txtig
Full time employment: Posting here.
I'm looking for some advice from those here that have rental property. Here's my situation: one of my adult son's is having a bit of a rough time right now with his job and housing situations. He and his wife have a new baby and he lost his job a few months ago and he has not yet found another job. He's got a few good prospects now, and we're hopeful he will find employment soon, but, unfortunately, he will be on the lower end of the earning spectrum. His wife is working, but she makes just a bit over minimum wage. They are currently living in an apartment complex and their lease is about to be up. They want to get out of the complex (its not a very good place to live), but I doubt that they would qualify for a new lease somewhere else with their current earnings.
So, DW and I have been discussing the possibility of purchasing a very basic single family home that we could then rent to them. We've seen some properties in the area that I think we could purchase at a price where principal, interest, taxes and insurance would be less than they are currently paying for apartment rent. If we do this, we would want to conceal the fact that we're the owners of the property. We fear that if he knew we were the owners, that he would be less motivated to keep up with the payments. So, I'm thinking that we could form an LLC to own the property and to collect the payments, with all communications via email and payments sent to a PO Box or transferred electronically. I know this charade sounds a bit convoluted, and I'm still somewhat reluctant to help based on his past track record. But the addition of our new grandson to the equation has changed the way we're looking at this. We want to see them in a decent home and we certainly don't want them moving in with us.
I guess my question to the group is how best to set up the structure of an LLC. Should I purchase the house in my name, or should the LLC purchase the house? I would want to rent him the house at our cost (mortgage payment plus property taxes plus insurance). Assuming that a portion of the mortgage payment would be principal, would this be generating taxable income for me? Any way to get around that? I'd also like to set up a rent-to-own structure to give him an incentive to keep up with the payments. So, as equity builds, it would reduce the cost if the LLC were to later sell the house to him.
I've never rented out any property before, so would certainly appreciate any advice you can offer.
So, DW and I have been discussing the possibility of purchasing a very basic single family home that we could then rent to them. We've seen some properties in the area that I think we could purchase at a price where principal, interest, taxes and insurance would be less than they are currently paying for apartment rent. If we do this, we would want to conceal the fact that we're the owners of the property. We fear that if he knew we were the owners, that he would be less motivated to keep up with the payments. So, I'm thinking that we could form an LLC to own the property and to collect the payments, with all communications via email and payments sent to a PO Box or transferred electronically. I know this charade sounds a bit convoluted, and I'm still somewhat reluctant to help based on his past track record. But the addition of our new grandson to the equation has changed the way we're looking at this. We want to see them in a decent home and we certainly don't want them moving in with us.
I guess my question to the group is how best to set up the structure of an LLC. Should I purchase the house in my name, or should the LLC purchase the house? I would want to rent him the house at our cost (mortgage payment plus property taxes plus insurance). Assuming that a portion of the mortgage payment would be principal, would this be generating taxable income for me? Any way to get around that? I'd also like to set up a rent-to-own structure to give him an incentive to keep up with the payments. So, as equity builds, it would reduce the cost if the LLC were to later sell the house to him.
I've never rented out any property before, so would certainly appreciate any advice you can offer.