Author Topic: Taking over from a PM  (Read 2476 times)

aj76er

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Taking over from a PM
« on: November 21, 2015, 04:39:25 PM »
Hi All,

I'm getting ready to take over the day-to-day management of 2 rentals from a PM and was wondering: Should I try to transfer the existing lease?  Or should I work up a new lease and have the tenants go through all the paperwork again, but under my own LLC.
Both are currently month-to-month, and I would plan to keep them that way.

arebelspy

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Re: Taking over from a PM
« Reply #1 on: November 22, 2015, 02:04:32 AM »
If they're month to month anyways, I'd do a new one, if you have a specific LLC already set up.

What's the point of the LLC if not to use it, and do things properly, for the liability protection.
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Bearded Man

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Re: Taking over from a PM
« Reply #2 on: November 22, 2015, 09:06:03 AM »
Are you a member of the LLC? Don't charging orders basically negate LLC protections these days? They seem to in my state. 

I'd put them on a new lease. I try to go by the book. If you don't, you are opening yourself up to more potential liability down the road.

arebelspy

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Taking over from a PM
« Reply #3 on: November 22, 2015, 09:37:20 AM »
Yeah, I wouldn't manage a property I had in an LLC, because then they'll sue you as the manager, ownership aside, and your assets are potentially open, even though you're expecting them to be off limited due to the limited liability protection from the LLC.

LLCs' veils are quite easy for a good attorney to pierce, and self-managing is one big, obvious way.

Good point BM, I wasn't thinking of that part of it.
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aj76er

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Re: Taking over from a PM
« Reply #4 on: November 23, 2015, 12:23:48 AM »
Yeah, I wouldn't manage a property I had in an LLC, because then they'll sue you as the manager, ownership aside, and your assets are potentially open, even though you're expecting them to be off limited due to the limited liability protection from the LLC.

LLCs' veils are quite easy for a good attorney to pierce, and self-managing is one big, obvious way.

Good point BM, I wasn't thinking of that part of it.

So, how would you suggest I structure things?  I was thinking of opening an LLC for the "management" of the properties (starting on 1/1/16).  However, the properties are still deeded to me (outside of any LLC).  Do you typically recommend a separate holding LLC for the properties?

arebelspy

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Re: Taking over from a PM
« Reply #5 on: November 23, 2015, 01:18:11 AM »
It's always best to consult a lawyer for legal advice than listen to randos on the Internet.

Of course, a lawyer will tell you to set up an LLC, because that's what they know. So it may not help you that much. But still, listen to what they say and why.

That being said, I can say that I personally no longer use LLCs for my properties. I have had some in the past, but closed them. I wasn't seeing the benefits, versus drawbacks. I do advocate for healthy umbrella insurance.

Run a search on the forums and you'll find more discussion.

(Properties in your name: another reason why they'll also sue you, in addition to the LLC, and you likely won't get the limited liability protection.  Of course, a lawsuit risk is very small. But then what is the LLC for?)
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Bearded Man

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Re: Taking over from a PM
« Reply #6 on: November 24, 2015, 09:54:08 AM »
Yeah, I wouldn't manage a property I had in an LLC, because then they'll sue you as the manager, ownership aside, and your assets are potentially open, even though you're expecting them to be off limited due to the limited liability protection from the LLC.

LLCs' veils are quite easy for a good attorney to pierce, and self-managing is one big, obvious way.

Good point BM, I wasn't thinking of that part of it.

So, how would you suggest I structure things?  I was thinking of opening an LLC for the "management" of the properties (starting on 1/1/16).  However, the properties are still deeded to me (outside of any LLC).  Do you typically recommend a separate holding LLC for the properties?

From my research, it is best to hold them in separate LLC's. Remember, the goal is to protect your assets. By holding them in separate LLC's, only the assets for that LLC that is being sued are at risk, in most cases. This is something you really should consult an attorney on, as I've seen a lot of evidence that LLC's don't protect you as much as you might expect. Charging orders are very common, and with a charging order they can come after other assets. It isn't a fool proof way to protect your assets.


zephyr911

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Re: Taking over from a PM
« Reply #7 on: November 25, 2015, 02:02:46 PM »
Hi All,

I'm getting ready to take over the day-to-day management of 2 rentals from a PM and was wondering: Should I try to transfer the existing lease?  Or should I work up a new lease and have the tenants go through all the paperwork again, but under my own LLC.
Both are currently month-to-month, and I would plan to keep them that way.
Their rights and obligations under the lease are conveyed with the property from the seller to you, so you don't *have* to sign new leases. The last time we bought, we had the seller execute a new 1-year lease for a tenant who didn't have one, just to make expectations clear before closing, and we never saw fit to revise it. He's winding up the initial period of that lease and will go month-to-month according to those terms, still on the old lease.
If you wish to renegotiate any terms under a new lease, please note that the old terms apply unless and until formally changed, and the tenant may have the legal right to refuse changes as long as that lease applies. Make sure you understand all those terms and their applicability before you try to do anything.

aj76er

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Re: Taking over from a PM
« Reply #8 on: November 25, 2015, 09:35:22 PM »
Thank you everyone for the good info!  Much appreciated :)