Posts Tagged Real Estate
LLC, LLP, S CORP, C-CORP – HOW TO OWN YOUR PROPERTY?!?!
Posted by patandkrislarkin in Property Management on May 1, 2012
LLC . . . LLP . . . S Corp . . . C Corp?!?! For the last week or so, we have been teaching our “How to Profitably Manage Rental Property” workshops around California. It’s odd how each of our teaching trips takes on a theme. Last time, it seemed that nearly every workshop we taught people were in the process of inheriting properties. The trip before that the theme was short sales and buying foreclosures. This trip . . . true to form . . . has revealed it’s theme to us . . . Forms of Ownership. People at every workshop are asking us “What is the best way to take ownership of my rental property to protect myself . . . Living Trust . . . LLC . . . LLP . . . S Corporation?!?!”
This is certainly not our area of expertise, but we can give you some guidance here. I can tell you that owning your property just as a sole proprietor or as a couple is the most vulnerable form of ownership you can have. You can mitigate any financial exposure with general liability insurance but will still have exposure above and beyond the limits of your insurance coverage.
Let me paint an example for you: Someone trips and falls on a loose floor board which had been reported to you as a problem by your Tenant previously. The person who fell is permanently paralyzed and their potential to earn income for their family has been severely impaired due to your negligence. The case goes to court and the judge finds in favor of the injured person;$3.5 million. You have $1,000,000 in general liability coverage. Your insurance company will pay up to the million dollars of coverage you have. But, you are going to have to figure out a way to pay the other $2.5 mil . . . in other words . . . for most of us we would be wiped out financially!
As I understand it (and you will certainly want to consult a knowledgeable real estate attorney on this), if in the example above, you had owned the property as an LLC, LLP or a corporation, you would at least have had a layer between you and the judgement of the lawsuit. That entity would take the hit and not you personally. Of course this all assumes that you are operating that entity as a bonafide business, keeping annual meetings and minutes up to date, etc. Now, that entity’s assets would be vulnerable but you would manage the structure of the entity’s asset holdings.
A living trust, as I understand it, is merely a way to structure your assets so that in the event of your death, your estate will not be subject to the full impact of estate taxes. I don’t believe it will afford you any protection in the event of a lawsuit or unfavorable judgement against the trust. But then I could be mistaken.
This is a great subject to explore at more depth. I would invite any comments or insight any of you may have. I would love to pass more information along to our readers. In the mean time, we will continue to research the subject and bring you new info.
Thank you for reading. We look forward your comments!
Pat and Kris
VISIT OUR WEBSITE for a full array of books, documents, checklists, videos and tips to help you to Manage to Make Money with your rental property.
RENTAL PROPERTY MANAGEMENT – ALWAYS COLLECT MOVE IN FUNDS IN REAL MONEY!
Posted by patandkrislarkin in Property Management on April 26, 2012
ALWAYS Collect Move In Funds in REAL Money
By: Pat Larkin
Don’t take unnecessary risks with people you don’t know. When you have a Tenant moving into one of your properties ALWAYS collect the move in funds in Cashier’s Check or Money Order.
When you have someone getting ready to move into one of your properties ALWAYS collect the move-in monies in “Real Money”. When you have a Tenant getting ready to move into your property, typically you will trade them the keys to the property for their final balances due; deposits and first month’s rent, etc. Always collect these funds in what we call “real money”… cashier’s check or money order. To help your case, be sure that you state in their lease agreement that “only cashier’s check or money order will be accepted when paying final move in amounts.” This way, you have discussed the issue with them and they have signed off agreeing to that. In fact, depending on how much time is between them paying their holding deposit and their move in, if there is not sufficient time for a personal check to clear their bank, you may want to require that all funds paid by them are “real” money also. If you do allow for the holding deposit to be a personal check, make sure that it has cleared their bank before you give them the keys to your property.
Why go through all this “dain bramage”? Well, unscrupulous Tenants have been known to pay their move-in funds with a personal check, get their keys and promptly stop payment on their check. Then the Landlord (you) have given possession to the Tenant, have no money, no income and a couple of months of legal wrangling to look forward to before you can get your property back. And don’t forget about the make ready costs to market your property again!
In summary, don’t take unnecessary risks with your property. Always collect move in funds in REAL Money.
To view a short video on this same subject CLICK HERE
Thank you for reading!
Pat & Kris
For more tips and forms and educational tools to help you to effectively manage your rental property, please visit our web site at: ManageToMakeMoney.com
RENTAL PROPERTY WORKSHOPS:
Don’t forget that we are in California for the next couple of weeks doing these very affordable rental property workshops all over the state. If you or anyone you know could benefit from learning more about the day-to-day management and how to profitably deal with the challenges of managing rental property . . . these workshops are just what the doctor ordered! CLICK HERE to find a workshop in a location near you. We hope to see you there!
RENTAL PROPERTY MANAGEMENT – WORKSHOPS
Posted by patandkrislarkin in Property Management on April 17, 2012
“Buying low cost property and renting it is a great way to create wealth and constant cash flow, but it can be tricky and very non-productive and even a disaster if you don’t know how to do it properly and profitably.”
Mike Rounds
There is so much to be said for education, and what an integral part of our life it plays . . . except when it comes to managing rental properties. Many of us take high level, intellectual courses that deal with a lot of great theory but many of those fail to get to the heart of managing rental properties . . . having systems and procedures in place to deal with the down-in-the-trenches, day-to-day issues of managing properties.
I hesitated this morning to write on this subject. Because we are so involved in teaching our workshops, I didn’t want to come off as a shameless marketer. OK, perhaps a bit of marketer is creeping in but my motivation for this subject this morning is mainly from the perspective of letting you know about a valuable resource. We have taught our Rental property workshops to thousands of participants and where we really get our pay off is in seeing the “lights going on” when one of our students “gets it”!
Oriented for professionals and novices alike, these workshops deal with the roll-up-your-sleeves issues such as: Getting your property ready for market, Marketing your Property, Listing your property for lease, Leasing your Property, Collecting Rent, Dealing with Challenging Tenants, Tenant Move out, Dealing with Homeowner Associations and Property Maintenance. Through our years of owning and operating one of the largest residential property management firms in Orange County, California we have come up with lots of systems, processes, forms and documents to make management easier. In our classes, we share this stuff with our students so that every time a situation comes up, they aren’t caught “flat-footed” having to re-invent the wheel . . . again . . . and again!
We will be starting our workshop tour next week in Northern California and then moving to Orange County and San Diego and then back through the Midwest. If you know of anyone in those areas . . . property manager . . . property owner managing their own property . . . someone thinking of buying rental property, please forward this posting to them. Click here for our Workshop Schedule and More Workshop Information. There is good information to be gained through these workshops and/or our books and other resources offered at our web site. Click here for Rental Property Management Resources
See what people have said about our workshops:
“I’ve done everything wrong! Pat and Kris showed that there are “do-overs” and that I can learn from my mistakes, turn my property around and do a good job of managing it!”
Workshop Participant – Pasadena City College
“I came back and took the workshop a second time because I learned so much the first time and the instructors are so down to earth, I wanted to learn more!”
Workshop Participant – Sierra College
As always, thank you for reading!
Pat and Kris
RENTAL PROPERTY MANAGEMENT – RENTER’S INSURANCE
Posted by patandkrislarkin in Property Management on April 16, 2012
Why Renter’s Insurance
Did you know that if your Tenants have no renter’s insurance, it could leave you liable? Always require that your Tenants buy renter’s insurance with $100,000 liability and, with you named as additionally insured. This is a win-win for you and your Tenant; the insurance is relatively inexpensive, it covers the Tenant’s contents in the event of a loss (water intrusion, fire, etc) and covers you in the unfortunate event that someone is injured in the property . . . fall down the stairs, slip and fall and so on. So what’s up with additionally insured language? That names you as insured just like your Tenant, that way should the Tenant cancel the policy or fail to pay the premium, you, just like your Tenant will receive the cancellation notice. Otherwise, you will have no way of knowing if the Tenant’s renters insurance is still in effect. Make renter’s insurance a requirement . . . not an option!
Click here to view a sample document we recommend you give to your Tenant’s AND have them sign. 03.17 Insurance Facts for Residents SAMPLE
We have a complete assortment of 62 documents, Forms and Checklists which can be easily downloaded from our website. Check them out.
Thank you for reading!
Pat & Kris
RENTAL PROPERTY MANAGEMENT – COLLECTING RENT
Posted by patandkrislarkin in Property Management on April 11, 2012
Collecting rent is really the “Ground Zero” of managing your rental property. If you are not receiving rent from your Tenant, then you can’t pay your mortgage, do maintenance (at lease not from your rent revenues) . . . . it can put quite a strain on the whole rental property system.
Collecting rent is really one of the main focuses of managing rental properties. After all, if you are not collecting rent, then a whole other set of actions have to come into play, like evictions and so on. But before you get to that point, when your tenants are not paying their rent on time, many times, they need some prodding or “encouragement”. The form of this “encouragement” that I recommend is issuing a “Three Day Notice to Pay Rent or Quit” which, essentially is a threat. I am telling my tenant that if you don’t pay rent within three days, I am going to evict you.
First of all, let’s talk about what the three day notice to pay rent or quit really is; as I said before, it is a threat. I like to think of it more like a promise . . . here is my resolve . . . this is the hill that I am willing to die on. This is my business, and I am sorry if you are having problems paying rent but if you don’t, then I will have to start the eviction process. The Three Day Notice is really much more than a threat or a promise; in many states, it is a legal requirement. In many states you cannot start the eviction process unless you can prove that you have served the Three Day Notice AND three business days have passed since you did serve the notice.
We are all familiar with the mother who makes the ever-familiar threat to her kids: “I’m counting to three . . . don’t let me get to three!”. She is threatening them with who knows what if she should ever get from 2-1/2 to 2-3/4 all the way to three! Just like that mom, we have to be prepared to act on our threat or just save ourselves the effort and let the Tenant be in charge of paying rent whenever they please. This is why I strongly recommend that you have a good relationship with a reputable eviction attorney . . . to back up your threat should you need to.
We have initiated the eviction process many times but followed through all the way to a full eviction very few times. Again, having that relationship with a good eviction attorney is worth it’s weight in gold when it comes to showing your resolve to your Tenants. Keep in mind, now that we have started the process, we have incurred some attorney fees and the Tenant will have to pay his rent, any late fees AND whatever the attorney fees at that time in order to be reinstated and stop the eviction process.
In summary, you will have to show your resolve to your Tenants when it comes to collecting rent. Having a good eviction attorney on your team is a good way to show them you mean business!
To view a short video on this same subject CLICK HERE
VISIT OUR WEBSITE to see the full array of rental property management resources as well as their latest live seminar schedule.
As always, Thank you for reading!!
Pat and kris
RENTAL PROPERTY SYSTEMS – HAVE THE RIGHT FORMS
Posted by patandkrislarkin in Property Management on April 10, 2012
Rental Property Forms and Documents
The forms and documents you use in managing your rental properties set the tone for how under control or out of control your management really is. Legal documents are very important and do a lot to set the stage for the period you will be working with your Tenants. But the forms, checklists and letter templates . . . if you have never experienced certain situations . . . you will be “re-inventing the wheel” each time a new challenge presents itself. Let’s take for instance that challenging Tenant of yours who throws one of those off-the-wall requests out there . . . how are you going to respond. We have developed a “No” letter which, in a very polite way explains to your Tenant that you understand their request but per section XYZ of their lease . . . you will not be able to accommodate them. Kris and I have experienced a lot of tough and challenging situations in managing investment properties and consequently have created forms, letter templates and checklists for nearly every situation . . . we got tired of re-inventing the wheel every time something came up! Our life lessons are for your benefit! this is not necessarily a sales thing but rather . . . making you aware of a resource that is out there which will make your management of rental properties more efficient, timely and more profitable!
See what others are saying about our forms and documents in this short video
Along with our forms, documents and checklists, we have developed a lot of time and money saving resources to help you Manage to Make Money with your rentals. Come, visit and check us out at: www.ManageToMakeMoney.com
As always, thank you for reading!
Pat & Kris
MANAGING YOUR RENTAL PROPERTY – FINDING A GOOD PROPERTY MANAGER
Posted by patandkrislarkin in Property Management on April 3, 2012
How Do You Find A Good Property Manager?
So you decided you don’t want to manage your own rental property . . . learning that you may not be cut out to manage rental property is a good thing! It’s much better to find out now than when you find your self in a difficult situation because you didn’t know what you were doing!
Finding a good and reputable property manger isn’t as difficult as it may seem. We recommend that you start by contacting your local Board of Realtors and get a list of managers from them. If that doesn’t work or isn’t convenient, then Google for property managers: “property management any town, any state”. A third option is personal referrals, contact your realtor friends or others who may know a property manager.
Once you have your list, visit their web site and then narrow the list to 2 or 3 and visit their place of business and interview them personally. When you go for the interview, note how organized they seem to be . . . or not. Then, ask questions to see if the two of you communicate well and on the same level and if you have the same values of money. The right manager for your property will become apparent to you.
See what Kris Larkin has to say about finding a good property manager . . . VIEW VIDEO
For more tips on how to profitably manage your rental property and about finding a good property manager visit our website at: www.ManageToMakeMoney.com or call 949-689-4344. Our book devotes an entire section to this subject.
Thank you for reading!
Pat and Kris
RENTAL PROPERTY MANAGEMENT – TENANTS BREAKING THEIR LEASE
Posted by patandkrislarkin in Property Management on March 23, 2012
Tenant Breaking Their Lease
Life happens and Tenants break their leases for many reasons . . . they can’t pay any longer and are skipping out or something as innocent as getting a great deal on a short sale and just learning that they have to close in 2 weeks . . . YIKES!! Either way, you have to know the Tenant’s and your responsibilities when this happens.
As you probably already know, the Tenant has the responsibility for the rent through the end of the term of the lease as stated in their lease agreement . . . and to leave all the utilities on and pay for them until the property is re-leased (if you used our lease form). You, as the Landlord, if you want to be able to collect any rent through the end of their lease term, must immediately and diligently market the property for lease again. Be careful not to market the property at a higher rent amount than the previous Tenant paid or you may have difficulty in collecting money for lost rent in court if . . . you “Jacked the Price up” which is how a judge may see it. You will only be entitled to the lost rent between the time your previous Tenant vacated or last paid rent and the beginning of a new lease with your new Tenant . . . no double dipping!
One other very important detail, as soon as the Tenant vacates the property, do an “Estimated” final accounting of their security deposit . . . or Move Out Statement. Of course you won’t know all the final numbers when you prepare this and that is why it is called an “estimated” statement. But, in this statement, you are going to assume that you will not find another Tenant for the property before the end of the lease term. You will also estimate the costs of any repairs over and above “normal wear and tear” the Tenant may have caused. This will show a worse case scenario. Send the statement out within 21 calendar days (in the State of California) of the Tenant moving out with a check for any amounts left over from the funds (typically security deposit) you are holding for the Tenant.
Within 21 days (calendar) of all the repairs having been completed and either the end of the lease term has come or your new Tenant has moved into the property, you will need to do what I call a “True-Up” Move out statement. This will show all of the actual costs to your Tenant, giving them credit for any time of their lease that the new Tenant will be in the property (you can’t double dip on rent) and cut a check for any differences. Oh yeah, be sure to include copies of receipts for all work performed that you are charging the Tenant for.
The subject of Tenants breaking their lease along with many other property management challenges are covered extensively in the new Property Management Training Program; Manage to Make Money . . . . the Real Estate Series. This new series has been developed around the book: Manage to make Money . . . Your Guide to Profitably Managing Rental Properties (available for California, Oklahoma, Kansas or Missouri) written by Pat and Kris Larkin who are seasoned real estate professionals and specialists in the area of Property Management.
To visit their website and see the full spectrum of Rental Property resources; Books, E-Books, Documents, Forms, Form Letters for nearly every occasion, Checklists, Videos more money saving tips and tools . . . and the list goes on and on, go to: ManageToMakeMoney.com
For a short video on this subject CLICK HERE
Thank you for reading!
Pat and Kris Larkin
Bit.ly: http://bit.ly/dTTI0W
RENTAL PROPERTY MANAGEMENT – 24 HOUR NOTICE OF ENTRY
Posted by patandkrislarkin in Property Management on March 22, 2012
What do you do when need to access your rental property but are unable to coordinate schedules with your Tenants? There are times when you need to get into your property to make repairs, show it to prospective Tenants, show it to prospective buyers or just to inspect the property and you can’t get a hold of your Tenants. We suggest that you go by the property and post it with a “24 Hour Notice of Entry” This is a legal document which tells the Tenant that in approximately 24 hours, you will be coming into the property to; and then you state your purpose.
Now you have to be judicious with the use of the 24 hour notice and not use it every week to go into your property. Your Tenant is entitled to the quiet use and enjoyment of the property. If you are using the notice to have repairs done… always accompany your workmen into the property. Also, it is a best practice that if/when you enter a Tenant’s property, that you have someone accompany you. In our our litigious world, this is for your own protection. It is also a good idea to try to contact your Tenant “one more time” before you enter the property. Also, document all the attempts you made to reach them or access the property.
You will be amazed at how when your Tenant receives their 24 Hour notice, they are miraculously available to meet you there!
In conclusion If you can’t reach your Tenant for access to the property, post a 24-Hour Notice of Entry, document all attempts to communicate with them and be sure that you accompany your workers when you/they go in.
To view a short video on this same subject CLICK HERE
For our 24 Hour Notice of Entry form or more down-to-earth tips on how to effectively manage your rental property, visit our web site at: ManageToMakeMoney.com.
Thank you for reading!
Pat & Kris
RENTAL PROPERTY MANAGEMENT – DEALING WITH “CHALLENGING” TENANTS
Posted by patandkrislarkin in Property Management on March 21, 2012
When my wife, Kris and I were traveling and staying with some friends, we walked into the room they had prepared for us and on the lamp was an antique looking sign which read: “Our guest bring us great joy… some when they arrive… and others when they leave!” I felt that way about our Tenants… sometimes, it’s the waiting for the joy at the end!
We are all challenging people to live with… some more than most! We categorize our challenging Tenants into three primary categories: 1.) Students 2.) Entitled Tenants and 3.) Those Tenants who upset the neighbors around them. In a way, they all have similar attributes… they want to live their lives… any way they choose… regardless of how disruptive they may be to others around them. Many of these Tenants “bully” their way through life… pushing their way through. Our tip for dealing with all types of challenging Tenants is to show respect to them, but also show your resolve. Be assertive in requiring that they go by the same rules that most others on the planet go by. We have developed what we call a “No” letter and it very respectfully says something to the effect of “Thank you for your concern about (whatever the concern is). However, this is not a situation in which we will be able to meet your expectations at this time.” (then state whatever clause in the lease which applies). Another option, if they are disturbing the neighbors or causing damage to the property is to threaten them with a notice to comply with their lease or move. There is a very strong chance that your Tenants won’t like either response. But with your resolve… you will get this challenging situation under control.
In summary: Don’t allow your Tenants to get the upper hand in your relationship… push back with respect and their legal obligation of their Lease Agreement.
To view a short video on this same subject, please CLICK HERE
If this tip has been helpful to you, please visit our website at: ManageToMakeMoney.com where you can find our “No” Letter and many more tools, tips and techniques for managing your rental property profitably.
PatandKrisLarkin.com 