4d ago

Time to get that 4th part time job rentoid

It's a tough "job" but someone "has to" do it

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The members of the organization buy in to the organization. 4 people buying in at 5% of the purchase price, and the organization has a 20% down payment.
This is a simple, straightforward business arrangement. You don't need to show that the organization is making excess profit. You need to show that the organization is able to pay its bills. A "sound business plan" where the members are all contractually bound to the organization is not unreasonable.
- Alright so 4 benefactors need to provide the down payment and pay the mortgage for years while the building is under construction. Once the building is fully rented out, rent payments will need to cover the ongoing mortgage payment + all utilities and fees + repairs + reserves for capital expenditures + some extra to cover initial down payment and mortgage payments during construction (over what time horizon?) How many people will you find who are willing to take such risks only to break even after a decade or two, rather than invest in government bonds or the stock market?
  
  The "benefactors" you're talking about are the tenants. The owner of the building is an LLC; the owners of the LLC are also the tenants of the building. In this case, the building is a quadplex. There are no additional renters to bring in.
  All of the various payments and fees you mentioned? A traditional landlord has all those as well, plus one more: profit. This LLC doesn't make a profit. Any "profit" it made would come from the tenants, and would be owed back to those same tenants. There is no profit incentive here.
  
  Wait, if the owners of the building are also the tenants of the building, then this is just home ownership with extra steps, which was my very first comment.
  
  For one, you get the benefit of renting. Which is flexibility.
  
  What is the benefit of renting from yourself?
  
  Because there is no profit motive if you rent from yourself. Also, you only pay rent. You don't have put up collateral, down payments etc. Also you don't actually own it. When you leave, you're not selling anything.
  
  The example we have been using clearly stated to the owners of the building were also the tenants of the building. Are you suggesting a completely different example?
  
  I think you better google it for yourself and learn about it, instead of asking questions to strangers and constantly being dissatisfied with the answers.
  
  I am just looking for a comprehensive answer that makes sense. I haven’t read one here so far unfortunately.
  
  That's why I told you twice(!) to look elsewhere
  
  I mean, something has to own the building and contract with the tenants, and that something can't have a profit motive without simply becoming a landlord. So, yes, pretty much.

31 comments