Any real estate investors??

[shibbershabber]

Getting ready to make a purchase of my first rental property...

Some people use an LLC and some don't...

What are the pros/cons?

I currently have an LLC for a food truck business, could I just use that LLC or is it advisable to ise a separate one for the rental?

Using a HELOC to buy the house. Once its refinished and rented I want to refi it to pay off my loan... So my personal home isnt on the line anymore. Does having it under the LLC affect credit at all?



Thoughts???

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[solv3nt]

Don't buy rental property in Oregon or Washington, as the laws favor the tenant that doesn't pay.

 

[DivCurlGrad72]

You'd have to be insane to rent out property in a blue state.

 

[billdeserthills]

Generally owners of commercial property have way more rights than residential owners

 

[solv3nt]

Generally owners of commercial property have way more rights than residential owners

Unless you pay in cash, commercial property loans have an early payment penalty.

 

[USMC1911]

I own commercial that is zoned as industrial. Best decision I ever made. LLC protects my assets that are not attached to the LLC. Residential anything seems like a headache. One of the best things I did was get triple net included as part of the leases. Making the tenant have substantial insurance as part of the lease is essential. Depending on the amount financed be prepared for a loan that is far from usual. My first loan the max the bank was willing to do was 7 years.

 

[shibbershabber]

Its out of state... Cant afford bubblegum around here

 

[USMC1911]

Unless you pay in cash, commercial property loans have an early payment penalty.

Usually commercial has higher rates in general and completely different terms all together.

 

[USMC1911]

Its out of state... Cant afford bubblegum around here

Are you planning to manage it or have someone do it?

 

[shibbershabber]

Are you planning to manage it or have someone do it?

professional management.

10% is a small price to pay. They'll do everything including full eviction for no add'l money.

I may self manage later on, but for now prof is the only way, especially with me being out of state

 

[CountryGent]

Don't buy rental property in Oregon or Washington, as the laws favor the tenant that doesn't pay.

Residential anything seems like a headache.

This is what kept us away after looking into this option for passive income years ago.

 

[solv3nt]

I just spoke to a financial advisor last week the recommendation was home rental in a cheaper, landlord friendly location like Michigan or Alabama.

 

[shibbershabber]

I just spoke to a financial advisor last week the recommendation was home rental in a cheaper, landlord friendly location like Michigan or Alabama.

I'm narrowed down to two properties and will proceed with one or the other on Monday.

One in Texas and the other in New Mexico

 

[CountryGent]

On the LLC question, an unequivocal "yes" to creating and maintaining formalities related to said. We have formed/maintained said, along with trusts, for various reasons. The sad fact is their are a lot of messed up, litigious, people out there.

 

[aasbra]

Getting ready to make a purchase of my first rental property...

Some people use an LLC and some don't...

What are the pros/cons?

I currently have an LLC for a food truck business, could I just use that LLC or is it advisable to ise a separate one for the rental?

Using a HELOC to buy the house. Once its refinished and rented I want to refi it to pay off my loan... So my personal home isnt on the line anymore. Does having it under the LLC affect credit at all?



Thoughts???

LLC can help isolate potential liability from you personally and your other assets held outside of that LLC in the event of litigation. However, if the LLC is borrowing from a bank or credit union to leverage the purchase, and it is a shell LLC that only holds the rental property or properties, expect they will want you to personally guarantee the loan unless there is very strong cashflow coming off the property relative to the loan payment and amount of leverage you have against the property (loan amount to value of the property). Also expect the interest rate you will pay for an investor property (as compared to buying a residential property for your primary dwelling) will be higher, and the loan term, and/or loan amortization likely will be shorter - which may further increase your monthly payment over what a conventional loan for an owner-occupied property would be. Something to consider when you are projecting your budget for the endeavor as you noted that you would be having leverage against the property purchased. If you are concerned about liability from either the rental property or food truck business effecting the other, I would do separate LLCs for each.

 

[ilikegunspdx]

Wow I would really research long distance rentals. Too much to write here but I've had lots of rentals both local and long distance. You will be 100% dependent on property manager for everything. So vet your property manager very very carefully. Since you are far away and out of sight out of mind guess who will get the worst tenants compared to local landlords? Guess how fast a bad tenant can screw you over/damage your property? Do what you want but please research it carefully. Local rentals means you choose the tenants, you are there to see how things are going, and you can nip things in the bud before they are a problem. Definitely use an llc to protect your personal assets if you get sued.

 

[shibbershabber]

If I dont buy out of state. I dont do it at ill.

Ive been in property management for 20yrs. Seen it all, and yet I'm moving forward... Maybe I'm crazy

You are 100% correct, the management company can make or break the whole thing.

 

[ilikegunspdx]

If I dont buy out of state. I dont do it at ill.

Ive been in property management for 20yrs. Seen it all, and yet I'm moving forward... Maybe I'm crazy

You are 100% correct, the management company can make or break the whole thing.

If you've been in property management then you are going in with your eyes open, that's great! For me personally I will never delegate choosing the tenants to anyone so that's an absolute for me. Good tenants = peace and success. Bad tenants equals either short term hell or long term hell. But lots of people make long term rentals work and if you've been in property management I would guess you can tolerate the stresses and also know what to look for in a property management firm. That experience you have will be a huge help I think.

 

[shibbershabber]

If you've been in property management then you are going in with your eyes open, that's great! For me personally I will never delegate choosing the tenants to anyone so that's an absolute for me. Good tenants = peace and success. Bad tenants equals either short term hell or long term hell. But lots of people make long term rentals work and if you've been in property management I would guess you can tolerate the stresses and also know what to look for in a property management firm. That experience you have will be a huge help I think.

Probably the only upside to this work

 

[MikeInOr]

Getting ready to make a purchase of my first rental property...

Some people use an LLC and some don't...

What are the pros/cons?

I currently have an LLC for a food truck business, could I just use that LLC or is it advisable to ise a separate one for the rental?

Using a HELOC to buy the house. Once its refinished and rented I want to refi it to pay off my loan... So my personal home isnt on the line anymore. Does having it under the LLC affect credit at all?



Thoughts???

My thoughts that anyone that comes to a gun board for rental real estate advice instead of asking a qualified real estate attorney probably should not be buying property to rent. Sorry, you asked.