All Forum Posts by: Misael Herrera Granados

Hi Misael,

Setting up an LLC for your rental property is something that I strongly recommend for all of my clients to provide them with asset protection. Glad you're already taking this step.

LLCs can help shield you from personal liability if a tenant were to ever sue as well as offer protection against creditors in case of a personal judgment through charging order protection, when the LLC has been structured appropriately. With the property in an LLC, if someone were to sue the property, they could only go after the assets in the LLC and not anything else (again, assuming you did not guarantee anything personally and the corporate veil has not been pierced).

Also, depending on the structure, you can keep your name off the public record as the owner of the property and even as part of the LLC. For my clients, I recommend that they place the properties in an LLC that has been formed in the state where the property is located and have the member of that LLC be a Wyoming LLC. This provides for both anonymity as well as charging order protection.

If you took out a loan to purchase the property, depending on the type of loan, you may benefit from a land trust. Depending on the terms of the mortgage, transferring the property to an LLC may be considered a sale, thus triggering the due-on-sale clause. However, putting it into a land trust first avoids triggering the due-on-sale clause.

While there are inexpensive DIY options out there, I recommend working with a local attorney to help you set up your LLC. I've had the opportunity to review a number of templates from companies, like LegalZoom, and have found that they often lack the necessary detail and thoroughness required for effective business management. Important sections are frequently omitted, which can create challenges in day-to-day operations and long-term planning.

This lack of comprehensive documentation becomes especially problematic if you ever consider bringing in partners or expanding your team. In my experience, the materials provided by these companies rarely offer sufficient guidance or clarity to support such transitions smoothly.

I recommend working with a local attorney to help craft contracts that address all your needs and allow for long-term growth and expansion, or, at the very least, have an attorney review the Operating Agreements you draft on your own or through a DIY company and suggest revisions so that they better suit your needs.

Good luck with your property! 

Note: This information is for educational and informational purposes only and does not constitute legal, tax, or financial advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Hey Misael! That's such an exciting step, congrats on setting up your LLC! We went through that process when we started transitioning our properties too, and I know it can feel like a lot at first.

A few resources I found helpful:

• Bizee offers some step-by-step guides, though I’d recommend customizing based on your state’s specific requirements.

• If you're planning to grow your portfolio, connecting with a real estate-savvy CPA and attorney early on is huge, they can help structure things to protect your assets and optimize your tax situation.

If you ever want to bounce ideas around or hear how we did it (and what I wish I knew earlier), feel free to reach out. Give me a follow back so we can stay connected, I love supporting others on this journey!

You’ve got this!

Mold isn't that complicated. It requires two things to thrive:

1. Moisture

2. Food (dust, paper, wood, etc.)

3. Oxygen

4. Suitable temperature (generally 40 - 100 degrees Fahrenheit)

The easiest solution: remove the water source. If your basement leaks, stop the leaks and dry it out. If it's an old leak, but you still have mold, it's because you haven't properly dried it out and there's enough moisture the mold can survive.

The steps I would take: 

1. Stop the Water Source

• ☐ Inspect for leaks: Check walls, floors, windows, plumbing, and foundation for signs of water intrusion.

• ☐ Check exterior drainage: Ensure gutters, downspouts, and grading move water away from the home.

• ☐ Fix the issue: Repair any plumbing leaks, foundation cracks, or window well failures. Consider adding a sump pump or waterproof membrane if needed.

2. Dry Out the Basement

• ☐ Remove standing water: Use a wet/dry shop vac or a sump pump.

• ☐ Run high-capacity dehumidifiers: Run continuously to bring humidity below 50%.

• ☐ Use fans and ventilation: Open windows and run box fans, blowers, and heaters to speed up drying.

• ☐ Remove wet materials: Pull out soaked carpet, insulation, drywall, and anything organic.

3. Contain the Area (Prevent Spread)

• ☐ Seal off basement from the rest of the house: Use plastic sheeting and tape.

• ☐ Wear protection: Use gloves, N95 respirator, goggles, and protective clothing.

4. Remove and Clean the Mold

• ☐ Cut out moldy drywall, wood, and insulation: Anything that can’t be fully cleaned should be removed and disposed of.

• ☐ Scrub hard surfaces: Use a mixture of detergent and water or a commercial mold remover. Do not use bleach on porous surfaces like wood or concrete—it doesn't penetrate.

• ☐ HEPA vacuum everything: Use a vacuum with a HEPA filter to remove spores from surfaces.

5. Treat the Area

• ☐ Apply an antimicrobial treatment: Spray a mold-killing solution like Concrobium or Mold Armor on all surfaces.

• ☐ Seal surfaces (optional): Consider painting wood framing or concrete with mold-resistant paint or sealer.

6. Verify Air Quality

• ☐ Test for mold spores (optional but ideal): Hire a professional or use a mold test kit to confirm air is safe post-cleanup.

It sounds as if you failed to properly dry it out after the water intrusion.

Gutting the basement can be done by you for much cheaper, but I suspect you don't have the time or experience to do this correctly. Selling will be tough because anyone interested in it will low-ball you due to the renovation cost.

That makes the situation even tougher- I really appreciate you being transparent about it. If gutting is not financially possible, maybe look into mold remediation grants, local housing assistance, or insurance options that may help offset some of the cost. In some area health/safety issues like mold can qualify for specific funding or support. 

If that is not viable, selling to a cash buyer or investor who specializes in heavy rehabs might be the cleanest way to move forward without going deeper into a loss. It won't be ideal, but it could protect your peace and pockets in the long run. 

Wishing you clarity and resolution soon- this is the type of situation that reminds us why risk management is so key.  

@Misael Herrera Granados Hey hows it going! Full discalimer first, I'm not familiar with Kansas landlord-tenant laws,however mold is definitely a serious issue. If the tenant decides to withhold rent or take legal action, this could lead to the property being condemned until the mold is remediated, which could cost you even more in the long run.

If the mold remediation is too expensive, selling AS-IS might be the way to go. You may have to adjust the price accordingly since you'll need to price it based on known issues. Just make sure to give your tenant ample time to vacate if you decide to sell.

If you have equity and don't want to lose it, another option could be to look into a HELOC, but you'd need to check if selling or a loan even makes sense in your market because you may end up with prolonged days on market. But if it's a hot market and properties are moving fast, it could be a good choice. If you decide to sell, start searching for a realtor ASAP!

Who did you use to test for mold? The reason being is mold is everywhere. You only require to remediate it when the testing shows the indoor mold is very different than outdoor mold 

did you test both indoor and outdoors ?