Investor · Philadelphia, PA · Member since 2014 · 88 posts · 64 votes
Hello,
I have one property in an LLC and the rest in my personal name. The property in the LLC happens to be managed by a property manager so they pay the LLC. The rent for the rest of my properties in my personal name are being paid directly to me.
Would there be any benefit to having all payments be paid directly to the LLC? I was thinking that this would at least help when I file my taxes and all payments are in one area.
Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
11y
Our LLC is our business entity, whether or not the property deed is in the name of the LLC or in our personal name is of little concern to us. (Some deeds are under our LLC name and some are under our personal names... for mortgage reasons.) We will still act in the name of the LLC and use a dba (doing business as) name of Fischer Properties for our interactions with our tenants. Therefore, the tenants know us as Fischer Properties and make payments to Fischer Properties. This is consistent with the entity name we have on the rental agreements... which is the name of the LLC dba Fischer Properties.
If I were you, I would list all your properties under your LLC and operate them under a business name. Talk with your professional tax preparer as to how this will impact the filing of your taxes. If you aren't already working with a tax professional (CPA or EA) then seek out the services of one.
Investor · Vancouver, WA · Member since 2013 · 3k+ posts · 4k+ votes
11y
Our LLC is our business entity, whether or not the property deed is in the name of the LLC or in our personal name is of little concern to us. (Some deeds are under our LLC name and some are under our personal names... for mortgage reasons.) We will still act in the name of the LLC and use a dba (doing business as) name of Fischer Properties for our interactions with our tenants. Therefore, the tenants know us as Fischer Properties and make payments to Fischer Properties. This is consistent with the entity name we have on the rental agreements... which is the name of the LLC dba Fischer Properties.
If I were you, I would list all your properties under your LLC and operate them under a business name. Talk with your professional tax preparer as to how this will impact the filing of your taxes. If you aren't already working with a tax professional (CPA or EA) then seek out the services of one.
Peoria, IL · Member since 2011 · 365 posts · 182 votes
11y
Disclaimer: Im not a tax pro and this is off memory.
A single-member LLC can file thier taxes "pass-through" on thier personal returns. Probably doesn't effect your taxes but it will help your bookkeeping. (comingling money is confusing at best)
Who are your tenants leasing from? That's who the payments go to.
My LLC (with a seperate bank account) recieves all the income and pays all the expenses.
I have properties that I manage and some that are managed by others. I have some in my name, some in my wife's name and some in my single-member LLC's name.
Doesn't matter what's on title, my LLC is the manager (for my self managed properties). The tenant signs the lease with and makes all payments to the LLC.
Rental Property Investor · Lakewood, OH · Member since 2015 · 27 posts · 5 votes
11y
Hi all,
This is my first post.
I'm in the same situation.
I have purchased a multifamily rental unit and the deed is in my name for mortgage reasons.
I am in the works of creating an LLC to act as a property manager.
I want to collect rental payment as an LLC acting as the property manager utilizing a business checking account.
Im in the understanding that this doesn't provide limited liability because the property is under my personal name. However, it will be convienient for me to manage the property by keeping personal and rental business separate.
When I draw up a lease, would I make it out as the LLC? Like the llc is preparing the lease?
Rental Property Investor · Lakewood, OH · Member since 2015 · 27 posts · 5 votes
11y
also, do you have to have a real estate or broker license to manage the property? Because if you create an LLC to manage the property whose deed is not in the llc name (it's in personal name) it is technically considered managing someone else's property like an outsider
Real Estate Investor · Longview, TX · Member since 2015 · 122 posts · 62 votes
11y
@Patrick Jung First let me say that it may not be as easy as setting up an LLC to be the acting property manager. Every state is different as far as requirements for a property manager. From the first page of Google:
Must Ohio property management companies have a real estate broker's license?
YES. Key components of property management (leasing and renting) are considered real estate activities under existing Ohio real estate licensing laws. If a property manager is going to lease, rent, list, procure prospects or negotiate, assist, or offer to perform any of those acts, or if he or she operates, manages or rents any building or portions of buildings to the public as tenants (other than a custodian, caretaker or janitor) he or she will need a broker's license. A salesperson working under a broker may engage in such activities.
Now that was my first shot in the dark, so you might need to do some more research.
Second, what is the point of your LLC? If it is for tax purposes then you might want to reconsider. If asset protection you may be jumping the gun a bit. There is a LOT of folks on BP that spout "run and get a series LLC for your 1st property" but you gain very little on 1 or even more. You still have personal assets that can be gone after. Find a CPA or tax attorney and discuss why you are going that route in the first place.
Nothing beats paid consultation. Why go spend a few hundred $$ to create an LLC when you haven't even talked to an attorney? Do you have one? If you are worried about affects from the LAW - wouldn't you consult someone in LAW first?
Or not, could just be my overbearing opinion. Do what you like, but please report the results to us. :)
also, do you have to have a real estate or broker license to manage the property? Because if you create an LLC to manage the property whose deed is not in the llc name (it's in personal name) it is technically considered managing someone else's property like an outsider
**obviously I'm not an attorney or trying to pretend to be giving legal advice** but...
You do not have to have a real estate license of any kind to own or manage your own property. The act of putting an LLC "in charge" of it does not make you "like an outsider"
You own and manage it with whatever paperwork you want, also write whomever you wish the rent pays to be payable to. Where you run into the specific of what this means to you is the why. Like Jonathan Key said, why do you need an LLC for your properties? I can easily think of reasons why it makes sense for me but your specific situations is likely different from mine. A visit/consultation with an attorney or cpa who services investors that are local to you is the right move here.
Rental Property Investor · Lakewood, OH · Member since 2015 · 27 posts · 5 votes
11y
Thanks for your responses.
The reason I was interested in forming an llc to act as a property manager is because I wanted to keep my personal finances separate from the income/expenses that are related to the property.
The main reason was to open a business checking account.
As far as taxes goes, I am under the impression I would be taxed as an individual With my personal tax return. (no business tax benefits)
Also, I feel with an llc name, it would be professional and I thought maybe it would be in my favor when collecting rent because I am young (26).
I am in the works with setting up a meeting with an attorney that specializes in real estate.
This is why I figured to form an llc especially to open a business checking account .
I will ask the attorney if it is necessary to acquire a brokers license.
I will let you know the result of the meeting with the attorney.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
11y
Good comments, yes you can have license issues.
Collecting payments that the entity has not title interest in, unless acting as a manager, where payments are really the cash asset of the member can become a contribution to capital rather than an earned income. Just because the LLC deposits rents doesn't make that earned income for taxes.
Rents from a personally owned asset deposited to an LLC can also be a comingling of assets issue causing the liability protection of the LLC to vanish.
Another issue besides mgt, an LLC owned property will usually require an attorney for any court proceeding, like an eviction. It is a separate entity. If a tenant mails payments to an LLC and it's owned personally, any sui brought will most likely list both of you and insurance coverage from your LLC may not be there as he LLC has no insured interest, but maybe tied to the property by its acts, that is for an attorney to figure out.
I would do personal business personally and LLC stuff separately.
Well, BP not responding again, every word has to be fixed......out of here! :(
Investor · West Palm Beach, FL · Member since 2015 · 15 posts · 1 vote
11y
I was thinking the same thing. I started an LLC but my mortgage provider said i can't put the house in the LLC's name. So i was thinking about still keeping the LLC but just to use it to collect rent and to pay bills, like a mgmt company.
@Patrick Jung were you able to manage the LLC as yourself in OH, or did you need to obtain a broker's license? Did you go the route of setting up an LLC?
Our LLC is our business entity, whether or not the property deed is in the name of the LLC or in our personal name is of little concern to us. (Some deeds are under our LLC name and some are under our personal names... for mortgage reasons.) We will still act in the name of the LLC and use a dba (doing business as) name of Fischer Properties for our interactions with our tenants. Therefore, the tenants know us as Fischer Properties and make payments to Fischer Properties. This is consistent with the entity name we have on the rental agreements... which is the name of the LLC dba Fischer Properties.
If I were you, I would list all your properties under your LLC and operate them under a business name. Talk with your professional tax preparer as to how this will impact the filing of your taxes. If you aren't already working with a tax professional (CPA or EA) then seek out the services of one.