All Forum Posts by: Greg Scott

If the PM is screening correctly an eviction should be a fairly rare occurrence.  In my SFRs I had only two in 10 years.   The biggest cost from an eviction will likely be loss of rents and turn costs.  I expect the legal costs in tenant-friendly states might be significant, but I would be surprised if your costs in Montana would be more than $1000.

Ask your PM what it normally cost them to evict a tentant

Answer: Happiness.

Amount of time varies.  If you buy it right, you may be able to have 2x the equity in your property as your down payment.  In that case you have an instant 100% return.

@Joshua Tikal

Every state is different and I'm not a lawyer.

In my experience, what the state wants is a location with a physical office in that sate so they can serve legal papers to someone. They usually like your personal address or the address of your attorney or a Resident Agent; I don't believe you can use a PO Box. The Resident Agent is basically someone that collects any mail for your LLC and forwards it on. There are many of them out there in every state.

In my own state, I have different strategies.  If I'm not too worried about privacy, I use my personal address.  If it is a property for holding an apartment, I don't want a savvy tenant tracking me down so I use a Resident Agent.

For other states, most require you have an address in their state.  In my Texas LLCs, for example, my Texas attorney acts as my Resident Agent.

On the other hand, I do believe that LLCs are over-sold to investors.  Most buy & hold single family risk protection can be handled by insurance.

Did your expense numbers include property management?   If you intend to do the work, that is fine, but if you want to run the numbers as if it were a business deal, include the cost of property management when analyzing the numbers.

Most states will require you have a registered agent in the other state, which typically costs about $100/yr. Some states require that your LLC be registered as a foreign entity and fees vary.

A bigger question is do you really need an LLC? What are you doing?

Flipping or buying a rental?

Most rental owners I know find something they like and use it over and over so there is no need to keep hundreds of brochures.

@Patrick I.

I had to look up M1PR.  It appears to be a State of Minnesota form, which is why I had not heard  of it.  

I would ask your CPA.

Dewayne:

I would suggest a totally different plan.  

Buy a duplex because it makes a great business sense and use the profits to pay for your vacations.  This way you can afford to stay in the nicest hotels  and eat at great restaurants.  It is better than hunkering down in a rental duplex and dealing with tenant issues while you are on vacation.   You can also buy a duplex in a place you want to visit so airfare and hotel can be tax deductible against your profits.

To answer your question, the IRS deduction on capital gains is only valid for your primary residence not a vacation home.  

Using half a duplex as a vacation home is not profit optimizing, is not tax-efficient, and gives you less flexibility for your vacation plans.

Rather than ask which state, my main questions is do you need an LLC at all?

I would think that being a note buyer has very little risk exposure. If that is the case, and you still want an LLC, I would think paperwork headaches and filing costs would vastly outweigh any subtle advantage of one state over another.

Colorado is probably a fine place to have an LLC.

You should make as much profit as possible.

I once bought a property from a wholesaler and he made more on his wholesale than I was expecting to make turning it into a rental.   Would I have loved to have a piece of his profit?   Sure!   However, it would have been stupid of me to try to eat this wholesaler's lunch.  The property was still a great deal for me.   I bought several more from that same guy over the years.