All Forum Posts by: Alex Pelletier

I agree with the group here that Zillow is still best for getting qualified applicants out of the major sites. FB Marketplace has been great for getting visibility, especially in niche local groups! It's nice that it's free as well and tied to a social account to vet the authenticity of those interested. Good luck filling your properties!

I think the best software for your use case depends on how many properties you look to manage and whether the financial tracking or maintenance piece is more important for you. Few platforms do everything well.

Some like Avail, RentRedi, TenantCloud, Innago, and TurboTenant are good all-rounders, but some of these are paid solutions and charge additional for accounting and other features.

Stessa is easy to use for the bookkeeping bit, but is a bit less developed for managing leases, collecting rent, screening applicants, etc. They recently came out with a paid “pro” tier which puts a paywall in front of a lot of their desired features. There are some other software (feel free to ask me for more info) that also focus on the accounting and money management part of rental management but can also help with the majority of the features you listed. 

Good luck exploring and finding the right fit for your business!

These questions are all good, but I'd agree with Kelly that a systematized application and a background check may be more thorough and easier to implement as you fill your properties. 

Services like Avail, TurboTenant, Innago, RentRedi, Hemlane, TenantCloud etc can all make this process much easier for you and potential tenants.

There are several considerations to think through when deciding on going for an LLC or not, including compliance, personal asset protection, and more. Here's some info from an Azibo blog post! If you do go the business banking route, there are a few good options for creating separate accounts for all your properties/LLCs in a rental platform -- you can check out Stessa, Baselane, or reach out to me directly.

1. Personal asset protection

Operating a rental property business as a sole proprietor comes with inherent risk. If you don't have an LLC, there's no separation between your rental income and personal income. That means if the property is in your name and a tenant, vendor, or other entity decides to sue you, they can go after your personal assets.

An LLC mitigates this risk by making your real estate business a separate and distinct entity. If you run into a legal issue and your property is owned by an LLC, your personal assets are protected.

2. Built-in tax benefits

Legal provider Nolo notes that an LLC is not a separate tax entity like a corporation; instead, it is what the IRS calls a "pass-through entity." Your rental income and losses "pass-through" the business to the LLC owners, who report that information on their personal tax returns. In many cases, according to FortuneBuilders, this structure results in lower tax rates for the rental property owner. But while LLCs are not taxed directly at a federal level, some states do require annual LLC taxes.

3. Establish a business profile

By creating an LLC for their rental property business, you can build a business profile and credit history that's separate from your personal profile. As your business grows, this will help you qualify for non-recourse lending (i.e., a loan that's secured by collateral but you're not personally liable) which allows you to minimize risk to your personal assets and finances.

Now that you know the benefits, here are a couple of important factors to keep in mind when evaluating whether to form a landlord LLC for your rental properties.

1. It can be costly depending on your location

On average, the average annual LLC tax is $91. But that amount, as well as the filing fees, vary vastly depending on where you operate your business. For example, forming an LLC in California costs $70, but California LLCs that make $250,000 or less must pay an annual tax of $800 — and California LLCs that make more than $250,000 must pay [additional fees](https://www.ftb.ca.gov/file/business/types/limited-liability-company/index.html#:~:text=If your LLC will make, of the current tax year.) ranging from $900 to $11,790 per year (depending on the LLC's annual income).

On the other end of the spectrum, Arizona LLCs have no annual tax and only a $50 filing fee. When considering LLC formation, research your state's tax policies to see which rules will apply to your business.

2. Commingling has serious consequences

As a real estate investor, it's essential to keep your personal income and expenses completely separate from your LLC income and expenses — otherwise, you could risk losing the liability protection entirely.

Each LLC requires a separate bank account to avoid commingling, so you'll need to make sure you're not depositing rental income into your personal account or using business assets to pay for personal expenses — and vice versa.

3. LLCs require ongoing maintenance

Once you form your LLC, your work is not done. Most states require period renewals, fees, and maintenance to keep your business entity in good standing and continue your personal liability protection. These tasks are not usually complicated — for example, California LLC owners must file a statement of information form every other year and pay a franchise tax annually. LLC owners also need to keep up-to-date records of key documents required by your state, which could include your Articles of Organization, Statement of Information, or Operating Agreement.

While these tasks are not usually complicated, forgetting to stay on top of them has serious consequences — from late fees and penalties to suspension of your LLC, which eliminates your protection.

One common question is whether landlords need to set up a separate LLC for each of their properties, versus one for their entire portfolio.

There's no wrong answer here — but your decision will depend on your risk tolerance. Setting up one entity per property offers the highest level of protection, because when you bundle properties together into one LLC, you're exposing the profits of one property to the potential liabilities of another.

That said, each LLC comes with costs, so work with your CPA and potentially a real estate lawyer to figure out what's right for you.

Many of the property management solutions out there use one of the big providers (Transunion, Experian) as Garrett noted. These all require an applicant's consent to pull but have a relatively short application to complete. Those are easily automated through the many rent collection platforms.

Most property management software doesn't differentiate units, so theoretically you can easily manage this yourself with a free or paid tool, especially if you're living on the premises. 

Tools that might fit your needs include Azibo, Turbotenant, Avail, Innago, Tenantcloud, Apartments.com. These should all make it easy to split up your properties into "units" by room and allow you to screen your tenants as you get them signed up to rent from you. 

If you are looking for a property manager, I'd recommend finding a reputable local option via Facebook Groups if there are active communities in your area. They're going to be more flexible and may cost less!

Good luck! Feel free to connect with me if you have any questions 

Hi Yatin,

Good questions! You'd be best off shopping around for a cost seg provider to fit your needs. From my experience, they're great for helping answer some of your edge case questions as well! 

Two, in particular, that I'd recommend checking out are KBKG and ELB Cost Seg. Best of luck!

Hey Craig,

Not sure if you're still looking for a recommendation, but a couple of common ones for you to explore are:
KBKG
ELB Cost Seg

Good luck!

To add to the great responses above, I'd recommend you check out some of the rental bookkeeping software or features on different rent collection platforms that will help your accounting as your business scales with more bank accounts and properties. It would make your life a lot easier if you have a separate account for your rental-related expenses! 1 per property/LLC is important for compliance but the bottom line is it'll also save you a lot of time.

 Some tools allow you to do a Cost Seg study using a DIY tool if your property has a low enough cost basis. Anything over $500,000 would benefit from a full study, but I'd recommend you consult your CPA and check out a couple of options. Two providers with both full studies and DIY options are KBKG and ELB Cost Seg. Good luck!