New Kansas City Investor: Intro, Post & Questions

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New Kansas City Investor: Intro, Post & Questions

Spencer Davis
Investor · Kansas City, MO · Member since 2018 · 3 posts · 0 votes

Hello All,

My name is Spencer Davis. This is my first post, my first question as well as my introduction. I am a new to real estate investing but have been observing from the sidelines for several years now. For 10+ years, I have been involved in commercial real estate business on the construction management and leasing side. My area of focus is buy/hold with value add opportunity for small multi family residential units around KS and MO. 

I am originally from Kansas City and I just moved back about a year ago. I have lived in a nice SFM for a year now but I want to move out make it my first rental. The property will no doubt cash flow but with my current SFM becoming my first rental, I was wondering if there is anybody out there that knows of a good RE accountant locally. Also, does anybody have any input on creating LLC's for your different properties? Going forward, I would like to create different LLCs for my properties to help mitigate the risk but don't know if this is an industry norm in the residential world. 

Any input would be greatly appreciated and once again I am glad to be a part of the BP community. Thanks! 

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Timmi Ryerson
Property Manager · Ketchum, ID · Member since 2016 · 277 posts · 132 votes
8y

I hear you about a different LLC for each property but really it is one business. If you have a good property management software you can put the properties in as separate entities and pull reports for them as separate entities. You can also compare your profit margins for each property with reports pulled from your software. I suggest that you consider only one LLC and maybe ask an accountant about sub entities for each property. If you are trying to protect each property from risk of problems from another property then you need to be sure you are educated about property management and the ways to protect tenants from suing you and attaching other properties. I have owned properties for over 32 years and have never been sued by a tenant. So if you use best practices in property management, you probably do not need to protect the other properties individually against each other. Good luck.

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  • Jill DeWitPro Member
    Investor · Scottsdale AZ · Member since 2015 · 1k+ posts · 423 votes
    8y

    @Spencer Davis hello and welcome to BiggerPockets!

    You came to the right place for real estate investing. On Bigger Pockets, you can real out to experienced real estate investors while getting deals done the right way.

    To answer your question: you should consult with an incorporation attorney to determine if single vs multiple LLCs are right for you as far as mitigating risk or other issues.

    Congratulations and I wish you nothing but success, Spencer. You are not alone in your real estate ambition.

    0Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    8y

    @Spencer Davis If you're financing with conventional loans, you'll have a tough time buying in the name of an LLC. Banks will require you to put it in your name.

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  • Alina Trigub
    Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes
    8y

    @Spencer Davis Welcome to BP community! 

    In order to find a good RE accountant, you should go to local meetups and investors for a recommendation. Also you can search here on BP for locals and PM them directly with the same question.

    In terms of buying a property under LLC name, it may be harder to obtain financing than under your personal name. But it never hurts to check with a few lenders. Also, while inquiring, ask them if you can buy a property under your name and then transfer the Title to LLC after the closing. Some banks may allow that.

    Lastly, see if you have Investors Bank in your area and give them a call.

    Best!

    0Reply
  • Matt Pritchard
    Rental Property Investor · Overland Park, KS · Member since 2016 · 205 posts · 85 votes
    8y

    @Spencer Davis I have mine in an LLC. But just one. There are people who swear by creating separate trusts and LLC for every property. I'm sure that is the safest way to do things. But I just don't have that much time. And a traditional LLC is just fine.

    I use an accounting firm that is national. I tried a few local CPA's and I was not impressed with their understanding of REI.

    0Reply
  • Billy Smith
    Shawnee Mission, KS · Member since 2016 · 716 posts · 313 votes
    8y

    I dump all mine  into a umbrella policy , very cheap around 400 a year for S.F.H houses and cars  .You will have to up your coverage on your cars when you buy a umbrella .

    0Reply
  • Kim Tucker
    Flipper/Rehabber · Kansas City, MO · Member since 2011 · 2k+ posts · 712 votes
    8y

    trying to build your real estate investment team in the Kansas City Market - check out the MAREI event for July 10th posted on the BP calendar - it is a vendor expo - it's free - well costs a $5 donation.  There will be free food, a cash bar and an auction to raise money for Harvesters.  Plus 50 vendor sponsors plus many other attendees.  

    We will have several attorneys and CPA in house that can help you.

    0Reply
  • Timmi Ryerson
    Property Manager · Ketchum, ID · Member since 2016 · 277 posts · 132 votes
    8y

    I hear you about a different LLC for each property but really it is one business. If you have a good property management software you can put the properties in as separate entities and pull reports for them as separate entities. You can also compare your profit margins for each property with reports pulled from your software. I suggest that you consider only one LLC and maybe ask an accountant about sub entities for each property. If you are trying to protect each property from risk of problems from another property then you need to be sure you are educated about property management and the ways to protect tenants from suing you and attaching other properties. I have owned properties for over 32 years and have never been sued by a tenant. So if you use best practices in property management, you probably do not need to protect the other properties individually against each other. Good luck.

    1Reply
  • David Flanders
    Overland Park, KS · Member since 2015 · 44 posts · 14 votes
    8y

    @Mike D'Arrigo Can you elaborate on reluctance of banks to offer a takeout loan if buying property in name of LLC? Doesn't seem to be an issue if providing personal guarantee and/or secured by property. Many of us obviously have LLC's and buy in the name of the LLC. What am I missing in this conversation? Thanks!

    0Reply
  • Mike D'ArrigoPro Member
    Turn key provider · San Jose, CA · Member since 2010 · 4k+ posts · 3k+ votes
    8y

    @David Flanders It's a problem with conventional Fannie Mae lenders, Truthfully I don't know their reluctance other than they want the buyer to be personally responsible. Who have you found that will do it? Do you have a conventional lender that will?

    0Reply
  • Brent Kiger
    Kansas City, MO · Member since 2013 · 131 posts · 64 votes
    8y

    @Spencer Davis Welcome to BP! This is by far the best place to learn and it it wasn't for BP,  I would not have a portfolio. I too live and invest in KC. I have a great accountant that has owned and managed significant real estate in his past, and I've used for years and really like him. I'd be happy to share his contact info if you're interested.

    Also, regarding using multiple LLC's, obviously talk to an attorney for your situation, but what has worked well for me was establishing a series LLC. This serves the purpose of having multiple LLC's without all the maintenance and expense of several separate LLC's. There is some good info on this site about a series LLC, but a quick google search will explain the basic premise. Again, seek advice of competent counsel, but it was worked well for me and my business. Feel free to reach out if you have any questions.

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