All Forum Posts by: Mike Hanneman

My father in-law wants to invest in my business. He is worried about his liability as he has assets.

We have already purchased a property using another one of his to pay for it. and is scheduled to close middle of May. The arrangements are that he paid for the property and I am paying his loan plus interest. He doesn't want to be involved in it any other way, just getting the interest and loan payment.

We have discussed setting up an LLC. With me as the manager. Have also thought about turning around and selling to me or me assuming the property loan. How would you guys go about this? So both sides win. Would also like to use the property to pull out the equity and buy another, so there's that issue that I'm trying to deal with as well.

I know we need to talk to attorneys and CPA but would like some info or ideas to bring up when we do meet with them.

My father in-law wants to invest in my business. He wants to purchase a property with cash and then have me pay the loan plus a little bit of interest so he makes some money. He is worried about liability protection and wants me to set up an LLC for his protection.

I don't want an LLC yet because I don't have anything to protect as of yet, all properties are levaeraged. It's not nessasary for me yet.

Just being the loan holder, doesn't that render him protected? I mean home lenders aren't getting sued because of a home they lend on is.

Any advise please.

I know I need to talk to an attorney, my in-laws have and of course they recommend setting up 2 LLC's and all that. I was just curious if anyone else can shed some light on this for me.

@Account Closed How much does the utility charge you back there for installing water meters? Out here its a couple thousand!! Hard to absorb that kind of an expense when one can back charge the tenant.

@Greg Cooksey I agree 100%, I'm always looking for the smallest payment, fixed of course. I can always pay more, but if I ever get in a pinch the smaller payment will help out.

I can't think of one benefit for the lanlord to even offer a lease greater then 1 year. Stick to month to month, or 1 year leases.

Upgraded homes have custom cabinets that are using real wood for the cabinets but they can be pricey.

You can always check the big box stores, home depot, Lowes, Ikea, as they get scale pricing. Where have you looked for cabinets already? What is your budget for cabinets?

There are numerous ways to save on cabinets and still get the look you desire. One way is to get the cheaper cabinet box, the part with the shelves, and put higher end doors on. Or get cheaper cabinets but then add in some of the accessories, i.e. pull out shelves, no slame hinges, etc...

Some higher end MDF the average person can't tell it's not real wood.

I NEVER go to boutique, specailized stores for anything as they are always higher.

I'd ask the seller to negoiate with you! I'm sure the seller put those numbers out there as a starting point. One of the best things about real esate deals is everything's negoiable.  The house is valued at $85K but he wants you to pay $89K that doesn't add up for an investor like me.

See my post above^^^

Also check your state specific "landlord tenant laws" as every state is different.

You would start by screening in the advertisement, i.e. minimum credit score 6@@ required, must pass credit checks/background checks, etc...

Hopefully that will "weed" out the ones that know they wont qualify. Next do a phone screening stating what you expect as a landlord from your tenants at this property, and reiterate the income requirements, and all background checks that you will be performing. Give them an application and tell them you will only look at it, once it's complete with app. fee.

Then check the applications and the ones that look promising you will want to run the checks on. When/if the checks come back ok start calling previous landlords and current employer.

I don't know why you'd put a rental in an S-Corp to begin with so enlighten me please.

As the using an LLC, it's sole reason is for liability protection it DOES NOT effect taxes. The taxes are pass though meaning whatever you are taxed the LLC will be taxed the same. If you're not worried about liability then there is no reason for an LLC. Also your CPA should be able to set you straight to paying minimal or actually getting money back for having a rental, unless you didn't keep good enough records/books. Then that's your own fault.