All Forum Posts by: John Laabs

@Tina Trussoni Tina, my suggestion if your willing to do some leg work yourself, go to the local library and look up books on how to form your own LLC (the Dummy books, or Nolo brands are good). Take them and in general you can do all the work yourself and then from there if you are feeling not so sure, use your accountant or a lawyer to review what you are going to do. By doing that you cut out a majority of the cost (or should).

Thanks Franco Li.  Your last comment about signing a new lease, I can only assume you meant after the current lease is up since as you stated the current lease would still be in place after I buy the property and would not be ended until its normal end date, correct?

Thanks Bill Pate.  Can I ask when you purchased it did you ask the seller to see copies of the leases or do any other investigation of the existing tenants before the purchase?

I also posted this under the General Real Estate - Renters discussion

Can anyone point me to a forum or other discussion on how the process works when you are buying an exiting property that is already being rented out? So it already has tenants exiting on the property, what happens to them and their lease with the current owner if I were to buy the property? FYI, the idea of me buying the property is to also rent it out, but trying to understand more of how the lease and other things go from current owner to me being the new owner. Any help, direction or advice would be appreciated.

Can anyone point me to a forum or other discussion on how the process works when you are buying an exiting property that is already being rented out?  So it already has tenants exiting on the property, what happens to them and their lease with the current owner if I were to buy the property?  FYI, the idea of me buying the property is to also rent it out, but trying to understand more of how the lease and other things go from current owner to me being the new owner.  Any help, direction or advice would be appreciated.

Anna,

One question to ask yourself (and friends), is if you are investing in more properties later you may want to look at who all have their names on loans. For later loans it may help if different properties have different loan owners, but in the end I believe it is like Adam is stating above, that it has to be defined in your LLC (or even a Partnership agreement).

Raj,

The biggest thing about setting up an LLC in any state outside of your home state is the Registered Agent, this is where ALL legal documents will go if there are any (e.g., being sued) that have to be delivered to a person. Some states require that the RA, be an address (not PO Box) within the state that the LLC (or other legal entity) is registered in. That is why some of the "services" out there for creating a legal entity in a state charge so much because they end up acting on your behalf of receiving mail and forwarding onto you.

If you are creating the legal entity in the state that you live, I have found that you can do it for whatever the state registration fee is, some elbow grease and internet time on the Secretary of State (that you live in or where you plan to create the entity). I have registered both a Corporation (taxed as an S Corp) and a LLC member managed (taxed as a partnership, since there are 2 of us in my buinsess) in my home state of Minnesota for the filing fee of $150 each.

By the way, in most states you need to renew your business entity on a yearly basis to keep using it.  In my state that is just going on-line with the Secretary of State's office and clicking a button or two to renew (no money), but some states require a yearly renewal fee as well.

https://www.biggerpockets.com/users/TiffanyLynn

Tiffany,

I just talked to my agent today as I am in a similar situation as you (i.e., looking at my first buy and trying to understand the insurance side of things).

If you are buying, rehab, renting type of scenario, then you will have insurance for different stages.  You will want/need General Liability insurance (Landlord Liability) for if some gets hurt on the property, especially once you start to rent.  If you have someone doing the rehab on the property (i.e., contractor) you will probably want it then as well.  It is also a good idea to make sure your renter has renters insurance part of the rental agreement so as to avoid them coming after you for something that happens to their property.  They would need to provide you a certificate of insurance.  Then there is Property insurance, here you have the choice of Market Value (during the re-hab and usually if you paid cash for the property) or Replacement Costs (which as stated above is based on calculations of #of bdrms/ # of baths, square footage, etc. of the actual property).  This is based on the conversation I had with an insurance agent doing "commercial" real estate.

One of the things is that I found my insurance agent on my house, does not do investment property insurance, but they were able to put me in touch with the agent that I talked to that gave me the above information.

Also I have a separate business that I needed to buy General Liability insurance from a agent.  They can only provide a quote and they should be able to do that WITHOUT getting any money from you up front, that would state all the limits and such of the policy so that you can compare insurance companies and policies.