All Forum Posts by: Matthew McNeil

I just built a new primary home for my wife and I. Monthly loan is $3500. I’m thinking about selling one of my debt free rentals to pay off the loan of the new house – thus erasing the $3500/month loan payment. Cashflow on the rental is $1400.

I realize that selling a cash flowing rental is open to criticism. However, I view it as either a) saving $3500/month for the new home or b) earning $1400/month cashflow from the rental.

The capital gains tax if I sell the rental will be $40,000. However, the money I’d save by not paying $3500/month mortgage is $42,000 after 12 months – thus recovering the money paid on the capital gains tax.

QUESTION: would you advise selling the rental to pay off the new home and take the $1400/month rental income loss (and gain $3500/month savings) or would you advise keeping the rental?

Thanks much!

For many years I assumed my LLC's Operating Agreement was sufficient until I learned that a Creditor who obtains judgement can have a significant detrimental impact on the entity.

There is an abundance of comments on BP about LLCs, and people are evenly split 50-50%; either for or against the idea. If you have an LLC or plan to create one, I suggest you consider wording that includes;

No forced distributions, Non-Pro Rata distributions, No Charging Order language, Creditor cannot force the removal of a manager, No member interest can be assigned to a creditor, and Creditors have no voting rights. Ultimately, you want limitation imposed against creditors who try to force their way into the ownership of the LLC.

Without such wording, the LLC is not as protected as you might think. My OA is about 70 pages long.

I agree with Eliott. Negotiate for principal payments only. You need to get some equity in the deal. Balloon payment at 5 years.

The level of asset protection you decide to go with depends entirely on the level of risk you feel comfortable with. As others have written here, if you have a great property manager and a $1M umbrella policy then you may be fine. I've put each of my assets into separate LLCs each with a 65 page Operating Agreement that deals with issues you rarely read about on BP. 

Quote from @Mike S.:

Quote from @Adah N.:

@Andy Vasquez

Why can't he simply do a Quit Claim deed to the LLC? What is the advantage of an Umbrella policy over a regular landlord policy?

Don't quit claim deed to your LLC. Use a Warranty Deed instead. The use of the Quit Claim may void your title policy and will make the chain of title murkier.

Generally, the title policy isn't voided using a QC if the LLC member(s) are the same as the name(s) on the mortgage. He can call the Title Co to confirm.

Clint Coons has an interesting take on Cost Seg involving a 1031 Exchange. Interested in hearing other people's thoughts on this - @Dave Foster. Check out this video starting at 6:00 timestamp:

There are pros and cons to buying Turnkey properties. I seriously considered investing in TKs, but realized that buying at a premium price meant that I was paying for (or buying) the home’s appreciation for an indefinite period of time. And that “period of time” has increased in this current economy and market, especially with home values lowering.

Quote from @Bruce Woodruff:

Quote from @Matthew McNeil:

Coming at this post as a guest who has rented a dozen AirBnbs during the past year, I will say that my wife and I are almost done with AirBnb primarily because the increasing requirements of hosts regarding cleaning. Aside from loading the dishwasher, why are we expected to strip the beds and gather all the laundry and take the garbage out and sweep the floors? That's what we're paying for with the cleaning charges. And this is my FAVORITE story.  We stayed in a cabin in Montana and were required to haul the garbage in our car to a transfer dump site located 6 miles away!

Well sweeping the floors, and driving to the dump shouldn't be on the list, but the rest are fair. I mean are you seriously going to leave dirty dishes in the sink? What if the hosts are like us and don't show up until Monday (after a Sunday am checkout)?

I guess maybe some people just have to be waited on and shouldn't stay at STRs......?

 Not necessary to be condescending. We're a BP family trying to support one another. The point I was making is that I'm seeing the cleaning requirements increase and the sweeping and hauling garbage in our car highlights some unrealistic expectations that more and more hosts are requiring. Cheers!

Coming at this post as a guest who has rented a dozen AirBnbs during the past year, I will say that my wife and I are almost done with AirBnb primarily because the increasing requirements of hosts regarding cleaning. Aside from loading the dishwasher, why are we expected to strip the beds and gather all the laundry and take the garbage out and sweep the floors? That's what we're paying for with the cleaning charges. And this is my FAVORITE story.  We stayed in a cabin in Montana and were required to haul the garbage in our car to a transfer dump site located 6 miles away!

I spent a lot of time studying TKs and came to the conclusion there are better investment options for my long term goals. Only cashflowing $150/month is not for me. But the real sting of TKs is that you are, for all intent and purposes, buying your appreciation up front.