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Old 03-03-2021, 01:50 PM   #4501
shikataganai
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Originally Posted by XanRules View Post
Yeah I mean realistically a - what, $800,000 mountain house? is not displacing anyone the same way that buying a $300k starter home in the suburbs for $400k cash is.

But you're on thin ice, bourgeois scum!


I'll be supporting the local economy as well via taxes and food. It's not like I'm, say, buying up a multiunit place used for resort workers and converting it to luxury condos.



(that's next year, my bro)

(($762k.))
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Old 03-03-2021, 02:42 PM   #4502
TheViking85
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I'm not sure if I qualify as making an "absolute ****ing ton of money" but otherwise I'm your culprit in mind. Up in mountain county with this particular place I'm not displacing any locals, though.
I'm pretty sure you make at least 10X annual of what I do

But the problem isn't that some people have money, it that society has failed to ensure there's sound intergenerational growth opportunities in the lower and middle class. (Which would be a you problem if you vote for that, but not because you have money).

...if that made any sense.
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Old 03-03-2021, 03:24 PM   #4503
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Originally Posted by XanRules View Post
Yeah I mean realistically a - what, $800,000 mountain house? is not displacing anyone the same way that buying a $300k starter home in the suburbs for $400k cash is.

But you're on thin ice, bourgeois scum!
Dude, it's millionaires serving billionaires. Don't get me wrong, I'm all about the free market but $800k is pretty much the barrier for entry in these towns for a single family home.
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Old 03-04-2021, 10:04 AM   #4504
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Listening to some financial investment podcasts and one guy who is talking about investment properties is saying how he owns multiple rentals and puts them all under a business entity (LLC or whatnot) rather than directly under his own name, partly as a barrier to liability.

We currently own two homes we are renting out outside of our primary home (titles are under our names directly) and it has got me thinking.

Anyone here have insight into this?
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Old 03-04-2021, 10:27 AM   #4505
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Originally Posted by edkwon View Post
Listening to some financial investment podcasts and one guy who is talking about investment properties is saying how he owns multiple rentals and puts them all under a business entity (LLC or whatnot) rather than directly under his own name, partly as a barrier to liability.

We currently own two homes we are renting out outside of our primary home (titles are under our names directly) and it has got me thinking.

Anyone here have insight into this?
Definitely I would hold under a hold co for liability purposes. Especially if I was in the USA where it is quite sue-happy.

I have 2 separate numbered companies for holding property or investments to separate risk for my professional corp, which also separates me personally from liability.

The other reason is to separate myself from various investments, i.e. to avoid having my name attached to a certain type of investment. A simple search would not show up any connection. A deep dive would eventually link back to me, but in some cases through 2 numbered companies.
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Old 03-04-2021, 10:32 AM   #4506
shikataganai
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Doesn't that force one into commercial homeowners insurance on the rental properties then? Not such a big deal for permanent tenants, but in the case of my mountain house with likely only sporadic rentals through the year due to us blocking off weekends could change the balance.
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Old 03-04-2021, 10:36 AM   #4507
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Originally Posted by edkwon View Post
Listening to some financial investment podcasts and one guy who is talking about investment properties is saying how he owns multiple rentals and puts them all under a business entity (LLC or whatnot) rather than directly under his own name, partly as a barrier to liability.

We currently own two homes we are renting out outside of our primary home (titles are under our names directly) and it has got me thinking.

Anyone here have insight into this?
Definitely a good idea to do and also recommended highly by the attorney we used when setting up our family trust, etc.

For our rental properties we have a parent LLC that owns the separate LLCs that own each specific property. If that wasn't clear you would create EdKwon Investments LLC which owns 12345 EDprop and 67890 Edprop which are each an LLC in more or less the name of the property and then own that specific property.

Keeps it fairly intuitive and in this case there are then multiple layers of separation and protection from you personally.
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Old 03-04-2021, 11:07 AM   #4508
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Originally Posted by shikataganai View Post
Doesn't that force one into commercial homeowners insurance on the rental properties then? Not such a big deal for permanent tenants, but in the case of my mountain house with likely only sporadic rentals through the year due to us blocking off weekends could change the balance.
If youre only renting it out sporadically then your liability risk footprint is probably a lot lower as well so probably not worthwhile going thru the process and incurring extra costs vs someone who is renting it out year-round.
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Old 03-04-2021, 11:09 AM   #4509
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Originally Posted by Compressed View Post
Definitely a good idea to do and also recommended highly by the attorney we used when setting up our family trust, etc.

For our rental properties we have a parent LLC that owns the separate LLCs that own each specific property. If that wasn't clear you would create EdKwon Investments LLC which owns 12345 EDprop and 67890 Edprop which are each an LLC in more or less the name of the property and then own that specific property.

Keeps it fairly intuitive and in this case there are then multiple layers of separation and protection from you personally.
How much do your LLC company costs stack up forming so many different companies.

Also are there many tax advantages or writes off you've been able to take advantage of, like writing off vehicle or office supply expenses (cell phone, computer, etc)?
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Old 03-04-2021, 11:14 AM   #4510
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I get the liability shield aspect, but how many of those tax advantages could still be claimed sans LLC? I guess I'll figure out when I file my taxes next year!

(My wife has two side businesses that she runs and for which I claim several things on my taxes, home office depreciation, inventory depreciation, etc. No LLC involved.)
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Old 03-04-2021, 11:23 AM   #4511
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How much do your LLC company costs stack up forming so many different companies.

Also are there many tax advantages or writes off you've been able to take advantage of, like writing off vehicle or office supply expenses (cell phone, computer, etc)?
It's a one time cost to form each LLC. For us since we own five properties and they are all in the same complex the work to create one LLC meant the work was basically then done for the other four, only needed to change unit number and then file so our attorney discounted the cost significantly for the other four.

My wife is also a physician meaning like you, Shik, et al there is a elevated risk for lawsuits hence the attorney recommending the extra layer of separation.

There are no unique tax advantages due to the LLC structure. It's all about protection.
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Old 03-04-2021, 11:36 AM   #4512
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Originally Posted by Compressed View Post
It's a one time cost to form each LLC. For us since we own five properties and they are all in the same complex the work to create one LLC meant the work was basically then done for the other four, only needed to change unit number and then file so our attorney discounted the cost significantly for the other four.

My wife is also a physician meaning like you, Shik, et al there is a elevated risk for lawsuits hence the attorney recommending the extra layer of separation.

There are no unique tax advantages due to the LLC structure. It's all about protection.
Thanks, also are those properties fully owned or are their existing mortgages on them? If the latter does the transfer of property ownership from individual (who originally bought under a primary home loan) to an LLC entity poses any issues with the banks who issued out said home loans?
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Old 03-04-2021, 11:42 AM   #4513
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Thanks, also are those properties fully owned or are their existing mortgages on them? If the latter does the transfer of property ownership from individual (who originally bought under a primary home loan) to an LLC entity poses any issues with the banks who issued out said home loans?
Sure. We own them all outright so not sure on that question.
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Old 03-04-2021, 12:23 PM   #4514
edkwon
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Sure. We own them all outright so not sure on that question.
So I consulted my friend who runs a mortgage lender business and he said if I have existing loans on the rental properties then transferring the title to a business entity comes with a lot of obstacles:

Quote:
Yeah, the problem with a house in the LLC is that the Fannie/Freddie guidelines say the new investor/lender has to "approve" it being in an LLC. But the loan needs to close and get sold before it gets transferred to the new investor/lender, so there's no way to get their authorization upfront. I think it's basically Fannie/Freddie saying, "We don't want loans in an LLC." lol

And you can't just close as an individual (i.e. your name) and then put the title into the LLC after unless you ask the new lender first (because what do you do if they say "no"?). And you can't have the home in the LLC prior to starting the new loan as the chain of title (in the preliminary title report) will show it was once in an LLC and now out of it, so the Underwriter figures you'll just put it back in the LLC after (which may not be allowed). Complicated...
These issues/roadblocks may just be a CA thing or apply nationwide, I'm not sure. But good info to share nonetheless.
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Old 03-04-2021, 01:30 PM   #4515
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Originally Posted by the_saintusa View Post
Definitely I would hold under a hold co for liability purposes. Especially if I was in the USA where it is quite sue-happy.

I have 2 separate numbered companies for holding property or investments to separate risk for my professional corp, which also separates me personally from liability.

The other reason is to separate myself from various investments, i.e. to avoid having my name attached to a certain type of investment. A simple search would not show up any connection. A deep dive would eventually link back to me, but in some cases through 2 numbered companies.
Last point is good. I don't like my tenants knowing I own the property - at least not initially. I try to keep early discussions vague and that I'm just trying to find a tenant for the owner.
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Old 03-04-2021, 01:33 PM   #4516
shikataganai
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Originally Posted by Compressed View Post
It's a one time cost to form each LLC. For us since we own five properties and they are all in the same complex the work to create one LLC meant the work was basically then done for the other four, only needed to change unit number and then file so our attorney discounted the cost significantly for the other four.

My wife is also a physician meaning like you, Shik, et al there is a elevated risk for lawsuits hence the attorney recommending the extra layer of separation.

There are no unique tax advantages due to the LLC structure. It's all about protection.
Huh. As a compromise I may just bump my umbrella policy up from $1 to maybe 2 or 3 mm
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Old 03-04-2021, 02:37 PM   #4517
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Piece in Tuesday's FT that goes into what some of us have been talking about in this thread, though obviously this involves commercial real estate rather than residential:

"Property and the pandemic: the great reckoning that never seems to arrive"
https://www.ft.com/content/084f94e8-...b-fcb0b5e6171e

I would copy and paste but FT actually has it so you can't copy and paste articles, which is a nifty trick. Fortunately this article does not appear to be paywalled.
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Old 03-04-2021, 02:46 PM   #4518
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Originally Posted by XanRules View Post
Piece in Tuesday's FT that goes into what some of us have been talking about in this thread, though obviously this involves commercial real estate rather than residential:

"Property and the pandemic: the great reckoning that never seems to arrive"
https://www.ft.com/content/084f94e8-...b-fcb0b5e6171e

I would copy and paste but FT actually has it so you can't copy and paste articles, which is a nifty trick. Fortunately this article does not appear to be paywalled.
paywall for me
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Old 03-04-2021, 02:49 PM   #4519
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****! Now it's paywalled for me too!

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Old 03-04-2021, 03:42 PM   #4520
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Originally Posted by edkwon View Post
So I consulted my friend who runs a mortgage lender business and he said if I have existing loans on the rental properties then transferring the title to a business entity comes with a lot of obstacles:



These issues/roadblocks may just be a CA thing or apply nationwide, I'm not sure. But good info to share nonetheless.
You can try adding the LLC to the title so that you and the LLC are on it.

Then, have the LLC get a mortgage for it and remove yourself from the title. Might be able to do this step at the same time. LLC mortgage pays off your loan.
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Old 03-04-2021, 03:44 PM   #4521
edkwon
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Originally Posted by Tilapia View Post
You can try adding the LLC to the title so that you and the LLC are on it.

Then, have the LLC get a mortgage for it and remove yourself from the title. Might be able to do this step at the same time. LLC mortgage pays off your loan.
What he says that LLC mortgage rates tend to be higher than rates for loans to individuals.
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Old 03-04-2021, 03:47 PM   #4522
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Huh. As a compromise I may just bump my umbrella policy up from $1 to maybe 2 or 3 mm
Any rough estimate on what those policies cost? Are they $$$?
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Old 03-04-2021, 03:55 PM   #4523
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According to le-googles an umbrella policy of $1MM can be had for ~$200 / year.
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Old 03-04-2021, 03:58 PM   #4524
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Yeah Umbrella policies are not bad. I think we pay ~$350 per year for 2M.
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Old 03-04-2021, 04:01 PM   #4525
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hmm, might be worth looking at, I have pretty high limits on auto etc as is, so the USAA guy mentioned it when we called and cancelled our renters ins.
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