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Helping mom with her properties
My mom needs a lot of help with the properties she owns and my brother and I are stepping in.
Unfortunately, neither of us was included in the business prior and because of her health issues, the business is in a mess.
Neither of us really know where to start and any links to articles here or general advice would be appreciated. Also any recommendations for professionals (CPA, financial advisor, etc.) to meet with to make sure this is all done correctly would be amazing.
Here are the details:
- She owns 3 commercial properties in Los Angeles
- There are not any mortgages on the properties
- These properties were in a trust that my uncle and mom both were trustees of, but that is being dissolved (there was mediation and the 3 properties she now has were part of that). My uncle and mom are going their separate ways.
- We are putting the 3 properties into a new trust.
- I'm thinking we need to create a new LLC or S-Corp to manage the properties once they are inn the trust?
Please feel free to ask me any questions if you need more info to reply.
And you and your Brother know how much about managing commercial properties in Los Angeles?
This might be a learning curve situation for both of you here.
If I were in this situation, I'd talk to an asset protection attorney in California first--someone I was comfortable with (and get out the checkbook).
The others you seek might come from a referral from the 1st attorney--maybe.
Be able to pay the property taxes as they come due (1% of $1M is $10k).
Good Luck!
We know nothing about managing commercial properties in LA.
Definitely a big learning curve.
Thank you for the advice and I will look into an asset protection attorney.
Robert Hall and Associates is pretty well known in the Real Estate CPA space, you can check them out as a reference. I can PM you some contacts for a good trust lawyer, and if theres anything else specifically you need just let me know.
#1 General Real Estate Investing Contributor
Start by getting copies of the leases. Know what is and isn't included in the rent (eg are utilities in the tenant's name or your mom's name?). Make sure rents are up to date. Read the tenancy laws so you know what you can and can't do. Make sure all of the taxes are paid.
#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Investor
- Austin, TX
Get with a CPA on this, you should be in the mindset to keep these properties and have them operate efficiently without taking losses. Having them paid off will help.
I presume that you're talking about putting the properties in a revocable family trust? Typically those do not provide asset protection but are an important part of an estate plan. As to whether you want or need an LLC, it can be costly to do so in California, though warranted in several scenarios. If title is changing hands, be careful about property tax implications. Depending on how your mom was able to obtain title and when/how it went into the trust with your uncle, you may have been able to save a reassessment at that time.
*Readers are advised to seek independent counsel and no information in this post is to be taken as legal advice
There's a few things you can consider, but I'd start with speaking to your CPA to see what makes sense. If you're looking to remain hands off, I'd consider a property manager or a type of real estate that is less work and can allow you to focus on your own aspirations. I'm helping a client in the same type of situation right now. He just had 2 properties handed down from his dad, and he has no clue what to do. Let's connect and maybe I can help you out like I did with him
#1 House Hacking Contributor
- Real Estate Agent
- Los Angeles, CA
Everyone is pretty spot on. This is an attorney and CPA thing.
I would also consider passing things on to a property manager. Let them deal with the learning curve and you just collect the paychecks unless you actually want to be involved and it is a good use of your time. There are some pretty big ones in town that could probably point you in the right direction. If they want your business, they will also give you the right referrals to get everything set up the way you need it to.
Thanks everyone for your input. This is exactly what I needed. I'm glad to have found this communnity.