What does being a landlord, involve?
So, you want to be a landlord, but not really sure, what all it involves. First of all, you have to buy a rental property, or a few. Start out with one first. You don’t want to overwhelm yourself. Remember you will be responsible to your tenants.
If they need something fixed, you need to be able to do it, economically. It is your job to make sure tenants are happy, and keep paying their rent. Don’t overextend your own financial responsibilities, by buying something that will need constant repair.
Where do you look for rentals?
Know your market, buy accordingly, then charge rental fees that match the area. If you want to be able to provide cheaper rent, and help out lower income people, then you can.
If you want more affluent tenants, pay more for a nicer place in a highly sought after area. Some good investments are usually with foreclosures, but you must know a little bit about construction, and repairs, as they usually need some.
Another good investment, is finding rentals of a landlord who is retiring, and does not want to be a landlord anymore. These people usually have good tenants already in place, who don’t want to move. Keep your eye out.
Okay, you have mastered being a landlord, now what?
So now you have a few properties, and gotten the hang of being a landlord, so now what? You have been doing fairly well, only having to make a few repairs. What happens though, when an accident happens.
You know, where someone gets hurt. It’s bound to happen, it does in your own home. But hey, you have insurance for that, right? . You could double up on insurance for extra protection, or you could form an LLC.
When you should make your rental real estate property an LLC, or perhaps not!
Actually the question is, should you, or should you not, form an LLC. There are many pros and cons for both sides. You should seek out the help of your accountant, which hopefully you have, being a landlord.
There are several different ways to go about this. Yes, you probably should make your rentals an LLC. However, what are the pitfalls and advantages of such measures?
The pros and cons of forming an LLC.
Forming an LLC costs money, but protects you from lawsuits. Of course you maintain your rental properties well, but there is always that “what if” hanging over your head. You can never prevent everything, and hopefully nothing will happen, but with an LLC, your personal assets will be protected.
However, if you include all your rentals on one LLC, it subjects these other properties to the ramifications, of one lawsuit. So, you may have to form an LLC, for each individual property, to protect all other properties from being lost, in a major lawsuit.
But be aware, there are some added costs from forming LLC’s. It all depends on the state you live in. There may be added tax costs, but in the end, it is better to pay, and be protected, then to lose everything, rom one mishap.
How do you go about forming LLCs on your rental properties?
You have already decided on, when you should make your rental real estate property an LLC, so now it is time to take action.
Seek out the advice and help of an accountant, near all your rentals. This will guarantee, everything is done right, as they know the laws and regulations for that area. Don’t let being a landlord, be a hassle!
