Benefit to Single Purchaser on REI Property?

[kenmoremmm]

My wife and I will be purchasing a property for a rental. Is there any benefit one way or the other to having one person or two people be listed at the Buyer?

[ilsy]

1. Are you planning on getting divorced?
2. Is any of you want to live on Medicare/Medicaid?
3. Are you planning on financing the property?

[kenmoremmm]

1. no
2. medicare, eventually (26 years from now)
3. no

[ilsy]

It might be advantageous to have 2 people, so you can use the phrase "I need to talk to my spouse" when you deal with contractors, tenants or anyone who you don't want to give the answer right away. But you can use the phrase even if only one is on the deed. Another advantage of having both on the deed, is if one of you dies, the other becomes automatically the owner, might be less paperwork  (depending on your state) for the surviving owner to sell the property. Or in case one of you is the owner and also becomes incapable to give a concent to sell the property, the other one doesn't need to wait for the "incapable" to die in order to sell. But it also depends on your state laws. Maybe get consultation from an estate lawyer.

[tralfamadorian]

If you plan on doing any financing in the future, you can get a maximum of 10 mortgages per person. If both people are on the deed/mortgage, then it counts against both. If you only have one person on the deed/mortgage, then you have 20 mortgaged properties between the two of you. So, if you think you may finance it now or down the line and plan on accumulating lots of rentals, then I vote alternating who is on the deed for each new property.

If you're sure you will not finance or cash out refi in the near future, then I vote both for the reasons @ilsy outlined above.

[brian.ellwood]

I put all mine in LLC's for the protection, but if you don't go that route, just pick you or your wife. You only get 10 conventional mortgages by law per person, and if you are both listed on the mortage, it "uses" one of your 10 spots for both of you.

[kenmoremmm]

all our initial purchases will be cash only (next 4 units). after that, we will likely lever.

i've read that LLC is hit or miss in terms of protection and that an umbrella policy is just as effective. thoughts?

[tralfamadorian]

all our initial purchases will be cash only (next 4 units). after that, we will likely lever.

i've read that LLC is hit or miss in terms of protection and that an umbrella policy is just as effective. thoughts?

Do the umbrella policy regardless- it's cheap and nice to have in a SHTF situation. If you are confident that you will never lever these properties and LLCs are not expensive to start and maintain in your state, then I would go for it. The effectiveness of LLC for liability protection depends on the correct procedures being followed to avoid piercing the corporate veil and the protection afforded the LLC in your state (google "one member llc" and "charging order" to get started on that one). As you can see, what the state laws are in your location will weigh heavily into your decision.

[brian.ellwood]

all our initial purchases will be cash only (next 4 units). after that, we will likely lever.

i've read that LLC is hit or miss in terms of protection and that an umbrella policy is just as effective. thoughts?

Yeah, i've also been told that the umbrella policy is just as good. But an LLC is only a few hundred bucks a month, its additional protection, you can get a business checking account in the name of the LLC, and treat the properties like the business that they are, all within an LLC and separate from any personal finances.

Keep it separately regardless, but I think an LLC plus the umbrella policy is the safest bet.