All Forum Posts by: Clint Galliano

@Michael Dahlheim Your title company's reasoning sounds odd. It would seem to me that if your company owns the property and your company holds the insurance, then claims are not an issue, just a matter of business. And selling should not be an issue either. You would just need to make sure that the title is held in the company's name. 

When we bought our last property as a cash sale, the real estate attorney at the title company encouraged us to title the property in a company's name. This was in Louisiana. Maybe it is different in Minnesota.

@Chris Martin, A single member LLC can be beneficial for buying/holding a property/properties in when you have other assets outside of real estate that you want to protect from liability. Should someone sue due to a claim against the LLC, your other assets are protected.

Neither an LLC, nor an umbrella insurance policy are silver bullets providing be-all, end-all protection, but can be used in conjunction with other strategies to protect your interests.

These are my opinions.

Disclaimer: I am not a lawyer, don't play one on the internet, and didn't sleep at a Holiday Inn Express last night.

Cool! Would you like to get together for coffee one day? Preferably on a Thursday or Friday. Could be Houma or Thibodaux. 

@Eve Oliver To create the entity, yes. IIRC, There is a $25 annual filing fee starting on your first anniversary.

I opened one through my state's Secretary of State's website. It took about 30 minutes to fill out the information after I got an EIN from the IRS. Within 24 hours, the process was completed and it cost me around $130 (Louisiana). Other states vary. 

Wow! It's been FIVE MONTHS since my last update...(we have been a little busy).

After many delays with the contractor, we finally finished things up and listed the property for rent in August. We had a few minor things to finish, but started showing the house to prospective tenants.

We had a lot of interest, but little follow through in the way of applications. We listed it for $1000/month, but the people who did apply did not meet our qualification standards. Some of the applicants even were worthy of a mention in the "Tenant Applicants say the dumbest things" thread!

We finally found a couple who loved the house and met our qualification standards after dropping the rental rate to $950/month. We offered them a further discount of $25/month if they signed a 2 year lease, which they readily accepted.

We did get a call from them that the washer water supply valve was leaking and that the washer drain overflowed.

**Kicks self in the head** The only valves we did not replace and the only drain we did not check as part of the inspection.

One plumber visit later, we find out that the washer drain was never tied into the municipal sewer system when the house was converted over. It used the original existing field drain. Luckily, the plumber was able to run a new drain line above the ground to tie in to the main cleanout line as a temporary solution AND we have figured out that we will be able to run a full-sized drain from the utility room area that will tie in to the main drain, thus allowing us to add a half bath too the large utility room. #SilverLinings

Below are some of the "after" pictures of the house:

What @Account Closed said. There are extra requirements for C-Corps in the way of reporting and taxation...the business gets taxed, plus you get taxed on any pay you receive from the C-Corp, so that may be a down side. Another option could be to have a separate LLC set up as a holding company for the remodeling business, allowing you to set up a separate LLC for your REI activities. The holding corp could then fund the REI business.

Check out Loopholes of Real Estate and Start Your Own Corporation by Garrett Sutton for better advice.

Disclaimer: I don't play an attorney or an accountant on the internet. Check with your attorney and accountant for advice in your specific situation.

We formed an LLC when we bought our second property. We already had a business checking account from activities a few years ago. It was set up before a tax ID was required to set up an account. We were able to convert that account to the name of the LLC along with all the required information with no hassle. It was simple.

Keeping your REI accounting separate from your personal finances is a must, especially if you want to keep track of your profitability and expenses. Plus, it is good practice for if/when you do set up a business entity.

Here in Louisiana, I was able to set up an LLC in about 30 minutes online and had the articles of organization available the next day for roughly $120.

Disclaimer: I don't play an attorney or an accountant on the internet.

Garret Sutton's Loopholes of Real Estate is pretty good. It covers some business basics. Based on his business structure recommendations from that book, I will assume his "Start Your Own Corporation" will give you a deeper dive into that sort of stuff. He has numerous books on business entities available and is a Rich Dad adviser.