All Forum Posts by: John Lenhart

@steve B. a personal residence in an LLC can help provide a level of privacy to someone. I have seen it done before and can make sense if one of the owners his a ton of professional liability. Often the LLC is owned by the spouse. Not common and a trust is a better instrument when talking about your personal property such as a house, but not going to say holding personal residence is a complete waste of time but generally there are better ways to accomplish the goals outside of an LLC.

@Jeremy Roll if you talk to most legal professionals, they will advise for max protection to hold one property per LLC. However, this is administratively burdensome in many cases so if you own a large portfolio, it can be best to spread them out amongst a number of LLC's for many of the reasons cited above. Most states, the LLC is only $100-$200 to form and may cost no more than $100 a year afterward to maintain In good standing depending on your state of incorporation.

If you are investing in commercial properties, LLC's offer additional benefits beyond asset protection. When you are doing single family, that need is a little less. It provides good asset protection, but you typically must personally guarantee the bank note, and oftentimes, there are covenants in the note that say you cannot transfer to an LLC (its OK, everyone does it anyway, and as long as you remain current, the bank does not care)

For your personal home, you can transfer to an LLC and hold it in that entity if you so choose, however, you may not be able to take advantage of the asset protection because you will still have personal liability to injuries sustained to those you invite to your own premises (i.e. you invite someone to your house and upon you leading them to your man cave, they fall down the stairs and break their ankle, you are personally liable no matter how the house is held)

@Mike Fitzpatrick is it too late for the referral? We use buildium on our portfolio. Agree that it is a better value than Appfolio for the size you have. I would say that at 11 Units, you can probably get by with spreadsheets and such, but Buildium is the best value in the market from what I have seen so far

@Chase Gochnauer when evaluating the deal to determine the price, I do not. When evaluating the deal for my own personal benefit I do. On the evaluation side, if you are looking for an 8 CAP your personal tax rate and savings are irrelevant. This will affect your own IRR and return on your cash, but it should not change the value of the property. The property is worth what it is worth whether you are in a 15% tax bracket or a 39% bracket

I find this quite humorous. The Patel name in India is equivalent to Smith or Jones in the US.  So the majority of the Patel's who own hotels in the US are not related and it is not one giant family. @Jay Patel is right, the way to make these investments, like any real estate investment work at the beginning is to bootstrap and work your way up in the business.

Delhi is a solid area. you will do well there. There are certain neighborhoods I would probably not venture to in region so it is good to be careful. Also, one thing to keep in mind is to shop the property management company rates. I have seen from numerous transactions we have done in the past, that some management companies will stick it to California and New York investors with their rates by charging "California" type prices whereas a Midwest investor will be paying a lot lower.  The law firms do this too when they can.

@Dan Graves from what you are saying, it seems unclear if you will have your interest on the deed or how your interest will be documented for the property. Personally, I would advise against the structure your friend is proposing. First, if something goes wrong at one of his other properties, a judgment creditor can attach the judgment to your property because your partner is holding the property (or his portion of it) through his LLC. This would expose you to liability or possibly having to unexpectedly buy him out to pay off his judgment creditor. It is always better to have a clean LLC holding individual properties instead of co-mingling multiple assets in one. That being said, sometimes, it may be worth co-mingling the assets in the same LLC because of the administrative burden however, when you introduce separate partners into the equation, you should want separate LLCs.

@Sidro Felix Do you have a large Cincinnati portfolio? We are very active in the multi-family market and always looking to connect with other investors in the Cincinnati area. Would love to connect when you are out there. 

If this is your first time investing in Cincinnati, it is a unique area with a lot of different submarkets with unique characteristics that may not be true of other cities.

@Andrew Michaud I would focus your spend on what will generate the most income for you either through increase rents or reduced expenses. The fuse box is nice to change out, but does the tenant really look at that when they are renting? I had a duplex at one time with a fuse box and to be honest, that was not something the tenant ever paid attention to nor did it really reduce expenses. New windows definitely have more of an appeal to the tenant because they offer a fresh look and will reduce your energy expenses.  I would first focus on items that are going to get an instant return and then take care of other upgrades that while important do add value to the tenant or reduce your expenses.

@Michael Hooper you can always cut the windows larger and have a window well to create a suitable means of egress. While expensive, it may not kill the economics of the renovation depending on how long you intend to hold it.