Hello from Rochester NY.
Hello everyone! My name is Michael Feeney from Rochester ny. I actually signed up to this site over a year ago because I was screwed over by a so called land lord/property manager Doug Hirt and I found out a bunch of info about him on here.
Any ways I have been researching rental properties for a while now and I am looking to make a move by the end of summer. I have been advised by a few guys I know that have properties to have a separate LLC for each property I buy. I do own a small used car lot so I have an idea whats involved in starting a business. My question is do I start a buiness/llc before I even buy my first property? Do you guys use your house as your business address?
I don't think you need an LLC for each property. That is a little overkill. I purchased my first 7 units all in my own name. After that I set up my first LLC. It all depends on what your risk tolerance is. IANAL, but I think if you get really good insurance and then also get an umbrella policy, you should be fine to purchase your first few properties without an entity. By doing this you can get much more favorable mortgage rates. Then when you are ready to really start purchasing a ton of units, look into creating an LLC and then move the units you own into the LLC as well.
That all being said, I would talk to a lawyer :)
Hello everyone. I am new to the forum.
Hey Mike, I formed an LLC so that it would motivate me to put something in it. I was also informed that often times you set some kind of monetary value for each LLC so one may have say 4 houses while another only has the one house because the values are similar.
Good luck.
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hey good luck with all you do and sorry about your experience with doug hirt. I have faced the same with the man. From what i know he finally got caught up by all his scams. But as far as an llc i agree with the above usually every few properties form a new llc. Obviously the bigger you get the more risk involved so would require added protection.
Hello Mike,
I am new to the site also. I would get a PO Box rather than list your address.
Originally posted by @Steve Santacroce:
I don't think you need an LLC for each property. That is a little overkill. I purchased my first 7 units all in my own name. After that I set up my first LLC. It all depends on what your risk tolerance is. IANAL, but I think if you get really good insurance and then also get an umbrella policy, you should be fine to purchase your first few properties without an entity. By doing this you can get much more favorable mortgage rates. Then when you are ready to really start purchasing a ton of units, look into creating an LLC and then move the units you own into the LLC as well.
That all being said, I would talk to a lawyer :)
Steve, first thank you for the info. So I should buy the first few without even a DBA? If so then I guess I would be pretty confused on how I would be taking tenants money and filinx taxes and what not.
That's a CPA question, but I believe it's just a schedule (E maybe?) on your taxes. And I still think you really should talk to a lawyer before deciding which way to go. I was willing to take the extra risk to simplify my accounting and year end tax returns. It also helped as I was able to get much better rates on my first few mortgages.
Hey Mike - I would imagine you are purchasing your property under your name in order to get better terms and conditions on your loan. I only know a couple banks who will give a commercial mortgage to a LLC (Canandaigua National), and they will want minimum 20% down. If that's the case you won't need to form an LLC until you close. I would close the deal, talk to your lawyer in the meantime, then form your LLC after you close.
mike, i put a few of my properties into an LLC i created but only after i had 6-7 in my personal name. My attorney did all the work for me. LLC or not is not the first issue for you to be considering in preparing your RE adventures. Acquiring your first property is . . . after that, you build on to what you've started including your asset protection strategy. IN addition to havingn some but not all my properties in LLC, i have an Umbrella Insurance policy.