All Forum Posts by: Justin B.

The answer here is simple because of what you stated. You have an LLC with it's own banking account. If you want to classify it as a business expense UNDER THE LLC, the LLC needs to own the asset and it needs to either be rented or being planned on rented without you living there. It cannot be your permanent residence. If you want to be sure to keep the veil from being "pierced", it is that simple.

Some folks may argue you can rent from the LLC or use other strategies, but just remember, we have courts, judges, and lawyers for a reason. Laws and regulations are open to interpretation. If you sell your house to your LLC (at a reasonable price), move somewhere else, and put your house up for rent, anything you do to that house would be under the business (a new A/C would have to be depreciated though, not expensed). Nothing is for certain so I would say you have a 99.99% chance of keeping the veil in tact. If you try some other strategy, that percentage starts going down quickly. There are lots of people who have done all kinds of things and been fine, it's just because they haven't been caught or audited yet.

Seek the guidance of a tax professional before doing anything (or at least educate yourself as best you can).  I am NOT a tax professional.

Holy Crap!  Go refinance that car loan.  One denial doesn't mean anything.  If you truly have a 700, you should be able to find someone to Refi.  I have a 3.1% interest rate on my car now (used car) and the most I ever paid (when I was young and had no credit) was 8%.  If you only have a few thousand left on your loan, pay it off.  If it's a significant chunk, refi, knock your payment down a ton, and go buy a house.  Based on your post (and I didn't read all the replies), I'm assuming it's a decent amount because your comparing it to the cost of buying a property.  If you pay off you car loan, I also assume that would delay you being able to buy a property (potentially for years).  So without having every detail, I'd say, refinance the car long to a decent rate and go get your first property.

There are other options as well.  Get a new car (new to you) through a dealer (You'll get a good rate), py off that old loan.  Just make sure the new car is the same value as the one you have and that's a way to get around a refi problem as well.

I'm sure you'll have varying opinions on this situation.  I'm sure some people have been doing it for decades with no issues and others have been burned.  I can only speak to my situation in helping you make a decision.  I own properties in areas where getting decent tenants is not too difficult.  Without verifiable income, they would fail my qualification and be rejected.  I just don't have time to deal with risky tenants.  Of course I own more than 1 property so an extra month or 2 without rent to find a tenant with verifiable income is just a small blip on my radar.

I also use PM's for almost all of my properties and without verifiable income, application is rejected.  They do not rent to "under the table" incomes, no exceptions.

Here are some notes on "under the table" income:

-- It's not garnishable (someone else said that too)
-- It can stop at any point for any reason between "employer" and "employee" for a ton of reasons.
-- If the IRS finds out, they always get paid first, which could mean your rent check stops.  I can all but guarantee if the IRS comes knocking it will be more money (back taxes and fees) than the tenant has.
-- It's illegal.  To be more clear, if income is not reported to the IRS, it's illegal.  If it is reported to the IRS, it's not "under the table".  So ask yourself if you want to rent to someone you know is breaking the law.
-- The income they do report (which is probably very little) could put them into a protected class, making things like evictions harder (always check state and local laws when it comes to that).

With all that being said, the risk is on you.  Hopefully that is enough information to help you make your decision :)

You said "my house" so I'm going to assume you live in it.  Don't confuse Capital Gains tax with the personal exemption.  If you've held an investment for a year + a day, capital gains tax comes into play (The rate varies depending on your situation).  There are exceptions to that (not worth typing out here), but that's the "general" rule.

If you have lived in the house for 2 of the last 5 years, you qualify for no tax on the gain.  Based on what you said it's worth, you're well within the limits.  Keep in mind, that's no tax on the GAIN, not the total sales price, so that's quite significant.  Selling 2 months short of that 2-year time frame would be very unwise.  Hold on for 2 more months.  The timeframe is all about the closing dates.  to be safe, just make sure to set your closing date a few days after the mark.  So if you bought 5/25/14, set your closing date for 5/28/16 or something like that so there is no confusion.

I find it funny that all these people just post to say the gun is a non-issue.  Yes, we get it, Constitution and all.  Under normal circumstances, I'd 100% agree it's a non-issue.

Focus on the issue, not the gun.  He has discovered a 6th tenant and he has no idea who this person is.  He doesn't know if he is a felon, or anything because he didn't get a chance to do a credit or background check.  Not knowing who this person is living in his property, perhaps the gun concerns him.  Just as someone has the right to own a gun, he has the right to be scared when someone he doesn't know has one on his property.

This 6th person doesn't have the right to live in his property and that's the whole point.  Whether he's concerned about the gun or not is a non-issue.  My advice would be to send a letter to the tenants saying you noticed there was an unauthorized person living there.

If him being there violates something with the county, you have to inform him that he needs to move out immediately as he's violating county law.  If the county finds out you did nothing about it, you're in trouble and I would not accept that risk.

If having him there doesn't violate the county law, I would send them a form for the tenant to fill out so you can do your checks.  If he passes the check, have him sign the lease.  If not, request he move out.  If they are good tenants and pay on time, I personally wouldn't even bother charging for the new tenant, just the $30 or whatever for the checks. Having 5 versus 6 tenants isn't probably going to make a difference on wear and tear, so I'd just say, do the check, have him sign the lease, and problem solved.

As a side note, this is why I use PM's.  They do it and I never have to visit or interact with the tenants.  Sure you give up 10% of the rent, but it sounds like you wish you had a PM to do all this for you right about now :)

I've got a physical presence in Memphis and it's easy enough for us to drive around and reach out to realtor's (which is how we got our first 2) but Curt's group has made it so easy, that I have no interest outside of turnkey in the Memphis area anymore.  And No, Curt didn't pay me to say that :)

If I were in your particular situation (and I was a couple months ago but only with 1 property), my key would be to keep them just under market rates.  With such a big increase, they certainly won't be happy.  Out of spite, they might move if they find a similar rent.  It could also be fear of a large increase again.  However, if you're still beating what they can find by $100-$200/month, they won't go anywhere.  When I bought a recent house, I had a tenant paying $550 where market rent was $850.  So I raised it to $700.  I'm sure he looked around because a few weeks later, he signed a new lease at $700.  I plan on continuing to raise it over time to get to market rent.  I believe had I raised to $800-$850 up front, he would have been gone.

It is fairly common to give rent concessions for larger complex's.  I see first's months rent free signs all the time.  The "fine print" is that they still collect the normal amount of money up front.  They usually require one month's rent and deposit before they let you move in.  It's all in the verbiage.  The "first" month is free, but in order to move in, you must pay the deposit plus second month's rent, so you can take that however you want.

Also, a lot of them are "One Month Free" wherein the "last" month on the lease is free.

The only HORRIBLE idea is one where you don't collect (or collect very little) money up front.  If you aren't collecting at least the entire deposit and a full month's rent before they get the keys, that's a bad idea.  I still believe in the thought that if they can't afford to pay deposit + one month rent up front, they can't afford to rent your property.

FU Money is simply when you can say FU to anyone you want and not have to worry about it effecting you negatively financially.  I'm sure someone somewhere has written an equation that will help you figure out what your FU number is. :)

Absolutely, just join the meetup and you'll get all the info.