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Do I Need an Attorney Yet? We Are Purchasing Rental Real Estate in the Near Future

Attorney Thomas B. Burton answers a reader question about the right time to hire an attorney for the planned purchase of rental real estate for him and his wife and also gives entity selection advice for purchasing investment rental real estate properties.

Transcript of Video: Do I Need an Attorney Yet? We are Purchasing Rental Real Estate in the Near Future

This question has to do with small

business law and real estate and it's

from Menasha Wisconsin and the reader

asks the following do I need an attorney

yet question mark

my wife and I will be purchasing rental

property in the near future we will be

starting with a four-plex

or less in our own name to get better

financing terms we plan to owner

occupy for the time being I am thinking

we should create a business for tax and

liability purposes but I am unsure if we

can use the business since we are

planning on FHA financing and the

property will be in my personal name or

am I thinking wrong so I have some

concerns about hiring and paying an

attorney for something I may not be able

to use every dollar counts please help

okay so I would say you should consider

forming an LLC to own the rental

property if you owner occupy the unit

for the time being you could delay

forming an LLC until down the road at

which time you would transfer the title

into the LLC however if you have it

formed right away that LLC that is it

could be possible you could buy it

directly in the name of the LLC and then

transfer or buy it in your

individual name and then transfer it via

quick claim deed to the LLC after you

buy it and obtain the financing I know

that FHA loans are for individuals only

and that may be the part you're hearing

about here so you would want to check

and see if you're going to have to buy it

in your individual name anyway you might

to get the financing you might want to

do that and pay down the loan some and

get some equity and then check with your

financing institution and make sure you

could put it into the LLC in your

case like I said if you're going to live

there a little while maybe you buy it in

your individual name then once you move

out and no longer owner-occupy you put

set up the LLC and transfer the property

in the reason I like the LLC is that

it's a great vehicle for owning rental

property to separate your corporate

business liability from your personal

liability what

you're trying to do is drawing a circle

around your personal assets and keeping

them out of a potential lawsuit from the

operation you're running as a landlord

on this rental real estate you can check

out my other videos I have one on what

is the best entity for owning rental

real estate property and hint hint an LLC

is featured prominently so you could

watch that other video about the

benefits of the LLC but I think you're

on the right track here it's just going

depend on your timing with the financing

and how long you want to live in the

property when you actually might want to

form the LLC and put it in in general

once you form an LLC in Wisconsin each

year there's a $25 filing fee to keep it

active so it's very minimal it's not

like some states like California where

I've heard it's five to six hundred dollars

but there is that fee so if you don't

need it for one year you might wait one

year and then set it up the year you're

going to do it again watch my other videos

on that and if you're planning to be a

husband and wife LLC I have a video on the

special rule that allows you to be

multi-member LLC as a husband and wife and

still file your taxes on a Schedule C

that could save you three to five

hundred dollars on a partnership tax

return each year so I'd check out those

videos before proceeding Congrats

on getting into rental real estate and a

great question and thank you for asking!

© 2019 Law Office of Thomas B. Burton. All Rights Reserved.

Transcript and captions provided for ease of access for the hearing impaired.

For questions about this topic, or to suggest a topic for a future blog post, please contact my office.

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