#174: Ask Paula – I’m 48 and Retiring Next Year. Should I Buy More Rentals?

Should a 48-year-old New Yorker who’s retiring next year buy more rental properties?

Should a Michigan-based first-time homebuyer use an FHA loan to buy a duplex for $135,000 that rents for $1,800 per month?

Should a 40-year-old music professor who owns a duplex transfer his property into an LLC?

Should a New Jersey condo owner sell her unit as For Sale by Owner?

And should a woman who’s anxious about owning her own rental properties dive into real estate crowdfunding deals instead?

I answer these five rental property questions in today’s podcast episode.

Here are the details:

Matthew asks:
Last fall, I closed on a duplex. This purchase occurred before we started an LLC, so the property is under my name instead of the business. I know I could change the ownership with a quit claim deed, but I’ve heard there may be complications with the mortgage lender when going this route. Can you give any advice on how to transfer a rental property into an LLC?

I also have two related questions:

1. I recently purchased a $1M umbrella insurance policy; I’ve heard that some people use an umbrella policy instead of an LLC for rentals. Are you for or against this?
2. If the rental is not under an LLC, will I still have the same tax advantages for owning a rental property?

Julie asks:
I own a 4-unit property that I purchased 11 years ago, and my husband and I househack our primary residence, renting out a portion of it on Airbnb. I’m 48 years old, and I plan to retire in spring 2020. I love being a landlord, and we’re constantly looking to purchase other properties in cheaper areas. (We live in NYC.)

However, our cash position isn’t the greatest, and with my retirement date nearing, I’m wondering: should we buy additional rental properties? Or should we wait and save more money, rather than tapping into our equity?

Also, do you have any thoughts on where we should invest?

Shannon asks:
I’ve owned my condo for three years, and I’ve been president of the condo HOA for two of those years. I’ve overseen the majority of the renovations in this building, including a massive remodel inside my own unit.

Despite the time and energy I’ve put into upgrading my condo, I’ve decided that I’d like to sell my condo this spring. The local housing market is booming, and I’d like to relocate closer to my family in Florida.

Since I have so much knowledge about this building and my own property, I think it might make sense for me to sell on my own, rather than pay the fees associated with having a realtor.

Do you have any feedback or suggestions regarding the pros and cons or risks and benefits of pursuing a for-sale-by-owner route?

Brianne asks:
Do you have any thoughts on syndicated real estate deals? I want to invest in real estate as passively as possible, but I wasn’t sure if syndicated deals were a good idea. What are your thoughts?

Eric asks:
I’m looking at buying a duplex for $135,000. One side rents for $800, and my girlfriend and I will live in the other side. If we moved out, we could rent that side for $1,000. I’d like to buy this duplex with an FHA loan, putting 3.5 percent down, and my goal is to stop paying for mortgage insurance as quickly as possible.

I recently repaid nearly $40,000 in student loans, although I’ve had to slow down on the last of my student loan repayments in order to save money for this duplex purchase. I also have a small emergency fund.

Do you think this duplex is a good deal? Should I get an FHA loan? And the owner wants to sell the property to me as an FSBO deal; what do I need to know?

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I answer these five real estate questions in today’s podcast episode. Enjoy!

 

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