All Forum Posts by: Mitch Kronowit

I agree. The only manner in which I invest in gold or silver is holding the actual metal, then I keep it locked up in a safe or bank deposit box.

It's interesting how some people who don't trust paper currency will gladly pay for a piece of paper that says they own some metal, somewhere.

And besides, I actually enjoying looking and touching these shiny metals.

You are speaking to some confused people. LLC's are flow-through entities, so the only one paying the tax is you. Now, corporations are famous for double-taxation, i.e., they pay corporate income tax on their profits and if any of those profits are distributed to the shareholders as dividends, the shareholders pay tax on them. So it's the same money getting taxed twice.

This has been discussed ad nauseum here on BP. Insurance is your first layer of protection. Well, acting in an ethical and responsible manner truly is the first. However, what if your insurance company refuses to cover you for the amount claimed? What if they found you neglectful in some manner and refused to pay anything? Does carrying insurance help your privacy?

Asset protection is like an onion with your valuables at the center and the rest of the careless clumsy greedy world on the outside. The thicker the onion, i.e., the more layers you have, the better.

Do NOT hire any of the CPA's that said you have to pay SE tax while running a rental income business. As Charles said, it's passive income, regardless of how much you materially participate, and not subject to SE tax.

CPA's familiar with RE investing will know this.

Yes, you can look at crime maps and law enforcement data bases to help build a picture of an area's safety, but I only do that to verify my suspicions. I only buy investment properties locally where I have a good feel for the neighborhoods to begin with. That's why I don't buy rentals, site unseen, across state lines, where I have absolutely no idea what the community is like.

I also like to look at school performance. Good areas typically have good schools and vice-versa.

What BIll said. You have to make sure they have indeed vacated the premises. One good way is for them to hand you back the keys or notify you in writing. Other than that, it's a gray area. If you suspect they have abandoned the premises, you can verify by mailing them a notice. Here is some guidance and the applicable code:

http://www.thelpa.com/lpa/landlord-tenant-law/california-abandoned_property.html

As far as any personal belongings left behind, the tenant has 18 days from vacating the premises to request the return of his junk, which the landlord must keep safe and secure within reason, the costs of which are the tenant's responsibility, and then make the stuff available for collection by the tenant within 72 hours of receiving the request. Otherwise, if the property left behind is less that $300, the landlord can do whatever they want, throw it out, take it home, etc. If over $300, it must be auctioned off, expenses deducted, and any remainder surrendered to the county.

More applicable sections of the Ca. Civil Code:
http://codes.lp.findlaw.com/cacode/CIV/5/d3/4/5/4.5/s1965
http://codes.lp.findlaw.com/cacode/CIV/5/d3/4/5/5/s1988

Old thread.

Hi Gary, and welcome.

We have a California LLC also for our California rental properties. It was suggested as the entity of choice by our attorney for a passive business such as ours.

For starters, you will have to pay the annual franchise tax of $800 for your LLC. There is also a biennial form you must submit, LLC-12 Statement of Information, every two years along with the fee, $25 I believe. Since your income is relatively low, you shouldn't owe any more state taxes on your LLC's earnings. Consult your CPA.

You'll need to check with the city and county where your rental properties are located and see if they require a license or fee. For example, our rentals in Riverside County are in cities that require a business license, but the county itself doesn't ask for anything. However, in San Diego, the county charges a Rental Unit Business Tax for landlords which is about $60-70/year.

We do have a Federal EIN. It will be asked for on several state forms.

Get a good accountant and attorney that understand real estate investing. It's amazing some of the garbage I hear from professionals who don't specialize in real estate.

Hey Greg B., I thought YOU were the one I was replying to originally, but it was Greg P.

It seemed odd, you asking all these questions about landlording, because I thought I remembered you were a pretty experienced landlord.

Ok, I'm no longer confused now. :-)

We sure as hell don't. I have ONE property manager that charges for placing a tenant. If I recall correctly it runs about $349. Rent on that property is $1,050/month.

How long has he been land-lording? And where?

Hey Greg, looks like we typing replies at the same time (see above).

There have been plenty of discussions here on BP on whether to fix & flip, buy & hold, wholesale, invest in notes, etc.

People will continue to fight me on this, but the wealth building power from land-lording comes from a 4-prong approach:

1) Cash flow. Yeah $100/month/door... whoopie.
2) Tax savings. Writing off your passive losses against your normal income.
3) Equity build-up (mortgage pay-down). Even with ZERO cash flow, after 30 years, your tenants will have bought you a free & clear property. THEN we can talk cash flow!
4) Appreciation. No, it's not the same in every area, so don't anybody bore me with your nationwide statistics. Buying a good home in a good area in my state will outperform every other investment I can think of, but you have to be patient and wait for time to do its magic. The wealthiest people I have met in the real estate business made their money by buying and holding, not chasing the quick buck.

There you have it. Do you want a business that earns you money while you're sitting on a sailboat in the Caribbean or skiing in Vail? Or would you rather have a business that needs you there working deals every single week or else nothing comes in? I've made my choice.