Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Rental property LLC
Old 01-12-2015, 02:22 AM   #1
gone traveling
 
Join Date: Oct 2007
Posts: 1,135
Rental property LLC

Setting up LLC for DW rental property. She wants to know what is best corporate structure. S corp. C corp or pass through partnership or sole proprietorship.

Any suggested reading to know best corp structure considering minimizing taxes. Ease of filing and/or liability protection ?

Don't know where to begin aside a few Google searches.
__________________

__________________
papadad111 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-12-2015, 03:48 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RonBoyd's Avatar
 
Join Date: Dec 2007
Location: Denver, Colorado
Posts: 5,280
Did your Google search not find this?

Compare Types of Businesses | C Corp, S Corp, or LLC Business Types

As that's where I would begin.
__________________

__________________
"It's tough to make predictions, especially when it involves the future." ~Attributed to many
"In theory, there is no difference between theory and practice. But, in practice, there is." ~(perhaps by) Yogi Berra
"Those who have knowledge, don't predict. Those who predict, don't have knowledge."~ Lau tzu
RonBoyd is online now   Reply With Quote
Old 01-12-2015, 05:54 AM   #3
Recycles dryer sheets
 
Join Date: May 2011
Location: Twin Cities
Posts: 434
Personally, I don't set up an LLC for my rentals. Instead, I purchase a landlord policy from State Farm that includes $1M liability coverage. This costs me $170/year/property (it also covers some other things too).
__________________
Fishingmn is offline   Reply With Quote
Old 01-12-2015, 06:08 AM   #4
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Eagan, MN
Posts: 3,040
All my properties are in separate LLCs. I have an LLC than acts like a holding company for the individual LLCs. I also have a S-corp with zero assets that manages them.

Each one needs a tax form. If I get into a lawsuit, I can let a property go, if I have to. I also have business umbrella and personal umbrella insurance. And a business liability policy.

There are many corporate expenses you can take that you cannot take as a sole proprietor.

With one property, I am not sure f I would bother with an LLC. If you ever want to refinance, it will be near impossible to do it with a conventional loan on an LLC.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is online now   Reply With Quote
Old 01-12-2015, 06:10 AM   #5
Thinks s/he gets paid by the post
 
Join Date: Jan 2013
Posts: 1,043
Because liability judgements can be quite large, I carry $5M in commercial liability, the largest policy I can get from State Farm. Some risks, such as mold, are excluded. I recommend that every landlord go over their liability insurance to see what is and is not covered. I do not use LLC's, as they don't offer significantly improved protection from lawsuits while costing a lot of money to set up and maintain.
__________________
Another Reader is online now   Reply With Quote
Rental property LLC
Old 01-12-2015, 07:04 AM   #6
gone traveling
 
Join Date: Oct 2007
Posts: 1,135
Rental property LLC

Two units. Both paid off and in the clear. I want them in an LLC to protect both joint and her individual assets as well as my individual assets.

We have a 5M umbrella policy.

I want added protection so want her to set up an LLC.

One more question: Properties are solely in her name. She is DW. What risk do I carry as DH if she, as the owner, gets sued? Are assets that are in just my name subject to risk by way of marriage contract ? Worked hard for what I have. Don't want some jack@55 taking it all away.

Google search...yuck. Turned up a few nuggets among the 500000 hits and most are advertising legal services and are very light on actual useful information. The post that Ron highlighted was typical of what I am finding ergo. 2 paragraphs of depth but no how-to or hypothetical examples / information beyond very basic what it is. (I'm no lawyer. Why do lawyers only make web sites scrounging for money. Guess it's for dummies like me to pay up).

From what I can tell the requirement to maintain an LLC is pretty minimal. Have an agent , file a tax form or two. Get properties re-titled in name of LLC and get rental contracts into LLC name. Am I missing something ?

Should the umbrella policy be in my name jointly with DW or just her name since she is owner OR should I get two policies- one for general family protection and a separate one in the name of the LLC ?
__________________
papadad111 is offline   Reply With Quote
Old 01-12-2015, 07:15 AM   #7
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Eagan, MN
Posts: 3,040
Quote:
Originally Posted by papadad111 View Post
From what I can tell the requirement to maintain an LLC is pretty minimal. Have an agent , file a tax form or two. Am I missing something ?
That's it. You can be your own agent. I have heard that multi-member LLCs protect better than single member LLCs.

The best thing you can do is avoid situations where you could get into trouble. The second best thing is to make it more complicated and expensive to sue you. The third is to have a decent insurance policy.

If someone really wants you, they will get you. You just need to make it expensive for them to do so, and give them some doubt to whether or not the trip will be successful and worth it.

With rental property, your main risk is not the tenants, it is the government. Rental licensing, building codes, etc. can all cost you a bundle.

Imagine if you have a duplex, or an apartment building, and the City takes away your rental license. Or you decide to sell. In many cities, there is no guarantee a new owner will even get a rental license.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is online now   Reply With Quote
Rental property LLC
Old 01-12-2015, 07:21 AM   #8
gone traveling
 
Join Date: Oct 2007
Posts: 1,135
Rental property LLC

Thanks senator. Your advise is always wise.

Any thoughts on how best to protect assets in my own name (not held jointly) if DW (sole owner of properties and eventually owner of LLC) were to get sued?

Does marriage impact the risk profile of non-jointly held assets ?

I'm just paranoid as hell... Hate lawyers. Hate how lawyers work what should be a black and white legal system.

These are not quite slumlord properties but they aren't worth a whole lot. It's 2 units of a quadplex and I can't control all tenants so worry Crack heads move in who burn down the place and sue DW.

Sorry to ramble ... 📢
__________________
papadad111 is offline   Reply With Quote
Old 01-12-2015, 07:23 AM   #9
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Eagan, MN
Posts: 3,040
Quote:
Originally Posted by papadad111 View Post
From what I can tell the requirement to maintain an LLC is pretty minimal. Have an agent , file a tax form or two. Am I missing something ?
That's it. You can be your own agent. I have heard that multi-member LLCs protect better than single member LLCs.

The best thing you can do is avoid situations where you could get into trouble. The second best things is to make it more complicated and expensive to sue you. The third is to have a decent insurance policy.

If someone really wants you, they will get you. You just need to make it expensive for them to do so, and give them some doubt to whether or not the trips will be successful and worth it.

With rental property, your main risk is not the tenants, it is the government. Rental licensing, building codes, etc. can all cost you a bundle.

Imagine if you have a duplex, or an apartment building, and the City takes away your rental license. Or you decide to sell. In many cities, there is no guarantee a new owner will even get a rental license.

Or the city could require you to bring the entire building up to code, no lead paint, split utilities, etc. at a cost of a large bundle.
__________________

__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Financing rental property and using property management services GreenER FIRE and Money 12 01-12-2015 09:00 PM
Should I have a LLC for my rental? Ronnieboy FIRE and Money 19 04-17-2011 04:41 PM
LLC for rental properties? cardude FIRE and Money 18 09-12-2009 10:01 AM
Rental property rent raises Toejam Other topics 12 03-09-2005 05:48 AM

 

 
All times are GMT -6. The time now is 07:32 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.