will have special concerns as a physician when it comes to asset protection, and you’re definitely on the right track by using the TX SLLC. But that SLLC is only effective for protecting the assets within it. I’m not sure how you’re currently holding the properties you intend to transfer, but it sounds like they may be vulnerable. So that issue and forming a shell company would be some things to discuss with your attorney. Your lawyer should be able to give you an informed opinion if you give him or her as full of a picture as you just gave me.
    Sam Garcia
    Replied about 1 year ago
    I believe in Ohio, trusts cannot be anonymous, and that trusts are non-entities, so any case will be made against the main trustee of that trust.
    Annabelle Lopez
    Replied about 1 year ago
    Thanks
    Curt Smith Rental Property Investor from Clarkston, GA
    Replied about 1 year ago
    What I fouind missing here is never rehab a flip house with non-licensed and insured contractors for the major systems: plumbing, electrical, hvac. The plumbers E&O insurance should have kicked in to cover what might have been the plumbers mistake. At the least the plumber would have been thrust out in front of that suit!!!! Not sure why the author and investor here did not mention licenced and insured tradesmen JUST for this issue!!!! Less of an issue in rental rehabs,,, but in flips this is the perfect example of why you need to pull permits, get the work inspected by the county/municipality and use insured trades.. I found this story fairly lame. Be clear about what work you did, and permits and inspection backs you up. Nice protection plan though! 🙂
    Scott Smith Attorney from Austin, TX
    Replied about 1 year ago
    Hi Curt! Yes, space limited my ability to comment on that piece (and I was focusing on the legal side of the story), but you raise some excellent points about doing your due diligence. There is no substitute for thorough due diligence. I can’t always mention the details because of space restrictions, and I also cannot give out too much information that could risk identifying my client. Thank you for your feedback and contributions. I absolutely agree that not only should you be clear, but document the hell out of each of these steps. Great points!
    Brandon Koser from Indianapolis, Indiana
    Replied about 1 year ago
    I established an LLC-S in Indiana through an attorney recently. I put the one property I own outright in its own series. My other properties still have mortgages. Is it possible to transfer them to their own series without triggering the “due on sale” clauses? The attorney is the registered agent for the master and the master is the series owner. How do you feel about Indiana series for asset protection?
    Scott Smith Attorney from Austin, TX
    Replied about 1 year ago
    Yes. In fact, I’ve actually written about how to make such transfers for BiggerPockets before. You can check out that article here: https://www.biggerpockets.com/renewsblog/llc-lending-problem/ Smart move using the attorney as your RA. It sounds like you’re in capable hands. Indiana would not be my first choice. I have a forthcoming article elaborating on my personal preferences for Series LLC formation, which are the following (in order): Texas, Delaware, and Nevada.
    Account Closed Investor from Omaha, Nebraska
    Replied about 1 year ago
    I question why the plaintiff’s lawyer didn’t sue your client personally considering it was her own personal statement that triggered the allegations of fraud. In general, it seems an LLC can help you avoid personal liability for the negligence of your employees or contractors, but why would someone expect it to shield them from their own acts of negligence (or fraud)?
    Scott Smith Attorney from Austin, TX
    Replied about 1 year ago
    Hey Nick, That’s correct. The LLC does inherently separate the property from you personally. It’s not a defense against outright, deceptive fraud though. You have to do your part for an LLC or any other entity formed for asset protection to work effectively. Most lawsuits I see don’t involve outright deception. The reality is many of us get sued over simple mistakes and that LLCs can minimize the liabilities that could come with any piece of property.
    Eliot Houman from Los Angeles, California
    Replied about 1 year ago
    Hi Scott – how would you recommend a California resident, looking to purchase both in state and out of state properties, go about the method you describe above? Also, can one do this for their personal residence?
    Mike Shemp Rental Property Investor from Stewartsville, NJ
    Replied about 1 year ago
    Great article – thanks so much for sharing it. Mike
    Glenn F. Rental Property Investor from Virginia Beach, VA
    Replied about 1 year ago
    Thanks for the article. However, people need to be careful thinking you can hide and be anonymous and you’re shielded from lawsuits hiding behind entities. This plaintiff’s lawyer must have been just looking for low hanging fruit and gave up. It’s a simple as convincing a judge that there was potential fraud or misrepresentations and a few subpoenas later and your whole LLC structure and members are exposed. You can easily name the owner in a lawsuit and bypass the LLC’s. Judges have also done what is called “piercing the corporate veil” also bypassing them if they feel you are just using entities to hide. Basically, entities can be used to add an additional layer to your asset protection plan, but don’t rely on them solely. Also have GL, E&O, & umbrella policies.
    Isaac Agbolosoo Rental Property Investor from Grosse ile
    Replied about 1 year ago
    Paul manafort had several entities and layers to hide himself , but got caught. No asset in the United states is protected against potential law suit. I think investors looking for premium protection should invest overseas.
    Scott Smith Attorney from Austin, TX
    Replied about 1 year ago
    Isaac, it depends on your situation and I respectfully disagree. One thing to consider is that many investors set up there entity appropriately but don’t use it appropriately. An asset holding company that’s not preserving anonymity or taking the risk of doing direct business with the public WILL be vulnerable. The problem isn’t with the structure, it’s with the failure to separate assets and operations. Again, as I’ve said elsewhere, investors have to do their part. As for overseas, yes there are protections that can be accomplished this way but as I wrote in my article today–you can’t outrun the taxman. If you choose to use overseas elements for asset protection, make sure you’re on Uncle Sam’s good side: https://www.biggerpockets.com/renewsblog/moving-money-out-of-the-country/ That was published today and you might find it interesting. Note that it’s written with the assumption that the investor is a U.S. citizen. Where overseas do you think investors should be taking advantage of? I’m interested in hearing what informs your perspective.
    Scott Smith Attorney from Austin, TX
    Replied about 1 year ago
    I don’t see this often if the entity is structured correctly or used in conjunction with an anonymous trust. And yes, you do want insurance. You’re absolutely correct that real estate investors must still do their part. The structure isn’t a substitute for good faith or due diligence. It strengthens protection for an investor who is already operating above-the-board. It’s not meant as a defense for outright, intentional deceptive fraud. There are legal strategies that make piercing the veil more difficult. A Series LLC is more complex to pierce than a traditional llc with multiple properties, for instance. A corporate structure and network of trusts is even more powerful. I can’t speak to Mr. Manafort’s situation because I’m not his lawyer, but it seems his conduct was more problematic than his corporate structure. The corporate structures must be set up properly and investors have to do their own part, which starts with just doing good business. Your integrity alone won’t defend you from a lawsuit but it certainly is a critical piece of this equation.
    Jim M. Rental Property Investor from Murfreesboro, Tennessee
    Replied about 1 year ago
    Hi Scott. Great post. I am located in Tennessee. Can these Series LLC’s be used TN economically or is there a better option? I need to figure out what to do with my rental properties.
    Scott Smith Attorney from Austin, TX
    Replied about 1 year ago
    Hey Jim! 21 states currently offer Series LLCs, though some are better than others for investors. I have an article coming out on my top picks which are, in order: Texas, Delaware, and Nevada. SLLCs are regulated at the state level. I find entities formed in these states have more operational benefits. Delaware has some judicial benefits on the legal side of things, and all are regarded as “pro business” states. The SLLC may be a good solution for you. Whether you form it in your home state of Tennessee or elsewhere is up to you and your attorney, but you can certainly bring his or her attention to that. I have many clients who use out-of-state entities for more benefits than an in-state entity would allow. So you wouldn’t be the first investor to do that.
    Reginald Savoie
    Replied about 1 year ago
    Really informative article, thanks for posting
    Scott Smith Attorney from Austin, TX
    Replied about 1 year ago
    Thank you for reading!
    Kat Malkowski from Homer Glen, Illinois
    Replied about 1 year ago
    Am I able to set up a series LLC in ANY state of my choice. regardless of where I personally reside or where my properties are located (even if they’re in multiple states)? If so, would most local attorneys be familiar with each state’s individual laws or would you be better served finding an attorney in the state in which you set up your LLC?
    Scott Smith Attorney from Austin, TX
    Replied about 1 year ago
    Hey Kat– You sure can! Many of my investor-clients operate in multiple states. Often someone from say, Virginia, may manage properties using a TX Series LLC. Whether your local attorney will be familiar with state laws and the Series LLC is going to come down to their level of experience with the structure. I would recommend, above all else, finding someone who forms them routinely. There are benefits to having the lawyer in the state where you intend to form the entity. Namely, that lawyer will be hip to the state’s laws and regulations on the structure. Further, someone who forms these entities regularly will know how to advise you for protecting your assets appropriately. And just so you know, your lawyer doesn’t necessarily need to live in the state. To use myself as an example, I’m licensed to practice in multiple states, live in Texas, but form TX and Delaware Series LLCs (among other entities) often. I can’t really speak for other attorneys or how common this is, but you do ideally want someone who has handled it before. Most real estate attorneys will be familiar with Traditional LLCs, but since the Series LLC is a newer structure, there are fewer of us regularly forming them for clients. Those who do it often tend to know them well.
    Katie Rogers from Santa Barbara, California
    Replied about 1 year ago
    How does “all of it” mean “some of it?” Asset protection is great, but if it a scheme for avoiding legitimate responsibility, it sounds like the buyers was defrauded twice.
    Anthony Brown from Collierville, Tennessee
    Replied about 1 year ago
    Great article Scott.
    Anthony Brown from Collierville, Tennessee
    Replied about 1 year ago
    Scott, how can I convert my traditional LLC into a SLLC without having to change my existing LLC Federal EIN?
    Jerry W. Investor from Thermopolis, Wyoming
    Replied about 1 year ago
    Sorry Scott but throwing the bullshit flag here. First off Sally made the false statement so Sally can be sued personally. No number of LLCs or blind trusts changes her personal liability. When she is sued, they simply depose her or do an Interrogatory to learn what her personal ownership tie is to the property and she is legally required to disclose or face at a minimum contempt of court or at most a felony for perjury if she lied. Any attorney caught helping her lie would likely lose his license if found out. Since Sally was personally showing the place she is either clearly the owner or a real estate agent. If an agent they would know the there is likely malpractice insurance and of course her broker to go after. If she is her own broker then there is a deep pocket to go after. I don’t see any real protection here. Now if she is sitting at home and some agent misrepresents her then I could see some protection. There are multiple disclosure statements given to the Buyer. Who signed them? Sally of course because her registered agent wouldn’t know the answers. Who else would be comfortable signing a contract document other than the owner who did the work? Am I missing something? I see no protection from a reasonably competent attorney finding out Sally is the owner. Even if they have no idea she is the owner the obvious question is how did you know the plumbing had been replaced? Her answer I did it or I hired it done. Any other answer is perjury. When you do the work personally all the blind trusts and LLCs lose nearly all protection at least as to anonymity but like as to everything.
    Jeffery K Thornton
    Replied 12 months ago
    Hi Scott, I found the article very interesting and helpful. I live in Guilford County, North Carolina. Do you know if it is possible to get a Series LLC in North Carolina ? Do you help clients in NC ? Or, what is the best way to find an attorney In NC that can help in structuring SLLC’s and trust ? Thank you very much.
    Kinjal Patel Investor from Gardner, KS
    Replied 9 months ago
    Good Points. Which warranty companies are good? Do you mind sharing which one you use? Thank you
    Sarah P. Rental Property Investor from East Coast
    Replied 9 months ago
    I use AHS and have had a decent experience so far. I can’t tell you if they’re better than others, though, as I’ve only used them. If you need sales you can get someone fairly quickly on the phone, but I don’t suggest you use the phone for service call requests. You can submit work requests online through your account or via their chat option on their website. Their technicians have been extremely responsive in my experience, but I suppose that can depend on your area. You can email their corporate resolutions line if you have a really complicated situation and you can also get help via their facebook page.
    Vaughn K. from Seattle, WA
    Replied 9 months ago
    I’m sure I don’t have nearly the experience that many here do… But in my experience, I’ll take an older home over a newer one any day of the week. EVERY house I have seen that has been built in the last 25+ years, including 5 million dollar custom homes I’ve been around during construction, are basically built out of garbage materials. I’m sure SOMEBODY has purchased decent quality wood to build with, but I ain’t seen it! All the new construction is built out of cheap, not properly dried, garbage wood that warps and/or rots like crazy. I’ve seen 1-2 year old houses where every single seam on the building had popped and needed to be re-caulked, and all the “straight” lines were crooked already. Not to mention all the MDF/particle board/chip board, and it’s newer variants that don’t hold up the same as proper plywood. New homes have SOME nicer stuff, like granite counter tops and such which you can’t really go wrong with… But then you throw in a particle board cabinet and cheap plated hardware or whatever. Junk. No thanks. Older homes have their problems too, but IMO the basics are better built and a 75 year old home will probably be standing in another 75 years, when a brand new one won’t be. If you can get a comparable home fixed up to being in primo condition for the same or less than a newer house, I would take that every time. Not to mention the “charm” of them not being cookie cutter like most newer homes. AND all the little odds and ends being nicer than on the finest custom homes today. Solid, like ACTUAL solid hardwoods for all the trim, doors, cabinets, floors, etc. Often times out of wood (Honduran mahogany anybody!) that you literally cannot get anymore for any price. The intricate details on a lot of things. Etc etc etc. You know the kind of stuff I mean. To me, there is no contest. Newer homes are like everything else nowadays, built as cheaply and cookie cutter as possible. Including the custom built ones. A well built 70s house? Sure. But something from 2015? I’d rather not. If the math works, go for it… But I’d rather buy and maintain awesome old houses personally.
    Sarah P. Rental Property Investor from East Coast
    Replied 9 months ago
    I can empathize with you there! What is your personal opinion on homes built in the 90s vs. 70s, and late 1800s/early 1900s? I think that’s where the extremes set in. I had a home with a 40 year old furnace still cranking away (not as efficiently, obviously)… still impressive. Forced/planned obsolescence is a huge issue in today’s age in my humble opinion.
    Vaughn K. from Seattle, WA
    Replied 9 months ago
    I think your “breaking points” are about right. From my personal experience, and many conversations I have had with people more directly involved in construction, it seems that construction quality STARTED to slide in the 70s… But only barely. And almost all construction was still considerably better than today, but a few corners were starting to be cut now and again. Up through the 80s there were still many well made houses, but more creeping in that were sub par. By the tail end of the 90s a good percentage of houses were kinda dodgy, but still with some decent stuff once in awhile. By the time we hit the 2000s, it seems like pretty much everything has gone down hill. Now, there are exceptions to every rule, no doubt. Bad houses from the 50s, and great custom jobs from 2007 or whatever… But as a rule, I think the above more or less holds true. Things as simple as the quality of the lumber, being properly dried and treated, have changed. People just DO NOT use decent wood anymore on commercial projects. Once in a blue moon somebody having a custom house made for them might demand decent materials, but other than that it will all be garbage. In the 70s nobody would even consider using wood that was as prone to warping as is standard now. As for the older older houses… I don’t have a ton of experience with pre 1900s houses, but plenty with early 1900s. Everything seems to have been overbuilt, IE bigger pieces of wood than were necessary. Fancier woods than are used now. Things like that. I WILL say that sometimes framing methods can be funky, like inconsistent studs etc, but since the wood that was used was so much beefier than needed this rarely causes problems. They also didn’t consider some things we’re more conscience of now, like heat retention, as much. But IMO retrofitting a solid old house with the FEW improvements we have now will leave you with a better house than a brand new one. I understand there are issues with framing techniques used in the earlier 1800s (fire issues and such), and let’s just be honest… Tagging on an extra 50 or 100 years is going to take its toll on even the best built structures. So if I was somewhere that had houses from the early 1800s, that might be too far on THAT extreme end too. Although if it’s a well built brick or stone house… Maybe not? Devil is in the details. Many structures in Europe are still standing many centuries after their initial construction. Houses from the early 1900s though are still perfectly serviceable, and I can’t imagine one from 1890 being appreciably worse with the way they seem to age and hold up.
    Luke Ski from Columbia, Maryland
    Replied 9 months ago
    I have to agree with VAUGHN K. I have not been to all U.S states but growing up in Europe I am not used to see houses built out of materials like the ones we use to build doghouses back home. Besides house that I’ve seen in Miami and south FL that were concrete and strong, all houses on east coast are build like sheds. No matter if you paid $150K or $2.5million for it, you basically just own a large shed. I see it everyday across the board, even upper class living in their $1million + properties with rotting garage trim, door trim, window trim and entire doors and decks and you name it. The amount of maintenance needed to keep most of the houses in U.S out of rotting and looking like junk is bananas. I own a few houses and one of them has siding(luckly aluminum one) and don’t even get me started on that…..just another invention of american home builders that should be killed and forgotten(the invention , not necessarily the builders ) 🙂 Cheers
    Vaughn K. from Seattle, WA
    Replied 9 months ago
    Yup! I really do hate the “short term thinking” aspect of recent globalist, outsource everything, cut costs as much as possible capitalism… I am a capitalist pig through and through, but there is a difference between making the best LONG TERM investment/decision, and the best SHORT TERM investment/decision. Everybody nowadays seems to care only about maximizing SHORT TERM profits, or minimizing short term costs… Which ultimately costs us IMO. Building a house that will stand strong for 100-200+ years is worthwhile. If it costs 30% more to make a place that will last 4 times as long as a cheaply made house, that’s a GREAT investment in the long haul. You see the same thing with many items. Clothing that falls apart. Shoes that don’t last. TVs that die after a couple years instead of decades. I have a pair of $200 something dollar Red Wing boots that are over 10 years old now, haven’t even had to resole them yet! When I do I will probably gain another decade out of them, or more. That $200 pair of shoes will last me longer than $500 worth of cheap $40-50 dollar shoes. That is TRUE value. They’re also the most comfortable shoes of any brand I have ever owned, which is a nice perk considering I am spending LESS on them than cheap shoes overall. I really do hope more people return to being interested in QUALITY, and thinking about LONG TERM value versus just short term lowest cost.