So we set up an LLC for our investment property, primarily for keeping ‘the biz’ separate from our personal finances. It also helps at tax time and for keeping liability or damages away from your person if something were to happen at your investment or rental property.
Most complex to me is the permit situation. Because we have an LLC, the city is going to treat us like any other outside business improving a property – not as homeowners. Here is a breakdown of all the permits we needed…I highlighted the 3 permits where you must have a licensed tradesman do the work (you cannot work on these yourself):
- The first permit you need is a general building permit. You can get this yourself. The LLC purchases this to improve a property and it details the general scope of the project. There are a few different inspections required with the general permit.
- Framing inspection: Checks all the walls ensuring the structure is secure.
- Insulation inspection: Checks to make sure the house is properly insulated.
- Vapor barrier: Keeps the moisture out of the house.
- Fire block: Stops backdrafts in the event of a fire.
- You will need a permit for a new roof.
- You will need a permit for siding, but we were lucky; we did not have to replace any siding.
- You will need a permit for any new windows you install.
- You will need a licensed electrical outfit to pull a permit for any electrical work you do.
- Electricians are expensive, but we are lucky that my brother is an electrician and is able to pull permits and do the work himself.
- You will need an HVAC permit and you cannot do the work yourself unless you are the homeowner. HVAC is heating, ventilation and air conditioning.
- You will need a plumbing inspection and a permit from a licensed plumber.
This is all null and void, of course, if you are the primary homeowner, As a homeowner you are encouraged to make improvements to your property as needed. As a business, they want to ensure you are not doing shoddy work for a quick buck to the deprecation of a property.