Dan P.'s Advice

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Dan P. wrote:

Should I make an LLC for rental property?

Answer
Thank you for the responses and sorry for the late followup, I missed the e-mail notification.I think an LLC is something I may still consider because it is recommended for landlords to use an LLC to limit the liability for accidents occurring on the property to the LLC's assets only.  Maybe after a few years of payment history and more equity in the property, the LLC can acquire it's own loan for the benefit of lowering DTI.
February 12
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Should I make an LLC for rental property?

Answer
The overall logic is lowering my personal DTI, getting debts out of my name and into an LLC where I can still make some money from the property through the business while having the debt assigned to the Tax ID of the LLC instead of my SSN.1) I want to keep the property, so I must retain some type of ownership or a share of a company that acquires it to continue receive income from it, or let the company retain it for repairs.2) I don't want the debt counting against my personal income for future home purchases.3) Debts that a company owes does not count as your personal debt unless you got the loan under your SSN as opposed to your company's Tax ID# no matter how much share you have in the company.4) Just like the debt, company owned real estate does not count as existing home ownership.5) The title is not clear of liens, I need money to pay off the bank note.6) If I sold the property to an LLC (that I control), my personal loan would get paid off and the LLC would be the debtor to the new loan acquired under it's Tax ID#.  The LLC would pay its taxes and monthly debts and I will earn a share of the profits or leave it in the company's account for maintenance of property.7) I plan to move in the future, I may need to move before selling the existing home I am currently in and I may not qualify for another loan based on DTI if the debt for both of the existing homes are still in my name.For an example of how this affects DTI, lets pretend the following are true:* John makes 5,000 per month from wages.* John spends 1,500 per month on his monthly debts and owner occupied mortgage.* John makes 1,300 per month from rental property and has no problem finding renters.* John spends 1,100 per month on rental property's mortgage.Assuming John didn't own a rental property, his DTI would only be 1500/5000, or 30%.Since John owns rental property, his DTI is (1500 + 1100) / (5000 + 1300), or 41.3%, even though he has more expendable income.From a DTI standpoint, I think forming an LLC and having the company acquire the loan is a good idea.  I just don't know if a bank will loan to a newly formed LLC who's entire business model is one rental property with $200 monthly profit, nor if newly formed companies would get a reasonable interest rate on 80% loans for investment properties.  However, many companies don't even operate out of the red for the first few years so it's not like it's that poor of a business model :)
January 16
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Should I make an LLC for rental property?
I had to move for a new job and am now renting out the house I used to live in.  I was able to buy a new home but the old house was counting against my DTI even though it is generating a profit.  Is there difficulty moving property into an LLC?  Do I have to form the LLC and then take out a loan under the LLC and then buy it from myself?  If I do have to take out a loan, will it have to be a conventional loan with 20%+ equity?
January 13
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Need advice on being denied access to landlocked property in Tennessee, easement is recorded.

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Debbie, could you let us know how it turned out?
January 13
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Why are litings in Enid, OK so overpiced? These sellers seem a bit delusional.

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hmm for some reason i thought the original message said edmond, not enid.  Sorry
June 03 2011
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Why are litings in Enid, OK so overpiced? These sellers seem a bit delusional.

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I think it's the location.  Best commute to OKC and best public school system.Mustang/Yukon dwellers will likely find themselves looking at the sun on a morning commute to OKC.Traffic is horrible between Moore and OKC.Guthrie is a bit far but I35 north of OKC is much better than south to Moore.Choctaw is even smaller, but slightly shorter distance commute than Guthrie.  I have not traveled from there during 1st shift traffic to know if it actually saves any time.
June 03 2011
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Owner of 1979 home, $57K in remodels - Realtor says the upgrades added no value to home?

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All good advice.  What matters now are the comps people are actually buying and what's for sale.  I would compare comps of your house before and after remodel to determine the added value.  Make sure the comps are in equivalent neighborhoods.  Even if the added value isn't what you'd like, having it sell quicker due to the remodel could save you thousands.Best of luck
May 07 2011
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