All Forum Posts by: Ben Hansen

Hi,

Would anyone be able to suggest a good real estate lawyer in Washington State that would be familiar with the laws surrounding lease termination? Looking to consult someone on our options for terminating a lease when one of the tenants is choosing to move out due to irreconcilable marital issues. Additionally, the tenant choosing to move out informed us of some psychological issues the remaining tenant has been recently diagnosed with and we have some concerns for the safety of our other tenants. This is a small multi-family property.  

Appreciate any suggestions or advice on this matter. 

@Jameson Sullivan Thank you, that's super helpful information.  

@Cory Hoffman - Appreciate the feedback. I'm not sure this space is well suited for a franchised restaurant. Based on it's location I think it needs to be something with a bit more character than a franchise in order to be successful. 

@Randy Sanders - Thank you. Staking out the permitting process is an interesting and unique concept. I'll definitely take a look at this.   

@Jameson Sullivan - Thank you for the advice. The space is in the downtown area and all fixtures have been removed by the previous tenant. I have the capital to provide a decent TIA but I think it would totally depend on the prospect tenant. Is it your experience that most commercial tenants expect some kind of TIA? 

@Account Closed Thanks for the advice on LoopNet. 

I've considered that as an option as well but didn't know how much traction that gets in this space since I wasn't sure if a potential restaurateur would think to look there. I know the current owners don't have it as a listing on LoopNet so maybe that's all it will take. 

I'd ideally like to identify some prospects for the space prior to executing the deal. 

I'm looking to make the transition from residential to commercial investing and think I've identified an opportunity with a restaurant space in a pretty attractive area. 

Problem is I'm not sure what the best outlets are for finding a tenant to fill the space. Based on my research so far it looks like using a commercial agent/broker is the best option, but I'm wondering if there are other resources people use that I'm not thinking of.

 Any advice is much appreciated.   

There are multiple variables you're considering here that should be looked at independently. 

Short answer: Your LLC is a pass through entity and distributions won't impact your taxable income. Distributions only impact your capital balance an whether or not your LLC is structured in a way that your allocation of income/expenses is dictated by the capital balance you maintain in your LLC. Therefore, when it comes to minimizing taxable income it's really dependent on how much rental income you bring in, offset by depreciation and deductible operating expenses.

As @John Underwood mentions you can hold the property and never pay taxes on appreciation if you execute 1031's until it's passed on through inheritance with your benefactors getting the tax basis at FMV, but based on the fact that you're looking to acquire this property with friends that's most likely not the strategy. The question around the 1031 would be if the 1031 would be executed by the LLC. I'm not sure how the 1031 works for capital gains deferal when you have ownership of a property within an LLC and then take those capital gains and potentially 1031 by purchasing another property as an individual or different entity.

The distribution amount only factors in when deciding how much cash you want to keep in the LLC to cover future maintenance costs and other operating expenses.