All Forum Posts by: Jeremy H.

Hi, I found out there is a website that can help setup the LLC for me. (It starts with m and ends with n) Then I just need to setup a bank account for the LLC. It is coming to around $300.

I am not sure what the lawyer price includes, more customized service but I wonder if lawyers also use the same website. 

So without the big expense of my original post says, I am going to set one up plus probably increase my umbrella coverage.

I am just wondering , the mortgage is under my name, residential not investment type that I obtained a few years ago.   Would I get letter from them forcing me to refinance, if they can do that?     The account is in good standing of course.

Hi, I was talking to a lawyer about drafting up a lease / rental agreement for me.

He quickly suggested it is a good idea to setup a LLC, he said it is going to be $2500.

He said then the tenant can't find out who I am.   Also, protection from any lawsuit about injury or mold (if it comes to that) won't involve my other properties.   I live in one property and planning to rent out my previous home, the junk mail often have my name on it and I maybe the handyman for minor repairs.

The alternative is a lot of insurance.  For $800 (CA franchise tax) a year I think that can buy maybe a few million coverage umbrella.  (I have a small one right now).

I research about the LLC and some say it's great and some say you don't really need.

Anyway, do you think $2500 is out of line and should I really do LLC? I was thinking this is someone you can apply with the state on your own too so I am not sure what the cost may include. That doesn't include drafting the agreement for around $1000 but he said he will discount it.

Thanks

So I look at it like this now.

I sell and I have extra $1600 cash a month.

I rent out and have extra $200 cash a month + deal with a tenant.

Selling now or later will get $130k in bank.  Betting at property value not to crash.

If I sell now and keep the $130k, the next low market I could shop for a good deal, and however many months of $1600 I also save away until then

In the $1600 figure does not include insurance, which is $600 a year currently.  But I was told by my insurance agent if this changes to rental the insurance type changes and is "cheaper" .    The insurance has been raised 10% a year lately.

Anyway, within the $1600, $1300 is mortgage, $300 is property tax.   As I mentioned $500 is paid into principal, so the rest $1100 is tax deductible, and makes it more like $825 out of my pocket.   Assuming the property value does not drop drastically (big IF) and I get to keep my $500 principal each month so not looking at that.   $825 expense - $500 positive cash flow (from rent - $1600) puts me at -$325 a month.    Sorry I think I am doing numbers on money that I could have saved away not overall cash flow so maybe that's not accurate assessment.  So I will consider your calculation of $200 positive cash flow as well.

That does not look too bad, I can think of other silly ways to waste $325 a month, but that's another discussion.   

Though this does not include any breakages or maintenance cost.   at the current move in condition it does have a $900 dish washer and a $2000 wall oven (new price, but not worth swapping for cheaper new ones and selling it away used).

I like your "Should I put $130K down and buy this property?" way to look at it.   I am at a cross roads and because I did not buy this property at first with a great deal it is looking like selling is a good option, because a negative cashflow and also betting on property value to be stable can be a bad thing for me.

I bought this property to live in years ago.  I paid about $430k which was around peak, The property could be sold for around $460k today.

I owe $300k on this, so assuming a 6% realtor fee, I would get around $130k in my bank after selling.  minus property gain taxes.

I am preparing the property for rental with new paint, floor, bath, everything looks better than it's ever been.  I lived in it myself and I have high end appliances, but did not bother to swap out to cheap ones.    So it will sell or rent pretty easy over all.

As a rental, it will be rented at $2100 a month, 

after my mortgage and property tax only (not including maintenance and insurance or income taxes) is $1600, so I have about a $500 cash flow, at the current amortization $500 out of my $1600 is into principal of the mortgage.

I have to make some simple assumptions this is not ideal?  At $500 a month It would take 21 years to balance out the $130k that I could have access instantly by selling.    $130k is a little less than what I paid in mortgages over the years to live there, but overall it was relatively cheap compared to renting.

Of course in 20 years I would have much more equity also, but I could start investing $130k other ways and not have to pay $1600 a month out of pocket and do maintenance.  But $130k does not generate $500 cash flow unless put into long term investment.  Please help me see all aspects and decide.    I am happy to provide more information.

The area is booming more but this property will always to be a starter home in terms of size.

Thanks

So with the drought here, what's left of the grass is barely alive, I water a little bit, however I have monster weeds that is hard to remove, and shoots up about 2 feet tall in no time and needs to be mowed down.

I am in the process of remodeling, so I don't have time to up keep the front, it looks really bad. 

I maybe starting to use roundup on the weeds, but thinking what is a good landscape option for future tenants.   

I have read about putting cardboard and mulch over.  But then weeds will just grow too in a year or two.

I have checked out the artificial lawns, I didn't know they are so expensive, and requires extensive prep work

The problem painted popcorn is more difficult to remove with spray water, the popcorn is rock hard like a rasp.   Are you DIY guys experience is with painted popcorn or not?

I recently debated removing it before the walls are painted, but decided to leave it.  8/10 homes in the neighborhood has left it alone.

The daycare I used also has the same ceiling, they painted it and along with the walls, 8 ft ceiling, just seems like the acceptable style from that era home in California that we are used to..  Unless you are trying to make a modern pad which would then be a distracting feature.  

We updated to this year's trendy wall colors it is a huge difference, we have crown moulding through out, you don't really notice the ceiling

I would definitely collect samples, and send it in for testing before making a decision.

Because my rental property used to be my old residence, I had some cabinets in the garage.   They are standalone and not built in or mounted like kitchen cabinets so they are easy to remove.   I bought them originally at HD/Lowes sold as garage storage cabinets  

Or should I leave it to let the tenants use them or, take it with me / sell them ?

on one hand I feel there should be nothing in the garage but also felt it is a feature.  However the layout work for me and I don't want the tenant moving them around too much.

Thanks for your reply and everyone else, it is clear what the realtors duty is..

So without using a realtor, can you recommend any sites for me to advertise my property other than craigslist?

I didn't know you can search the MLS for rentals, or that people do that instead of craigslist!

OK, let's say it is a one time fee of one month's rent to the realtor, assuming I manage it myself, that's still 1/12 out of pocket expense (8%) if the tenant moves after a year.    (4%) if they happens to live there for 2 years.    Can I say this is not such a good deal since I am still managing myself after the realtor find me a tenant?  How much does managing company charge, would they handle everything at 8% for the year?

Will tenants who browse MLS or find their way through my realtor be a better quality applicants? Possibly...