All Encompassing Mortgage and Real Estate Thread

[Dbeasy 15,047]

What tax breaks do you think you’ll get putting it in an LLC that you won’t get leaving it in your name?  
 
Again, not a CPA, but your business expenses from your rental business can’t be used as itemized deductions to try get higher than the standard deduction. Your rental property will fall under passive income. If you’re not shaggy 1%, you’ll be able to get some tax benefit. If you are shaggy 1%, you should already know all this shit and be paying your $1000/h CPA instead of an message board poster currently covered in paint who is ready to burn down the house he’s trying to rehab to tell you that you can only deduct passive losses from other passive income. 
 
So if you’re not shaggy 1%, here is how it works.  You take all your expenses you mentioned (don’t forget depreciation, don’t include principle pay down) and subtract them from the rent you receive. If you’re negative, that is a Passive Active Loss (I think that’s the right term, again, not a cpa). If you make under 100k AGI, you can deduct up to 25k of the losses. For every 2 dollars over 100k AGI, the reduction is reduced by 1$, so at $150k you don’t get to deduct anything. 

This is not correct. You should talk to a cpa. The expenses of the rent house, such as property taxes, repairs, etc all offset the rent you receive. Your taxable income is the difference.

[Gil Bang 25,945]

Not a lawyer, but I recommend that each property have it's own LLC, for liability purposes.  Single-asset entities are the way to go. 

[T’Boo Ted Marshall 2,732]

What tax breaks do you think you’ll get putting it in an LLC that you won’t get leaving it in your name?  
 
Again, not a CPA, but your business expenses from your rental business can’t be used as itemized deductions to try get higher than the standard deduction. Your rental property will fall under passive income. If you’re not shaggy 1%, you’ll be able to get some tax benefit. If you are shaggy 1%, you should already know all this shit and be paying your $1000/h CPA instead of an message board poster currently covered in paint who is ready to burn down the house he’s trying to rehab to tell you that you can only deduct passive losses from other passive income. 
 
So if you’re not shaggy 1%, here is how it works.  You take all your expenses you mentioned (don’t forget depreciation, don’t include principle pay down) and subtract them from the rent you receive. If you’re negative, that is a Passive Active Loss (I think that’s the right term, again, not a cpa). If you make under 100k AGI, you can deduct up to 25k of the losses. For every 2 dollars over 100k AGI, the reduction is reduced by 1$, so at $150k you don’t get to deduct anything. 

Dbeasy touched on where I was thinking.
I sold one rental earlier This year as the cap rate was atrocious but made a 2x return for what I bought it for.
I can’t get to Surly 1% if I don’t try to find ways to get to 1%. I’ll plan with my CPA as I do on a quarterly basis.

Anyway, if I convert this primary to a rental and buy another primary in the LLC, but pay rent as the tenant, could I not deduct all the property taxes and not be capped like the new tax laws are now? Add in insurance, maintenance, etc I would think the tax benefits outweigh owning the primary on a personal level and not being able to deduct most of those items.

[UT_OB1 2,218]

4 hours ago, Dbeasy said:

 

This is not correct. You should talk to a cpa. The expenses of the rent house, such as property taxes, repairs, etc all offset the rent you receive. Your taxable income is the difference.

 

Bolded is the same thing i said. What are you disagreeing with? 
 

https://www.google.com/amp/s/amp.usatoday.com/amp/7154811

That is generally correct — for most taxpayers. Rental activities are considered "passive" activities, and a loss on a passive activity is not deductible against non-passive income, such as wages. A special rule lets you deduct up to $25,000 of losses from rental real estate in which you actively participate. The $25,000 deduction is phased out when your modified adjusted gross income is from $100,000 to $150,000, resulting in no deduction above $150,000 (for a married filing joint return). See IRS Publication 925 for additional information.

 

 

Edited December 22, 2019 by UT_OB1

[Larry T. Spider 1,746]

I don’t have any rental properties but have done a fair amount of reading as I would like to one day. Everything I have read says that an llc isn’t really going to help you if sued. I have also read that it’s harder to get a loan if you wish to buy more properties via that route. I’m sure the mortgage guys can confirm or refute that.

[Dbeasy 15,047]

Question about termites. We received from the builder a termite warranty of $85k as long as they do annual inspections. I’m sure those inspections will cost money. Is it worth it?

[Gil Bang 25,945]

13 hours ago, Larry T. Spider said:

I don’t have any rental properties but have done a fair amount of reading as I would like to one day. Everything I have read says that an llc isn’t really going to help you if sued. I have also read that it’s harder to get a loan if you wish to buy more properties via that route. I’m sure the mortgage guys can confirm or refute that.

Bullshit. 

If the LLC gets sued, the maximum exposure is the assets of the LLC, which should be nothing more than the equity in the single asset.  If a landlord gets sued as an individual, every fucking thing he owns is on the chopping block.

[HRSchenker 2,268]

Interesting development as of a few minutes ago. LifeLock sent me a "home title notification" and the address that came back is someone unknown in Harris County. They said to contact the county recorder to verify the information. I can't think of any reason why my information would be associated with this property. Do home titles have social security numbers associated with them? My credit reports are clean as a whistle FWIW

[Larry T. Spider 1,746]

3 hours ago, Gil Bang said:

Bullshit. 

If the LLC gets sued, the maximum exposure is the assets of the LLC, which should be nothing more than the equity in the single asset.  If a landlord gets sued as an individual, every fucking thing he owns is on the chopping block.

Didn’t realize LLCs were such a touchy subject. I don’t really have a dog in this fight, but I have read many stories on mr landlord and bigger pockets where judges allowed an individual to be sued in addition to the llc, especially if it was owned by one person. Here is an excerpt from an article that touches on this:

The purpose of owning the property in an LLC is to protect the LLC owners from personal liability. But you have to think about the possible ramifications if that owner personally oversees repairs or other work on the property and later someone is hurt as a result of that work. In our litigious society, you’d expect the plaintiff’s attorney to sue the LLC, the contractor that did the work and the person who hired the contractor and oversaw the work.

In a nutshell, we prefer small property owners buy better liability insurance, with a higher limit, to protect them (and their assets) in case of an accident at the property. 

 

https://www.google.com/amp/s/www.washingtonpost.com/business/2019/07/31/how-determine-whether-put-rental-income-property-into-an-llc/%3foutputType=amp

[HRSchenker 2,268]

I'm not a real estate investor yet BUT I can't stress the importance of liability insurance. I'm speaking from personal experience. We had a customer allegedly fall in our parking lot and sue us because nobody came to help her. None of us remember her nor is there camera footage of the incident. Her family sued us and the insurance policy settled for nearly $500k. I don't have that kind of coin!

[UTPhil2006 3,807]

2 hours ago, HRSchenker said:

I'm not a real estate investor yet BUT I can't stress the importance of liability insurance. I'm speaking from personal experience. We had a customer allegedly fall in our parking lot and sue us because nobody came to help her. None of us remember her nor is there camera footage of the incident. Her family sued us and the insurance policy settled for nearly $500k. I don't have that kind of coin!

Where is your business located and can you have a puddle pre arranged for me.. I mean a friend.. asking for a friend

[UT_OB1 2,218]

9 hours ago, Larry T. Spider said:

Didn’t realize LLCs were such a touchy subject. I don’t really have a dog in this fight, but I have read many stories on mr landlord and bigger pockets where judges allowed an individual to be sued in addition to the llc, especially if it was owned by one person. Here is an excerpt from an article that touches on this:

The purpose of owning the property in an LLC is to protect the LLC owners from personal liability. But you have to think about the possible ramifications if that owner personally oversees repairs or other work on the property and later someone is hurt as a result of that work. In our litigious society, you’d expect the plaintiff’s attorney to sue the LLC, the contractor that did the work and the person who hired the contractor and oversaw the work.

In a nutshell, we prefer small property owners buy better liability insurance, with a higher limit, to protect them (and their assets) in case of an accident at the property. 

 

https://www.google.com/amp/s/www.washingtonpost.com/business/2019/07/31/how-determine-whether-put-rental-income-property-into-an-llc/%3foutputType=amp

This is what I was talking about. Most landlords are going to do something inadvertently pierce the veil. It is very easy. Is the mortgage in your name?  Did you sign the lease with tenant in your name?  Did you use your personal CC or check to pay any bills?    

3 hours ago, HRSchenker said:

I'm not a real estate investor yet BUT I can't stress the importance of liability insurance. I'm speaking from personal experience. We had a customer allegedly fall in our parking lot and sue us because nobody came to help her. None of us remember her nor is there camera footage of the incident. Her family sued us and the insurance policy settled for nearly $500k. I don't have that kind of coin!

How bad were the injuries?

[JimmyHoffa 1,188]

When it comes to real estate I can't think of an industry where there are more people doing shit they have no business doing. ie- don't check with accountant, don't check with lawyer, don't check with insurance agent, etc. and just think they will be just fine buying this rental property and writing up their own lease. 

It's comical/scary the amount of shit out there that is leaving owners at a huge risk if they ever had Uncle Sam or a former resident's attorney come knocking. 

 

[T’Boo Ted Marshall 2,732]

I'm not a real estate investor yet BUT I can't stress the importance of liability insurance. I'm speaking from personal experience. We had a customer allegedly fall in our parking lot and sue us because nobody came to help her. None of us remember her nor is there camera footage of the incident. Her family sued us and the insurance policy settled for nearly $500k. I don't have that kind of coin!

Agreed, but as a recovering adjuster there has to be a lot more to this story.

[UTPhil2006 3,807]

On 12/27/2019 at 12:35 PM, T’Boo Ted Marshall said:

Agreed, but as a recovering adjuster there has to be a lot more to this story.

Yes I would like to know more as well

[Buzzrock 14,918]

Any suggestions on the most expeditious way to start up an LLC for a rental property in Georgia? LegalZoom looks like a few hundred bucks and a few hundred per year.

[UTPhil2006 3,807]

10 year hovering around 1.80

[Armybrat 40,833]

On 12/22/2019 at 4:48 PM, Dbeasy said:

Question about termites. We received from the builder a termite warranty of $85k as long as they do annual inspections. I’m sure those inspections will cost money. Is it worth it?

Liability talk has to be concluded first.

[Gil Bang 25,945]

On 12/22/2019 at 2:48 PM, Dbeasy said:

Question about termites. We received from the builder a termite warranty of $85k as long as they do annual inspections. I’m sure those inspections will cost money. Is it worth it?

Yes.  I recommend an annual inspection for all of my customers.  Out here, we pay 50-75 bucks for the inspection.

[HRSchenker 2,268]

I'm looking at the deed to my home. How do I know exactly how I took title? Are there certain phrases I need to look for? I'm buying a piece of land and they're asking me how I want to take title. I don't remember doing anything special with the house so I would assume community property.

[Gil Bang 25,945]

it's really a lawyer question moreso than a RE question.  Are you married? 

If so, "as joint tenants with right of survivorship" is most common in my state, no idea about Texas.

[jdhorn92 1,545]

On 12/27/2019 at 10:57 AM, JimmyHoffa said:

When it comes to real estate I can't think of an industry where there are more people doing shit they have no business doing. ie- don't check with accountant, don't check with lawyer, don't check with insurance agent, etc. and just think they will be just fine buying this rental property and writing up their own lease. 

It's comical/scary the amount of shit out there that is leaving owners at a huge risk if they ever had Uncle Sam or a former resident's attorney come knocking. 

 

I blame HGTV .  They make it look so easy.

[Goofyboy 3,288]

I need some help:

My sister and I inherited our family lake house when my mom died. It was in a trust set up by my grand father. I became the trustee, dissolved the trust and have the lake house in mine and my sisters name. This was all done with the help of a lawyer.

Robertson County has the new deed on file. It was accepted and shows we are the owners. The Appraisal District is refusing to change the name on the property from my mom’s to ours. I have provided a copy of the new deed, a copy of the document that makes me the new trustee. All of this worked for dissolving an investment account.

The woman at Robertson County CAD said she needs a document showing we own the place. The only person that could do this is dead. Also, she won’t tell me exactly what document she needs. This trust was not part of my moms will because of how it was created.

Any ideas??

[CooterBrown 18,006]

Talk to the manager. Clerks working a desk don’t know shit.

[Goofyboy 3,288]

Talk to the manager. Clerks working a desk don’t know shit.

This was the manager. Or at least the next level beyond the first person that answers the phone.

[Incredulity 11,667]

5 hours ago, Goofyboy said:

 

This was the manager. Or at least the next level beyond the first person that answers the phone.

 

Try to get to her superior.

 

or

 

Go hire an estate lawyer to write you a narrative of why and how they need to do their fucking job.

Trusts/estates/inheritance throw big fucking curveballs into paperwork and filings nearly everytime I have been associated with one.

[Goofyboy 3,288]

Found her superior today. Email sent and now we wait. I’m trying to avoid more legal fees. The county accepted the warranty deed. I could sell the place with no issues.

[UTPhil2006 3,807]

14 hours ago, Goofyboy said:

Found her superior today. Email sent and now we wait. I’m trying to avoid more legal fees. The county accepted the warranty deed. I could sell the place with no issues.

Hopefully that should work.  Small town/county offices can be a pain

[52-80 19,150]

Man, what the fuck.  Management co. reports that the lock to our sunroom/Wintergarten is funky.

I said fine let the tenant arrange for the repair and we'll pay for it.  A lock cylinder is, what, 20, 50, 100 dollars?

 

Got the invoice today's. They replaced the lock core/cylinder, not even the handle mechism or strikers or door or any of that shit..... One thousand dollars.   Half for parts half for labor.

 

The cylinder is some "winkhaus 40/40" shit.  Googling says it's sorta premium.  But 500 for a fucking cylinder?  Like made out of 40karat gold or what?  And they didn't denominate the hours of labor but 500 to replace the lock - perhaps it was done by the CEO of the locksmithing company?

 

I mean fuck me there must've been massive kickbacks

 

[UT_OB1 2,218]

3 minutes ago, 52-80 said:

Man, what the fuck.  Management co. reports that the lock to our sunroom/Wintergarten is funky.

I said fine let the tenant arrange for the repair and we'll pay for it.  A lock cylinder is, what, 20, 50, 100 dollars?

 

Got the invoice today's. They replaced the lock core/cylinder, not even the handle mechism or strikers or door or any of that shit..... One thousand dollars.   Half for parts half for labor.

 

The cylinder is some "winkhaus 40/40" shit.  Googling says it's sorta premium.  But 500 for a fucking cylinder?  Like made out of 40karat gold or what?  And they didn't denominate the hours of labor but 500 to replace the lock - perhaps it was done by the CEO of the locksmithing company?

 

I mean fuck me there must've been massive kickbacks

 

Yeah you should be have a conversation with the manager about that. Does the mgmt company have their own maintenance staff?  If so ask for details on the hours spent. You might even ask for a few bids yourself, see if it’s lower, and go back to your property mgr and tell them they owe you the difference. 

[Incredulity 11,667]

5 minutes ago, 52-80 said:

Man, what the fuck.  Management co. reports that the lock to our sunroom/Wintergarten is funky.

I said fine let the tenant arrange for the repair and we'll pay for it.  A lock cylinder is, what, 20, 50, 100 dollars?

 

Got the invoice today's. They replaced the lock core/cylinder, not even the handle mechism or strikers or door or any of that shit..... One thousand dollars.   Half for parts half for labor.

 

The cylinder is some "winkhaus 40/40" shit.  Googling says it's sorta premium.  But 500 for a fucking cylinder?  Like made out of 40karat gold or what?  And they didn't denominate the hours of labor but 500 to replace the lock - perhaps it was done by the CEO of the locksmithing company?

 

I mean fuck me there must've been massive kickbacks

 

I would assume the locksmith company thinks they are billing some institutional owner who won't question the invoice.

[UTPhil2006 3,807]

Yeah go back to the mgmt company on that.

[52-80 19,150]

1 hour ago, UT_OB1 said:

Yeah you should be have a conversation with the manager about that. Does the mgmt company have their own maintenance staff?  If so ask for details on the hours spent. You might even ask for a few bids yourself, see if it’s lower, and go back to your property mgr and tell them they owe you the difference. 

the property management co = my listing real estate agent 9for a private house)  so no in-house maintenance. 

 

i dont suspect ill-will, but he did recommend the locksmith company to the tenant.  and since the tenant already paid for the repair, im in it for this one.

 

we have a few other items that are towards its end-of-life, and im definitely gonna hawk over the repairs and vendor selection from now on. 

[HRSchenker 2,268]

I just signed a contract for a land purchase and I want to back out of it. Already paid for the survey. No option fee. How badly did I fuck up?

[Sbbruin 21,847]

30 minutes ago, HRSchenker said:

I just signed a contract for a land purchase and I want to back out of it. Already paid for the survey. No option fee. How badly did I fuck up?

My understanding is you have 3 business days to back out.  What day is today?

Edited January 22, 2020 by Sbbruin

[Catpfish 618]

Don't know of a right of recission in Texas, so most likely (not a lawyer), your earnest money is gone.  The survey money might get refunded if you the survey hasn't been done.

 

Assuming you are in Texas, of course.

Edited January 22, 2020 by Catpfish

[Dbeasy 15,047]

I just signed a contract for a land purchase and I want to back out of it. Already paid for the survey. No option fee. How badly did I fuck up?

What does the contract say? That is the guiding document. Are there buyer outs along the way, like financing, etc? You are probably out the earnest money but the seller could also potentially force you to perform to the contract if there isn’t an out. You need at the very least a competent real estate agent but they can’t provide legal advice, so a lawyer may be necessary if the other side won’t just take earnest money.

[UTPhil2006 3,807]

You can email me the contract if you want to take a look - phil@reihomerealty.com

 

[UTPhil2006 3,807]

On 1/6/2020 at 1:55 PM, UTPhil2006 said:

10 year hovering around 1.80

1.69 as of this morning..

[dingleberryswitzer 2,724]

On 1/22/2020 at 4:03 PM, HRSchenker said:

I just signed a contract for a land purchase and I want to back out of it. Already paid for the survey. No option fee. How badly did I fuck up?

Just "forget" to sign the check.

[Gil Bang 25,945]

On 1/22/2020 at 2:03 PM, HRSchenker said:

I just signed a contract for a land purchase and I want to back out of it. Already paid for the survey. No option fee. How badly did I fuck up?

Call your lawyer. 

[HRSchenker 2,268]

6 hours ago, Gil Bang said:

Call your lawyer. 

I did. Contract nullified and earnest money returned.

[UTPhil2006 3,807]

On 1/24/2020 at 10:28 AM, UTPhil2006 said:

1.69 as of this morning..

Was 1.60 yesterday, recovered a bit to 1.64 right now.  Apparently the coronavirus has impacts on the stock market which trickles into the 10 year

[Captainant 27,657]

My wife and I are starting to house hunt in earnest and her cousin with a real estate license is trying to push her way into being our realtor lol. Can give me some reputable (or at least better than "its from surly") looking links to Houston realtors? We're looking primarily in the Heights area but more generally on the west side of Houston (I work near City Center, wife works near Galleria)

[UTPhil2006 3,807]

23 minutes ago, Captainant said:

My wife and I are starting to house hunt in earnest and her cousin with a real estate license is trying to push her way into being our realtor lol. Can give me some reputable (or at least better than "its from surly") looking links to Houston realtors? We're looking primarily in the Heights area but more generally on the west side of Houston (I work near City Center, wife works near Galleria)

We'll we've done about 5-6 Heights people in the past couple years as well as about 10 mortgages for those people/others.  Don't have a fancy website or anything but you can tell her if you use us for both Mortgage and real estate it can save you guys a substantial amount, and we have a lot of recent work/sales/purchases done in the Heights area as some on this thread can attest.

[UTPhil2006 3,807]

On 1/28/2020 at 2:17 PM, UTPhil2006 said:

Was 1.60 yesterday, recovered a bit to 1.64 right now.  Apparently the coronavirus has impacts on the stock market which trickles into the 10 year

1.56 this morning.

[UT_OB1 2,218]

1 hour ago, UTPhil2006 said:

We'll we've done about 5-6 Heights people in the past couple years as well as about 10 mortgages for those people/others.  Don't have a fancy website or anything but you can tell her if you use us for both Mortgage and real estate it can save you guys a substantial amount, and we have a lot of recent work/sales/purchases done in the Heights area as some on this thread can attest.

Phil - do y'all have realtors in the Houston area?  If you do, I didn't realize that.  

So ready to be done with the rehab in Galveston.  Been stressing about the ReFi with my credit score where it is right now, and driving down to Galveston after work to paint and sand until 10 hasn't been much fun either.  

[UTPhil2006 3,807]

10 minutes ago, UT_OB1 said:

Phil - do y'all have realtors in the Houston area?  If you do, I didn't realize that.  

So ready to be done with the rehab in Galveston.  Been stressing about the ReFi with my credit score where it is right now, and driving down to Galveston after work to paint and sand until 10 hasn't been much fun either.  

Yeah we have 2 and then 2 that kind of help us out (showings) since we're all spread out.

[UTPhil2006 3,807]

On 1/30/2020 at 9:31 AM, UTPhil2006 said:

1.56 this morning.

1.53.  Getting close to 3 year lows.

[UTPhil2006 3,807]

On 1/30/2020 at 7:50 AM, Captainant said:

My wife and I are starting to house hunt in earnest and her cousin with a real estate license is trying to push her way into being our realtor lol. Can give me some reputable (or at least better than "its from surly") looking links to Houston realtors? We're looking primarily in the Heights area but more generally on the west side of Houston (I work near City Center, wife works near Galleria)

PM sent