All Forum Posts by: Leon Li

Originally posted by @Ronald Rohde:

Originally posted by @Leon Li:

@Alan Davidson

If it's out of state rental the LLC must be created in that state. If you buy everywhere that narrows your choices. Like mentioned above it's based on your risk tolerant. If you have 500k of equity among 4 houses and you put them in 1 LLC 1 law suit and it's all gone.

Also theres huge benefit in term of taxes, the more LLC you have the more you spend the more expenses you right off.

Theres also a better and common way to protecting your asset by having a parent LLC from Wyoming or Nevada owning all of your LLC, reason for that is those 2 states have tougher laws to penatrate during a lawsuit, but dont quote me on it.

That's not precisely true, you may need to file a foreign certificate, but you don't need to form a local entity.

Lots of good advice in this thread, lots of bad advice too. Good luck for anyone trying to build real estate instead of becoming a legal expert! 

You are right, I should of worded differently and my opinion does not replace legal counsel. In my personal experience my lender has told me multiple times that this can not be done, I wanted an out of state property to my WA LLC. I was told most title companies will not allow you to transfer title into an LLC that is not qualified or formed in the state where the property is located. Confirmed the same information with my attorney as well.

That was my most important trait.

@Corby Goade You cant be too cheap. It's too easy to fail in RE if you're cheap. RE is a long game, unfortunately many quit in the short run.

@Alan Davidson If it's out of state rental the LLC must be created in that state. If you buy everywhere that narrows your choices. Like mentioned above it's based on your risk tolerant. If you have 500k of equity among 4 houses and you put them in 1 LLC 1 law suit and it's all gone. Also theres huge benefit in term of taxes, the more LLC you have the more you spend the more expenses you right off. Theres also a better and common way to protecting your asset by having a parent LLC from Wyoming or Nevada owning all of your LLC, reason for that is those 2 states have tougher laws to penatrate during a lawsuit, but dont quote me on it.

@Abimael Rodriguez See the money, that would work if the individual loves money, not everyone loves money. She might enjoy the design aspect of RE, during a flip ask her opinion on color of the backsplash. If you're buying a rental ask her if she likes the interior exterior of the house. Most people have a personal connection with SFH and the american dream of owning a home. It's not always about the money, most investors fail because of the money aspect. 2k repair on a move out turnover, I cant do this anymore I'm too cheap to pay for 2k on paint and minor repairs, I quitting REI and selling my rental for half off and telling everyone about my horror story.

@Franky Juwana Looking at the numbers, I'm assuming you are looking at areas of high appreciation. Appreciation play can be dangerous but it works for some. If that is the case it is really difficult to cashflow, I invest in seattle area and I make 80k downpayment I cash flow 300 a month with terrible roi. I make some money on appreciation every year, but the number never works out that's just the way it is. If you want cashflow and investor returns you definitely should consider somewhere in the midwest, wouldn't hurt to start out with a good turnkey company, then research on a good realtor in the area and do it your self. Even with turnkey company you can make 14% cash on cash with the BP calculator adding vacancy repair and capEx. Just make sure it's a good neighborhood.

@Jason C. It depends if you are including maintenance vacancy and capEx, or if you are using the 50% rule. I would say the deals are not dropping on return rate unless you are looking at the same area, out of state investing etc.

@Domenick Cava I dont think theres any difference between out of state and in state. Only traveling expense which David does not do anyways. If you do an LLC then that expensive is also an expense. If you do LLC that LLC must be in the state you purchase from. When tax time comes you just ask your CPA for every expense you did can you expense it, or just ask turbo tax if you tax with them. There really is no difference.

@Bhaskar Pandey Umbrella is your best bet and safest route. If you do decide to go with LLC, you need strong documentation. Everything has to be documented or it's useless also much weaker than a umbrella. For example in the LLC you need to document how money will be distributed and the responsibilities of each members/owner. A professional attorney will easily do this for you. And yearly renew time you need to put in meeting minutes for everything you have done, if you opened a business checking or changing to different business checking all need to be in the meeting minutes. If you miss any of those things or accidently mixed personal bank with business checking, then that LLC provides no protection. Without an umbrella you be done. Doing it professional with an attorney can be expensive 400 a year and initial cost to setup.

@Gissella Irazabal I would do portfolio/investor lender, even though their interest rate not as attractive, you can still find 5-6%. Buying it traditional can save you on interest rate but heloc on the other hand is not fixed rate, as of now my heloc is reaching 6% flexible rate. Also down the line you can get into road block getting more heloc like you mentioned the snowball effect. Commercial heloc on rental property is tougher to get plus as more property u have the more reserve is required, the snow ball effect becomes tiny ball. As for portfolio lender u will see lots of flexibility and time saving and maximizing your downpayment.