All Forum Posts by: Mitchell Zoll

When you have truly decided to operate a business. 

Too many investors search out an LLC "to protect their assets" without understanding what is necessary run the business and maintain corporate formalities. Folks set up an LLC from an online company, sign a few contracts under the LLC name, but then fail to draft contracts that they understand or set up business practices they will actually follow. Within a year the contracts are a mess, the records haven't been maintained, and the state has terminated the entity for failing to file the most basic forms.

Insurance is a great vehicle to protect assets if that is a concern and there is no reason why you can't own real estate in your personal name. 

But you'll know its time to set up an LLC when you are ready to do all of the things that are actually involved in running a business.

The articles you are reading on google normally skip a lot of important factors to get to the benefits of a Series LLC. Read the statute that establishes the Series LLC and make sure you understand the obligations. You might be saving $308.10 (the Texas LLC filing fee) but spending a lot more on management and record keeping. Best to have a discussion with someone who understands what YOU are trying to achieve, and then can discuss the LLC options in that context.

Your lease should say that all requests/agreements should be in writing signed by Landlord (you) and tenant.  Legal or not... (and there are issues with agency here) her concessions may cause bad feelings when you have to tell the tenant she wasn't "authorized" to agree to something.  Instead make it a business rule (for all of you) that nothing is agreed unless in writing. If you tell her that rule it will help cut down on parking lot agreements. 

Get your information from the City, not the seller.  Unfortunately my experience is that enforcement might not care what other COA departments say.  They are all silos of authority.  But, if the permit department can note the work does not need inspection and the permit is complete (closed, void, etc), then it shouldn't ever go to enforcement. If there are contractors associated with the permits, try to contact them for their files and take that information with you to the City to get the permits updated. 

I've had this happen post-closing for a client. He found out about expired Travis County permits when he tried to pull a permit for a pool. Apparently the seller/builder didn't complete a foundation inspection. Well that wasn't going to happen.  The County closed out the permit just like your fact pattern.  Make sure the city voids/closes the permit before you close on the property and get documentation from the City showing the permit status. Then keep that paperwork as long as you own that property.  

Check with a New York attorney (I'm in Texas) but if you are doing business in another state, you will need to at least register in that state as a foreign entity. The other state - here Florida - will still the taxes on that rental income, and the filing fees and time might eat up any savings that you might have if you were to just file as a New York entity. Also note that New York has rules regarding entities trying to leave the state if you file in New York then later want to try to move the LLC to Florida. It's not hard but it's not simple.

@Bryan is correct. An LLC is the most custom business entity you can have. To do it right you need to review the entity structure, the tax structure (with a CPA) and your insurance coverage. An LLC is the right way to start "operating like a business" but you need to be clear on what you want out of a business before you form it. Some simple first questions - (1) are you fully insured (goes to the concern about liability protection), (2) are you brining on other investors (they have to have something to invest in) (3) do you need financing to build out your real estate portfolio (can you get a lender to give money to a brand new LLC?).

Be careful splitting things 50/50. Those are never good decisions for the long term.  Yes you are getting along now, and there is no reason to think you will not get along in the future.  But you need to have a tie breaker to avoid deadlock.  If you can't decide a way to break ties now, how much easier will it be when there is a disagreement?  Also, make sure you define "searching for deals". Set deliverables and expectations now so everyone is driving to a common goal! 

I have a great agent, some networking, and other streams of intel.  I am trying to create an investment property profile so that I can evaluate opportunities as they come in. One variable I am including is distance to the deal, which is why I am trying to build this map. Have you used any tools like this? 

I am looking to narrow my property search for investment properties to about 30 min from my main location (don't want to drive an hour to plunge a toilet). I have found a few tools that create an estimated boundary map based on drive times, but nothing that I can easily tie back MLS areas, zip codes or other cross-reference variables that I can then plug into property searches. Does anyone know of a good website to get this information?