All Forum Posts by: Deborah Burian

Jarcob - you should go to epa.gov and read about this. The short answer is 'maybe.' Some of the hardware kits are EPA approved and some are not. They all need to be used appropriately to give an accurate reading. At the same time, the $400-$500 test is probably not necessary. Find an RRP contractor and pay them a visit charge or equivalent. If they are RRP certified, that will be sufficient. Also, if you're not planning to 'disrupt' the paint by working on the house, it's not that big of a deal, at least in our market. Think about how much of the total housing inventory was built before 1978.

You will see a variety of opinions on this... we chose the LLC route. The properties were always intended to be a serious business, there is alleged liability protection, makes it clear to the IRS and vendors that you are a business and not a hobbyist, LLC has EIN so I can keep utilities etc out of my personal ssn. The list goes on.

I prefer the LLC first, it is possible but somewhat expensive and eye-crossingly annoying to change title. In our situation if we quit claim the property to a different organization, in addition to the title transfer and abstracting, we also have to re-file the mortgage, change all business info... Just not worth the aggravation to me.

But. We are buy and hold. Your mileage may vary.

Richard Linthicum... sanding is fine but under the EPA RRP guidelines, you need to be ensuring that you are capturing the dust and appropriately cleaning the property. Lead dust is the most dangerous exposure.

If I can nerd out for one moment... lead paint was ubiquitous prior to 1940. On the other hand, I just purchased a 1931 home and it tested lead free because the interior walls had never been painted, just papered. As one moves forward decade by decade, the usage falls off and by the 1970s, it is largely limited to outside applications that require high durability, window trims and so forth.

Issues arise when you "disrupt" lead based paint by sanding, scraping, removing drywall, etc. At that point you MUST use an EPA certified Lead Renovation,Repair and Painting (RRP) specialist and that individual MUST do appropriate notifications to anyone living in the household.

In defense of the EPA, lead is a serious hazard to small children. In fact, one of the higher risk pools is contractors. They scrape, sand, etc and then carry the lead dust home to their families on shoes and clothing.

On the other hand, if you plan to properly contain the dust, chips, etc, lead is easily managed and the EPA is not unreasonable in the testing/cleaning guidelines.

Hope this helps.

As many as you can talk your friendly neighborhood banker into.

Native American owned lands are a tremendously complex issue and will vary from one tribe/nation to the next. Historically owned land may not be able to be sold or separated from the nation. On the other hand, if the Muscogee's bought the property in a contemporary transaction, it is much less likely to be tied up. Can you get to county records for the county in which the property resides?

When we formed our first company, about 10 years ago, we chose an LLC format and that has worked out fine. We carry umbrella liability on the LLC and each property is added to the policy as they are purchased.

Based on my prior business life, I understand very well that one should have liability insurance of at least the value of the assets being protected.

However, past a certain size, say 10 properties, it seems prudent to create a second LLC, third LLC, etc, in order to keep liability spread out a little and to in effect, increase liability coverage. For example, a common contemporary liability value is 1mil/1mil. Once the asset value passes the available insurance, the company is in a somewhat riskier position. Hence the subsequent LLCs then one can purchase separate liability policies.

For this and other reasons, it's time to start a second LLC. That is in process. While discussing it with the attorney, he also indicated that it might make sense to create a third entity to be a management company, use the prior LLCs essentially as holding companies and manage all props by and through the management company. On the surface, that makes perfect sense to me, subject to approval by the tax accountant. As an aside, let me add that Oklahoma does have series LLCs but they are untested in our courts and there is no consensus on how these properties should be titled. Not wishing to be the test case, I passed on the series approach.

Now I have the question "how does the income flow." It seems as though revenue would come to the management company which would pay bills/expenses, extract a management fee and return the balance if any to the holding company capital and/or retained earnings accounts. Should a major expense, a la a roof arise, the management company could invoice the holding company for costs in excess of income and the holding company could transfer funds, write a check, whatever makes sense. At the same time, this is a modestly complex structure and raises the question of am I over complicating things.

I would deeply appreciate the input of any more experience members.

Thank you in advance.

Not at all. There are tons of homes that sell, even for retail, at under 100,000 and people buy them every day.

1 ) Yes
2) Before closing and as part of the due diligence. Will vary widely from state-to-state and depending on how complex the title is
3) In Oklahoma, we use title companies. Other states may vary.

On private sales, we don't use a state standard contract, we use one prepared by our real estate attorney. Among other issues, our state contract has many references to what the agent will and won't do and on a private sale there is no agent.

Hope this helps.

On a bit of a different note, I have had some luck with the IRS waiving penalties (never taxes) on an unintentional error.

Ditto what Jon Klaus said plus on the rare occasions when a tenant has balked at a credit check, I just tell them, "We're giving you control of a $70,000.00 property, of course we're going to check your credit.

This is with, of course, a full application and consent.