All Forum Posts by: Patrick Rafferty

My tenant just moved out after a painful experience with her. At the end of her lease she is 3.5 months behind on payment and I'm not anticipating receiving it. NJ is tenant friendly, so she timed it well where the eviction process would've taken until the lease ending anyway.

Her lease was up 3/31 - I was able to get her keys and change locks at 12:30am 4/1.

After gaining access to the property, it seems like she has 90% of her belongings still there. We left off with her "trying" to find time to move it all throughout the following week, with no commitment to a Uhaul or movers. She's one to make up excuses and extravagant stories, so I've had enough.

I am looking to see what I am able to do with the belongings, whether it be trash it all, sell some off or any other avenues that come to mind. This is new to me and I know NJ isn't the best state to be a landlord, so trying to figure out what my rights are.

Secondary question - is it worth going through the small claims process to recover $7,000 from this person?

Thank you in advance

0 Votes

Quote from @Account Closed:

We highly recommend to our clients they use some form of asset protection. See our "tier list" below:

Worst:

– No coverage, held in your name.

Bad:

Relying on insurance. This is the most basic level of protection and it is not very effective, but it is still better than nothing. Insurance companies have many exclusions and they may not cover everything, but they can help to pay for some of the costs of a lawsuit.

Good:

Using one LLC for all of your rental properties. This is better than relying on insurance because it protects your personal assets from liability. However, if someone sues you and wins, they could take all of your rental properties.

Better:

Using a separate LLC for each rental property. This is the best level of protection because it isolates each property from the others. If someone sues you and wins, they can only take the LLC that owns the property that was involved in the lawsuit.

Best:

Using a combination of LLC and land trust to protect your rental properties. These are more complex legal structures that can provide even more protection than a traditional LLC alone.

Here are some of the key things to keep in mind when choosing an asset protection strategy for your rental properties:

Your risk tolerance: If you are not very worried about being sued, you may not need the best level of protection. However, if you are worried about being sued, you should use the best level of protection that you can afford.
Your state laws: The laws governing asset protection vary from state to state. You should consult with an attorney in your state to make sure that you are using the best asset protection strategy for your situation.
Your budget: The cost of asset protection can vary depending on the type of protection that you choose. You should make sure that you can afford the cost of the protection that you choose.

Please also keep in mind for your situation to consult a professional and share more details!

This is great, thank you @Account Closed

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Quote from @Bjorn Ahlblad:

I have properties in LLC and others in my name. Just make sure you have liability insurance in both cases. This question gets asked daily so do a search.

Thank you

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Quote from @Dave Foster:

@Patrick Rafferty, Any tax paying entity can do a 1031 exchange. However, the entity (tax payer) that sells the property has to be the entity (tax payer) that buys the new property. So be careful that an LLC you set up will either have a track record so lenders will lend to it. Or use an LLC that is a disregarded entity (you are the only member and it does not file a tax return).

Thank you @Dave Foster, appreciate the clarity

1 Vote

Quote from @Matthew Hanna:

First and foremost I would recommend to start with the servicer of your mortgage to see about the transfer as well as an assumption.
most servicers won’t allow the switch-a-roo considering the liability is currently tied to you.

Best of luck!

Thank you for the input! Due for a call to them, their customer service has been pretty rough

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Seeking help/advice for what the title suggest. Reading and seeing a lot of pros & cons for moving my rental property to an LLC, getting stuck with what I should do.

For context, I purchased a townhome in my personal name in 2020, began renting it in 2021 and it has been rented out since. Property is located in NJ. Purchased at $166k, present comps at $285k

I am on the market for my next property, which is why I'm looking at forming an LLC for the original rental. I was advised that for owning a single property, isn't cost effective to have it in an LLC.

- Worried that, should I move to an LLC, my mortgage may be called to be paid in full by my company

- Does this disqualify me from a 1031 in the future?

- Am I able to do a mortgage assumption from personal to the LLC to avoid the balance being called and effectively keep the interest rate? (My mortgage does allow it)

- Does transferring the property bring any capital gains into effect due to the rise in value?

- Overall tax structure being more complicated

There's plenty more "What if's" out there, but I believe these are my main concerns. 4 years in and still a rookie.

Any advice and knowledge from personal experience is welcome. Leaning towards the LLC, just want to make sure I do it right. Thank you

1 Vote

Thank you @Jaysen Medhurst! Much appreciated, thank you for breaking the numbers down.

Was trying to wrap my head around how I could come out on top, but like you said, it doesn't seem like anyone could at that price.

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Hey all! Getting a signed contract for a home in my local area this week. Wanted to see what the experts in this community see

Located in NJ
SFR, 3bed, 1bath, 1,100 sqft, lot size 9,435 sqft
Sits across a lagoon, Waterview not waterfront, currently not in a flood zone (reassessed next year and expected to fall into one)

*Town requires that it be lifted by 2024, the cost will be about $50,000 all in.

Purchase Price: $175,000 (10% down)
Last Tax Assessment: $236,800

Taxes: $5,328 per year ($444 monthly)

Home Insurance: $1,200 ($83 monthly)
Flood Insurance: $450 ($37.50 monthly)

PMI: $101 monthly

Electricity: $100 Monthly

Gas: $50

Water Sewer: $25 Monthly

Repairs & Maintenance: 5% ($110 Monthly)

Purchase:

Down Payment 10%: $17,500

Estimated Closing Cost: $9,000

Total Down: $26,500

30 Year Term @ 3.875%

The goal is to rent the other 2 bedrooms at $750 each. Ideally, move out within 4 years and rent the full home for $1,800-$2,000/mo

Raising the home is obviously a worry. Curious to see thoughts on taking hard money and raising immediately or wait over the 4 years and take a home equity or cashout refi? Learning as we go here.

Any input is much appreciated! Let me know if I can provide any more info

1 Vote

All Forum Posts by: Patrick Rafferty

Patrick Rafferty has started 3 posts and replied 8 times.

Post: NJ Property - Tenant Out, Most Belongings Left Behind

Post: Switching Rental Property from Personal to LLC?

Post: Switching Rental Property from Personal to LLC?

Post: Switching Rental Property from Personal to LLC?

Post: Switching Rental Property from Personal to LLC?

Post: Switching Rental Property from Personal to LLC?

Post: First Investment, seeking feedback

Post: First Investment, seeking feedback