All Forum Posts by: John C.

Hello BP! I am currently a buy and hold investor and am looking to structure my assets in the most beneficial way possible. I know its a common question asked, but with a multitude of answers.  Would love some feedback.

A little background about me, I currently have a few investment properties that are either in my name, my wife's name, or both our names. I already have umbrella insurance on my properties for some liability protection and I currently manage each of these properties on my own. I was looking to set up an LLC for each property (unfortunately, our state doesn't recognize Series LLCs), but was looking to do them once each on is paid off, primarily because of the bank calling the loan when switched to a LLC. Does this seem like a good idea?

Also, if I do end up creating an LLC for each property, would I also have to set up a separate LLC for general business expenses? For instance, if I travel to a location to view new potential properties or take a course on real estate investing, how would I expense such items? Is a separate LLC the best idea for this? It seems as though creating all these separate LLCs, would create a lot of paperwork.

Anyhow, I am planning to meet with a lawyer to discuss in greater detail, but would love some background extra background before then. Thanks in advance!

Hello,

I am interested in getting some thought so on how I should structure my current real estate investments. I own three investment properties at the moment which are held in my personal name and I plan to hold on to for the long haul, primarily for my retirement. On a monthly basis, I pretty much break even on mortgage and rent, so I am not earning a huge passive income. Based on tax requirements, I earn too much money in my day job to be able to write off the expenses from these investments. I understand with an LLC the taxes would just pass through to me anyway, so I still would not be able to claim the expenses. I'm less interested in whether my investments were smart or not cause I am breaking even and more interested in recommendations on how to restructure my properties so that I can claim the expenses on my taxes. Welcome your thoughts. Thanks in advance.

This has definitely given me quite a bit to think about.  

@Chris Tan - my current mortgage rate is 3.375%.  With regards to finding something that would give me a higher return on my money .. I am not sure.  The area I live in is fairly expensive and properties are pricey.   

@Amy E - thanks for your suggestion, I will chat a bit more with my CPA about the LLC. Last I spoke with my bank, they told me they would call the loan, so I had just paused there and thought I would create a LLC once the property was paid off.

With regards to the cash flow issue, this is definitely something I have been thinking about lately which is why I considered paying the property off early to create a cash flow and use the snowball effect to help me pay off other rental properties.  Would this be a good idea?  I will note, I have been thinking about buying a larger house for my personal use, so I am still weighing out the pros and cons of having less liquid capital for a larger down payment.  Welcome any insights.  Thanks!  

To date, I have paid off about 70% of the property.  The investment is located in a nice area with projected appreciation, so I don't think the property is a bad investment especially in the long term (in fact the value has already gone up).  I do wonder, however, if it would have been wiser to have a longer term loan so that we had some cash flow to help with tax benefits since the household income is too high to claim any losses (since there is no passive cash flow from the units).  

In the past, I was simply investing my savings in properties as a good chunk came available for the down payment and have someone else pay off the mortgage for me (basically splitting even and building equity).  Now that I have acquired a few properties (all mainly splitting even), I am looking on how best to move forward.  

My end goal is basically to have a good cushion for retirement where I can rest assured that I will have passive income coming in.  However, it wouldn't hurt to have some cash flow now as well.  Maybe refinancing would be a good idea…? 

Thanks for you response. I have not talked with a CPA about making a business, but I have chatted about making an LLC. At this point, I had decided against creating an LLC since the bank would call the loans and I would be forced to pay them all off before switching to the LLC.

With regards to profit, you bring up a very good point.  When I purchased the property, I did it mainly to invest some of my money since I wasn't making much money keeping my savings in the bank. At the time, I opted to take on a 15 year loan since I would be able to split even since I thought to keep the property long term (mainly for profit during retirement - I'm in my mid 30s now).  If I had taken on a 30 year loan, I would have been able to turn a monthly profit.  Curious now that you bring it up, if I should have taken on a 20-30 year loan to make some profit..?

Hello, I'm curious about the advantages and disadvantages of paying off my investment property.  I currently have enough savings to pay off one of my investments (which has a 15 year loan) completely.  On a monthly basis, I do not make a profit on the property, but do almost split even.  So, since I do not make a passive income from the property, I can't normally write off any of my expenses (rental losses, hoa, etc.) from that property on my taxes cause my household income is too high.  However, I am able to write off the interest and depreciation on my taxes.  I'd like to hear your thoughts on the advantages and disadvantages on paying off the property.  Thanks in advance.

Thanks for all the responses.  As a follow-on, how much can I push back ok the tenant though?  Does the tenant have a right to deny request to enter the property if sufficient notice is given?  Since the clause states "reasonable" and not a specific timeframe he seems to think it is up for negotiation and is what HE deems reasonable. Thoughts?

My tenant has provided the required 60-day notice to vacate the rental unit. According to the lease agreement "Tenant shall not UNREASONABLY without consent to Landlord to enter the premise to exhibit the unit to prospective tenants."  I would like to begin showing the unit at the start of the 60 days, but the tenant feels that is excessive and would prefer 30-45 days.  I would think since 60 days was the required to inform the Landlord, that would be "reasonable." However, since there is no specific number associated with what is "unreasonable," what choices to I have if I live in Virginia?  

Hello, I currently own a few units as investments that I am renting out. I want to put them under an LLC for the lax liability and potential tax benefits since my income is apparently too high to claim any rental losses. I know there has been discussion about creating LLCs on this site before, but was curious about my specific situation. I contacted my lender regarding creating an LLC and was told it was not allowed based on my loan's current agreement -- which I assume means I would have to abide by the due at sale clause that has been mentioned in other posts. Can I put the properties under an LLC and create the business accounts associated with this without changing the deed to the LLC? Would this be allowed by the lender? Would I benefit from the creation of a LLC even if the loan is still in my name? Welcome your thoughts. Thanks in advance!!