All Forum Posts by: Adam L.

So I'm looking at a house that needs a lot of cleaning. See pics of before, after, and side by side.

I'm told the house has been vacant for a while (2 years) and its being offered for sale ~$100k. Comps show sales around $170k and rental comps around $1300/mo.

edit bonus kicker....I just found out a homeless guy was murdered in there after squatters got into a fight.

curious what you think this would cost to clean up?

I see cat piss and turds, damage to roof and gutters, yard work, etc.

• Before (2014) https://imgur.com/a/H5EYa7B
• After (2021) https://imgur.com/a/asoy2vR
• sidebyside https://imgur.com/a/NArX8MV

Good point! I need to think about it more like this. Previously, I've been 'thankful' to the big company and tip toeing around, like I don't want to lose my $155k spot in their offering. How to walk to line on this? The BigLLC came back with this solution after I told him I fear we will need to ask for distribution and not 1031 the $$.

@Dave Foster**update**

So I've talked with the BigLLC a bit and brainstormed this solution. If we move forward with the 1031 event as a FriendLLC, the BigLLC can then split up our interests a few months down the road after they close on the new property and everything is in a steady state. Seems like a win/win/win right?

From the CEO of the BigLLC

[quote]I'm going to share the direct feedback we've received below from the CFO and CPA's. If the 3 partners in your LLC can ensure that you'll follow this pathway, we can all collectively make this happen and execute on the breakup of your LLC after the 1031 exchange is completed and settled – so several months from now. And, it means we will not be redeeming your 3rd partner. He has to agree to participate as I'm sure everyone can appreciate here.

This should not be an issue if they roll into the 1031 and then break up their interests into 3 direct interest. Basically their partnership/LLC would be distributing up the interests in [new property] to the individual investors after we close. I prefer they do this after [new property] closes and we complete the 1031 exchange as the 1031 is messy enough as is. Should be straight forward after if they do at any time as long as we are not redeeming anyone out and their individual interests remain the same.[/quote]

@Dave Foster

So i'm reading more about 1031's and it seems clear that the seller cannot touch the money at all otherwise it voids eligibility. 

So the FriendLLC cannot receive the $155k and the individual members cannot get their share distributed because then we would void the 1031 terms.

so I need to find an escrow service or something to recieve and hold and then reinvest ? Any advice?

@Dave Foster

So, some updates. It seems the 3rd partner is not bowing out nicely. (backstory, he cheated on his wife and lied to all of us about it. We have since severed our personal friend relationship with him and are supporting the ex-wife as friends). We sent him a note saying that we would like to end our business relationship and that now is a great time to end things, as we have clear numbers when this 1031 event happens. We would like to buy out your share and have full intention of making things equal, fair and transparent.
He responded with: "you better lawyer up, I'm keeping the LLC."

So I'm wondering if we can do something like this:

• request full distribution from the bigLLC to our FriendLLC
• distribute to everyone their equal share, documented on K1's
• the two nice guys bow out and leave the FriendLLC to the divorced guy
• the two nice guys then reinvest in the bigLLC with our own personal funds/distributions.
• seems like this would satisfy the 1031, as the FriendLLC flows to the members anyway.

thoughts? 1031-wise, can the LLC take the $$ now, K1 it appropriately to the individuals, then the individuals reinvest the $$ to the BigLLC and not get hit w/ taxes? Assuming everything is documented properly by a CPA?

@Dave Foster

I have some more questions about cashing out the third partner. Here's the real numbers so we can talk about them.

$25k original investment per person grew to $39k in 3 years. The wife is kinda sorta interested in taking his share, but probably  not. Looks like at the end of the day, the third buddy needs to be cashed out and removed completely.

So how do we go about buying out or cashing out the 3rd partner? A friend of mine was saying to just write him a check out of the biz account for the full $39k, declaring it as returning his $25k priniciple plus $14k gains. Then he deals with the taxes on his own SSN. However, some other ppl here have said to pay the partner less a withholding for future taxes. 

Then also, how to go about doing the cash out? We don't have that $$ on hand (its in the investment), so do I need to ask for $39k distribution from the larger investment LLC to pay him, then I backfill by writing a check to the biz account for the $39k?

Do I write a check into the account in advance, keeping the original investment in tact, then write the partner his $39k check?

 and what about his asking for 6 months of free lease back? He is saying: I could wait until spring and then sell it or I can sell it now with a free lease back.

So I'm working on an off-market deal for my primary residence and would love some advice.

I've connected w/ a guy getting a divorce that is planning to sell his home in a great area. He's shown us the house a few times and now we're just trying to settle on a price with the guy (he's a part time realtor). I've got a month-to-month rental I'm living in and can be quite flexible on timing. The guy is trying to decide between selling to me now or waiting until the spring and taking it to market. He would want to stay in the house until March. He keeps talking about the 'future value' of the house if he waited until the spring.

What are your thoughts on how to negotiate this situation? The seller has said several times that if he 'waives the future value of the house' and does the transaction now, he would want 6 months of free lease back rather than holding until march then selling. Is this really a thing? I'm trying to buy the house now at today's market price, not the price 6 months from now. How would you respond?

so my small LLC $$ is classified as kind='invested in a large LLC'

so at some point in the future when we want to cash out from the parent LLC, can we 1031 our small $$ by creating a new LLC that we control that our old small LLC invests into and funds? Shell-ing the LLC's and keeping the 'in kind' classification? Our new parent LLC could then invest in whatever or another local small RE deal and getting funds from our small original "invest in large LLC" LLC?

So my next question is about what 'kind' of investment this is. it seems our small LLC is just invested as a limited partner in the master LLC, but its not technically real estate, correct? I was thinking that at some point in the future, I'd want to swing this $$ into a more direct RE investment like a local duplex or even my primary residence....but maybe that is not "in kind"?