Welcome back! We received the change order estimate and signed an addendum to our rehab contract to cover the plumbing fix. Framing and plumbing should be knocked out next week. With all the craziness on interest rates and talks of recession continuing to make headlines, are you staying proactive or do you find yourself reacting? How are you compensating for the rising consumer costs stressing your budget? Did recent market dips put a squeeze your investment portfolio? Reply to this newsletter and I'll show you how an investment with us can help you reach your financial goals.

Stoked you're here,

Alex

PROJECT UPDATE

PREVIOUSLY

THE SKINNY

DEEP DIVE

  • Do You Need an LLC to Invest in Real Estate? You don't for residential properties! First off, a Limited Liability Company (LLC) is a business structure that protects its owners from personal responsibility for its debts or liabilities. When purchasing investment properties you can 1) own it in your own name, or 2) form a business entity (LLC) to own it. The primary motivation investors form an LLC to purchase rental properties is to cover their butts, containing the threat of a lawsuit from a tenant, visitor, buyer, seller, lender or other aggrevated party, with assets outside the LLC free fro risk. It's also super important to note that even LLCs can be penetrated for liability claims. There's no such thing as zero risk. "But, Alex..." you might ask, " can you achieve this safety net without an LLC?" You most certainly can. Every homeowner's insurance policy has liability insurance included. Each of my rental properties has $1M worth of liability coverage. For added safety, I have an umbrella liability policy augmenting additional liability of $2M, bringing my total liability coverage to $3M. For a landlord (me) to be held liable for an injury it must be my negligence that caused the incident. But, because I contract property management professionals, the first line of defense is THEIR negligence, which is why they carry their own liability insurance. Beyond the coverage piece, operating LLCs for each of your properties can be a costly endeavor (initiation fees, annual fees, separate tax returns) and may overcomplicate your real estate journey. For the pros and cons of both options, check out this article from Rental Income Advisors, HERE. There's more to that story, but I much prefer the path of least resistance. Simple is best. For commercial properties, however, an LLC is a must. We'll cross that bridge when we get there.

MARKET PULSE & THE "SO WHAT?"

  • What's Ahead for Home Prices? Keeping Current Matters (20 Oct) There isn't a consensus just yet (in the short term). Taking an average of the experts appreciation/depreciation analysis doesn't sit well with me for a solid analytical assessment, so we'll keep our eye on it. Just know that experts are on both sides of zero, and that any depreciation that occurs is thought to recover and net positive in 2024 with annual appreciation jumping to 6% across national averages through 2026. If you're continuing to lean in on a home purchase this year, the best assessment of your market will come from your local real estate agent. If our recent newsletters are any indication, national averages hardly capture what's most important to you and your research. Read more, HERE.

HOW ARE WE DOING? 

If we shared something that blew you away, struck a nerve, or didn't quite make sense, SEND A REPLY!

If you're not yet invested, are thinking about it, want to learn more about passive income opportunities tied to projects like the ones above, LET'S TALK!

 

We look forward to the conversation.

Nothing in the Site or Backdoor Insights newsletter constitutes professional and/or financial advice, nor does any information on the Site or Backdoor Insights Newsletter constitute a comprehensive or complete statement of the matters discussed or the law relating thereto.

alex@kumunalu.com
703-973-5421

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