All Forum Posts by: Matthew Wahlstrom

Hey everyone, 

I live in Virginia and am considering registering my LLC in Delaware for tax benefits.
I have read a lot about the "benefits," but would like to hear from anyone who might have already done this and find out if it is worth it or not. I realize that you will pay a franchise tax each year, and you still need to have a registered agent with a Delaware address (which legal zoom can provide for $159 annually).  I would like to mention that I am going to operate independently and will be the sole member of my LLC.  So considering that I would not pay any state income or personal income tax but would have to pay the franchise tax, is it really worth it? 

Hello guys,

I am a licensed Realtor in VA and DC. I just started last August, and this year will be my first full year in the business. Until now, I have yet to pull the trigger on getting an EIN number and creating an LLC. I just wanted to ask if anyone has any recommendations on some specifics of what I should register as, and any other potentially useful aspects of setting this up that I should consider. I also plan on flipping and buying rental properties in the near future to create that passive income. Can I keep these things under the same LLC, or would I want to register them completely separately? I think the answer is separately, but I just thought it was worth asking.

Cheers,

Matt

Thank you everyone. I appreciate the input. There is really only one or two comps in the area to compare to. I also considered checking the plot records, and getting a perk test on the property to see if a second build was possible. If I could get the property for under $200K, subdivide the property and build a second larger dwelling, then it might be advantageous for us to do so. I didn't mean to exclude the financial benefits from my statement, when I said that I wanted to get the property because it was near my house. That was just somewhat of a "perk." As far as my cash-on-cash return, I haven't really spent to much time stewing over that because I am flipping it and not renting it. However, the rental rate would average around $750-1000 per month. I know for a fact that my taxes, insurance, maintenance would more than be covered by that. We would be paying in cash, so there there would not be a mortgage to deal with. We would hope to get an ARV of roughly $220-240K. So If I follow the 70% rule, I shouldn't be paying more than $130K for the property. That is including a $25K upgrade budget. I am going to be checking out the interior of the place tomorrow, so I will know a lot more after that. I did a little hard balling with the owner yesterday and he said $219,500 and you have a deal! But again, that price does not match my checklist. I agree that a 2-1 is not hugely popular, but for a young newly married couple on the Westside of Northern VA, it would definitely be a viable option, assuming we "modernized" the home a bit. It already supposedly has a new kitchen, new windows, new flooring and a new roof. So we shall see!

I just got my license in Virginia in October. I am now in the process of getting my DC and MD license. My main goal from the beginning was to burry myself in the real estate investing side of the business. I am trying to avoid "some" of the new investor mistakes by constantly educating myself on all sides of the business. I believe that I have somewhat of a technical advantage because I already understand CAP rates, cash-on-cash returns, etc. etc. I also spend hours running very comprehensive CMA reports on properties to analyze their list factors, sold factors and the average percentages of their tax assessment value that they are selling for as well. I investigate high school ratings and average median income amounts as well as the percentages of rentals versus owner occupied in specific areas. Now that I have bored everyone with my background, I wanted to mention that I am currently working on purchasing my first flip. I found an absentee owner who is selling his rental property. After I called him, I found out that he is selling because he wants to build a house on some land he has, and doesn't want to deal with the rental property any longer. He bought the property in 2003 for $135,000 and has been renting it out every since. I called my buddy at a title company and asked him to run a search to check if the home was owned free and clear (which I assume it is). I just want to make sure that there are no liens before I move forward. The seller has the property priced at $226,100. Which anyone with more than a days worth of experience can tell that the house was obviously priced by a novice. Especially considering the home is roughly 900 square feet 2 bed, 1 bath and is sitting on 2 acres. Although there are not many recent comps in the area, there is one house across the street that is under contract for $175,000. It is a 3 bed, 2 bath on over an acre. I have played around with the numbers and typically use average CAP rates as well as the 70% rule, but my first round of numbers is saying that I should not be paying more than $100-120K for the property. This is definitely more of a flip than a wholesale deal, because there is some potential in the home. It also has endured some upgrades in the kitchen and window department. All in all, I have a few questions for the poor souls that have taken the time to read this long drawn out message.

1. Are there any other red flags that I should consider regardless of him accepting my offer?

2. Is a 900 sq ft. home on 2 acres a obvious awkward ratio of house to land?

3. Has anyone used any specific tactics, scripts etc to get a seller to accept an offer of more than $100K under their asking price? If so, what was the situation and how did it play out?

The reason I want to grab this house is because it is literally 5 minutes from my house, its small enough to manage with just me, my partner and my father, and the upgrades it needs are minimal.  

Knowing that the home owner has done an absolutely awful job of marketing the property (like I mean, not even putting one interior pic online), and considering he wants to move on and build a home, I feel like if I walked in with a check for $100K, he should be happy, not insulted.  I am still waiting to hear back from the title company about the homes mortgage status, but if the home is free and clear, I feel like that is even more of a reason to move on this!

Any thoughts, comments, questions and insults are welcome!

Best,