Buying my first rental property

14 Replies

Hi Everyone,

I wanted to finally introduce myself to the bigger pockets community. I am a mechanical engineer working in San Diego and looking to buy my first long term buy and hold rental property to get some cash flow! Looking for a simple property to force myself in the game and learn the initial process before getting into possibly more complicated deals. I have been doing research for months and decided to make a goal to buy a property by the end of the year. So I have my work cut out for me! 

Things I would love help with and/or if anyone has someone they would recommend:

1) Looking for an accountant

2) Buying the house under an LLC or my name for tax purposes.

Thanks for taking the time to read this! I would love to connect with all of you! 

-Sean


 

Welcome @Sean Abrahamsen

Have you read How to Invest in Real Estate? It will help you figure out Question 2. And are you already working with an accountant in your area? I only ask because they may have additional recommendations for Question 2. 

Welcome! Those are great questions, but probably better suited for the accountant and attorney you end up working with. Depending on how you structure your business, it's likely that the owner of the property (either you or your LLC) will not impact the tax benefits in any way. Entity structure at the level you are talking about is really a way to legally separate your personal assets from your business assets.

Beyond that, I'm happy to help you get the ball rolling in any way you need. Feel free to reach out. Best of luck!

Originally posted by @Jeremy Goodman :

Welcome @Sean Abrahamsen! 

Have you read How to Invest in Real Estate? It will help you figure out Question 2. And are you already working with an accountant in your area? I only ask because they may have additional recommendations for Question 2. 

Hi Jeremy, I have not read that book. I will look into it! Thanks for your recommendation. I am not currently working with an accountant. I called a couple last week to get the ball rolling on finding the right accountant. I plan on calling a few more this week.

Would it be best to find an accountant before I buy a property? 

 

Originally posted by @Corby Goade :

Welcome! Those are great questions, but probably better suited for the accountant and attorney you end up working with. Depending on how you structure your business, it's likely that the owner of the property (either you or your LLC) will not impact the tax benefits in any way. Entity structure at the level you are talking about is really a way to legally separate your personal assets from your business assets.

Beyond that, I'm happy to help you get the ball rolling in any way you need. Feel free to reach out. Best of luck!

Hi Corby, thank you for the info, that was helpful. My biggest struggle right now is finding the right location to buy a rental property. California is way too expensive, so I have been looking out of state! 

 

@Sean Abrahamsen Welcome to the game! I hope you can meet your goal of buying something before the end of the year. the biggest thing with rental property investing is knowing the market you are going into. That is most people will tell you buy where you know which is typically where you live. I understand that your market might be too expensive to buy right now so if you are set on doing something before the end of the year I would look at doing something turnkey. there are several turnkey providers here on BP and many many threads about how they all are and peoples experience. As for the accountant thing yeah you should get one. As for the LLC thing it might not matter that much from a tax implication perspective. Most people use an LLC for asset protection but at a smaller scale an umbrella insurance policy may do the same thing and makes getting a loan and buying the property much simpler.

Are you focusing as well on learning about properties and what makes for a good investment? If you don't learn that, an accountant and LLC or not-LLC won't do you any good. But to your question- accountants aren't that hard to find. Can ask random investors for referrals. For the LLC, to me it's putting the cart long before the horse. Here's why I decided not to go the LLC route for myself though, if you're really wanting to focus on that before the property itself-
https://www.biggerpockets.com/...

Originally posted by @Ali Boone :
Are you focusing as well on learning about properties and what makes for a good investment? If you don't learn that, an accountant and LLC or not-LLC won't do you any good. But to your question- accountants aren't that hard to find. Can ask random investors for referrals. For the LLC, to me it's putting the cart long before the horse. Here's why I decided not to go the LLC route for myself though, if you're really wanting to focus on that before the property itself-
https://www.biggerpockets.com/...

Hi Ali,

I have invested almost all of my time learning about properties and the math behind what makes a good investment, which is why I am curious about the other smaller things that I have not done any research about.. ie. the accountant and LLC. After the last few days of researching LLCs, I will most likely not plan on using a LLC. Thank you for your blog post as well.

Thanks,

Sean
 

 

Originally posted by @Sean Abrahamsen :
Hi Ali,

I have invested almost all of my time learning about properties and the math behind what makes a good investment, which is why I am curious about the other smaller things that I have not done any research about.. ie. the accountant and LLC. After the last few days of researching LLCs, I will most likely not plan on using a LLC. Thank you for your blog post as well.

Thanks,

Sean
 

You bet, and sounds awesome! You'll do great.

 

Sean, any time you buy a property put it in an LLC! It's for your own protection. With rentals, if you have eviction you have to have a lawyer do it for you, the courts won't let you do it your self. When you interview your CPA, make sure they have rental units them self's! Go to a local real estate meet up, I'm sure the guys there will lead you in the right direction.

@Sean Abrahamsen It would be a good idea to have your "team" in place before moving forward. You'll hear that recommended over and over on the BiggerPocket podcasts, as well as in the book recommendation. And finding a good accountant will help provide an advisor to you when it comes to making decisions with your investment properties. 

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