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forbanger
Contributing Member
Cash: $ 6.80
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Joined: 27 Dec 2007
Location: up north
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| newbie buying rental property |
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Hi all!
I am looking to purchase my first investment property. It is a small 2 unit property with good cash flow (better than my mutual funds).
I have had several people tell me to make sure to form an LLC and title the property on it. This pretty much gives me an umbrella of protection.
What do you guys think? If I did that I am assuming I would have to open a bank acccount under the same LLC and I would be paying myself through that, right? Would this be a 1099misc at the end of the year?
Any input would be great!
Thank You!
NEWBIE
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Fri Mar 14, 2008 10:27 pm |
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oldguy
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Location: arizona
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You file a separate income tax return for the LLC.
There is some 'protection' but it is oversold - if you are negligent, you will be litigated (as you should be, the wronged person has a right to a hearing).
Sounds like you are buying a duplex? You mentioned cash flow - are you older and looking for more taxable income, or are you younger and looking for unrealized capital gain?
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Sat Mar 15, 2008 3:55 pm |
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forbanger
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Joined: 27 Dec 2007
Location: up north
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oldguy,
You are right I am buying a duplex and yes I am young.
Are you telepathic ? 
NEWBIE
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Mon Mar 17, 2008 9:00 pm |
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oldguy
Senior Member
Cash: $ 309.10
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quote:
It is a small 2 unit property with good cash flow (better than my mutual funds).
You're young - it might be better to set it up with low or 'no' cash flow - do you need more taxable income at this time? There are a couple reasons -
1. Interest rates are at 40-year lows, you could get a 30 year fixed rate loan and lock in low rates. I would be looking at a minimal DP and taking the biggest loan I could get while still getting a prime rate (in fact, I'm about to refi a rental and remove the equity).
2. Your ROE will be much higher if you use leverage and keep your equity low - ie, the leverage drives your unrealized capital gain to be a bigger component of your return.
Remember to add your depreciation tax break into your monthly cash flow (adjust your W4 to account for it).
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Tue Mar 18, 2008 1:17 am |
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thehardwarecity
New Member
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| realestate |
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Is it is Las Vegas?
I am trying get one there, so far no luck.
http://www.TheHardwareCity.com
One Stop place for Plumbing, Hardware, Electrical, Automotive, Garden, tools and Construction needs.
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Thu Mar 20, 2008 12:53 am |
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austin
Contributing Member
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Location: Austin
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| LLC |
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When you get an LLC remember its not just something on paper. You need all the rent checks to be signed to the LLC and now you personally. Otherwise, my understanding is that the LLC can be invalidated.
Austin Texas Real Estate has a Austin MLS search and info on mortgage interest rates
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Mon Jun 16, 2008 5:46 am |
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Tax Liens
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Location: Greenbrier, TN
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I wouldn't waste the time forming an LLC for just one rental property. Why go through the expense or trouble when you can buy a 1 million dollar umbrella policy for around $150 a year.
Tax Lien Properties | Wholesale DVDs
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Wed Jul 09, 2008 4:30 am |
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ChantellWilson
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I've always considered Hamilton to be a great city to invest in. Housing is fairly cheap. I find the closer you get to the University the more expensive it seems to get. Anyway, I know of people who have bought properties for $100,000. They rent the property for $900/month while they pay about $500/month for the mortgage, $200/month for taxes and maintenance and they have a positive cash flow of $200 a month. Anyway, there's my 2 cents. He lives in Toronto so he's able to maintain the property himself by driving up whenever there is an issue he needs to take care of.
Apartment Rentals
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Mon Oct 17, 2011 5:22 pm |
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EpicFinances
New Poster
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Location: Ohio
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I recently wrote a blog post about owning rentals you should check out.
Just make sure you understand how much of a commitment undertaking rentals can be. Double check all of your numbers and make sure you use a high vacancy rate to be conservative in estimates!
GOOD LUCK!
www.EpicFinances.com
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Fri Oct 28, 2011 1:27 am |
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Etienne Boulanger
New Member
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You are right. I am also buying same property like the one you mentioned here.
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Wed Nov 16, 2011 9:14 am |
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DHayner
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Location: Albany,NY
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| Good idea |
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Good idea to get into rentals for long cash flow. LLC your rental business once you have a couple more properties. For now just protect yourself by covering yourself in contract. You will be fine with that. Also if i could give some advice ONCE YOU REACH 75-80% PAID OFF REFINANCE PULL OUT MONEY AND BUY ANOTHER ONE WITH THAT MONEY.
Looking for a 12-14% interest rate backed by real estate? You get a lein holder position. Safe,secure,high rates of return GUARNTEED***
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Wed Nov 16, 2011 9:06 pm |
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kyleadam
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| Re: |
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Take into consideration the maintenance issues, any utilities not covered by tenant and amortize the cost of the big projects like furnace replacement, new roofing, siding or landscaping.Buying rental properties can be a good or bad investment just like anything else. There are a number of rules of thumb for calculating expenses and cash flow.
Real Estate Ahmedabad | Realestate Ahmedabad
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Sat Apr 14, 2012 1:04 pm |
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jamesmadan
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Location: miami
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Buying rental properties can be a good or bad investment just like anything else. There are a number of rules of thumb for calculating expenses and cash flow.
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Sun Apr 15, 2012 1:04 pm |
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