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investment property?

I really want to buy a rental investment (like duplex) and I need some guidance: 1. Should I form an LLC to protect my potential lawsuit and purchase that rental property under that LLC? can I avoid an LLC due to fees/costs? 2. I am in CA and looking out 3 different areas: Austin TX, Vegas NV, or Raleigh-Durham NC. Which one do you think I should look into in terms of long-term investment (at least 7 years) and taxes/fees consequences Thanks

Public Comments

1. I'm an agent out in Las Vegas, and boy is it a buyer's market! Sellers want to make "deals" happen, and they're willing to negotiate. Prices might not get any lower, and selection may never be better out here. It's also good for investors that rents are on the rise. The average rental out here is over $1200/mo. An example of a good situation is a rental condo I own purchased for a mere $75,000 in '06 and I'm renting it at $725. Other same-sized units in there are already going for $800/month! Feel free to try and contact me if you need any advice on the Greater Las Vegas-area market!
2. First, you're looking in 3 areas that require extreme care in property selection...these markets have risk right now. Dallas / Ft. Worth or San Antonio would be better in Texas, Northern AZ is still looking pretty good, and certain areas of Oregon and Washington offer good upside...I can't speak to the East, except to say that people are still moving to Florida lie crazy... regardless of disasters. Real Estate should always be a long term investment, and a 7 year horizon is a good start...the key is to buy the most property you can afford with break even cash flow at the start, but seek positive cash flow deals to reduce your risk during vacancies. The tax benefits are basically the same everywhere except in "Go Zones" where you get dramatically accelerated depreciation which can be carried back and forward if you don't have enough income to take all the benefit in year one. The Biloxi, Mississippi area where a bunch of casinos are being built is a great spot for that. There were 2-3...but there will be 20 in the rebuilt area...and the casinos need places for their people to live. New Orleans is not ready for investors yet, and may never recover to the point of being a great real estate investment. A better instrument for protecting your assets is a Family Limited Partnership, which would contain the assets you normally either hold personally or in an LLC, and this is just one component of a total asset protection strategy. For your estate you should have a living trust to eliminate probate and reduce estate taxes, for cap gains tax protection you would put together a charitable remainder trust, and for better tax treatment than an LLC and similar personal liability protection, you should use a C Corp, but all of this is unnecessary until you have something to protect. If this is your first property, an LLC is overkill, instead start with your FLP and place your asset in there, or buy the asset personally and then transfer it to an FLP when you are ready. Good luck in your quest to be an investor, and keep that long term thinking...it will make you wealthy if you buy just one property per year. Regards, Robert Noakes Real Estate Investment Consultant Sr. Mortgage Planner 415.652.8112
3. Yes, you should form a LLC especially if you are going for self proprietorship ! Also get a good accountant to sit with you and go over your profit projection plan, so you will know how much you will possibly make after taxes! As far as rental property, when it comes to renting you want to be in the state you have your property. When you have a rental unit ,remember this. You are RESPONSIBLE for everything!!!!!!!!!!!!! Someone jumps off roof ,little kid falls through floor, all on you! Just because you open a LLC it doesn't mean tenants won't sue! If by chance you do get rental unit in another state you will need to hire a property manager or a company that offers that type of service. As far as the location it doesn't matter as long as the numbers are right! This is why you need to create a profit margin analysis once you have completed this step you will be able to find deals all around you! Or deal with a professional company that will help you in this whole matter. This is the company I use ; www. kjonesrealestateinvestment .com fill out their form and they will call you ! You are on the right track though! you may also be interested in getting an IRA so you can do your transactions tax free! If you need further info e-mail me! Good Luck!
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