All Forum Posts by: Account Closed

Brief Background. I live in Texas. I'm an engineer by profession. I've owned 4 rental properties at one point in time. I've since consolidated down to one rental property that I currently own. My plan/aspiration is to increase the number of cash flowing properties in my portfolio potentially though BRRRR. I will also want to transfer my current property into the entity I create.

I talked with a RE attorney today, thinking that we'd be focused on series LLCs; however, he advised against the series LLC in Texas since the "chances of piercing the vale are high in this state" opposed to others. His recommendation was to create limited partnerships to hold the properties then have them managed by either an LLC or INC. This is a strategy that I have not heard of and didn't see in the stickies. I'm fairly certain this strategy is popular with many of the oil companies in my location (Midland, Texas).

Being an armature in this space, I'm left with many questions! So naturally I turn to you gurus here @ biggerpockets.

1.) Are series LLCs really "weak" in Texas?
2.) Has anyone used this limited partnership managed by an LLC strategy?

General question on entities and BRRRR:

3.) Do most people BRRRR outside of the entity then transfer the refinanced, cash flowing property into the entity? Or do they buy the house with cash in the LLC, renovate, rent, and then refinance with a personal grantee within the entity? (then create it's own series? or it's own limited partnership?)

Thanks for any guidance/opinions yall offer. I'm trying to get in the game on the right foot.

Also if anyone has any solid recommendations for RE Attorneys, CPAs, and contractors in the Midland, Texas area I'm all ears! (I guess the CPA and Attorney just need to be in Texas... not Midland only...)

Cheers,
James

So I ran two economic cases out to 28 years (only 8 years shown) (Recast vs Standard Pay Down).

• It seems that if you don't care where what pocket your "gains" are going into (principal vs cash) then the standard pay-down is more adventitious.
  • You'll make less monthly cash-flow, but you'll pay down principal faster with the standard pay down
• If you "need" the additional flexibility of increased cash flow then the Recast has the advantage.
• Some items were not included in these economics, but they'll be the same in both cases (taxes, appreciation, inflation, management, etc)

Good to know. Thanks for your reply. It could offer more flexibility. You could Recast and continue to pay down the loan, but have the availability of cash flow if trouble strikes. One of the reasons it appeals to me. 

I recently sold a rental property and would like to invest the cash into another rental property that I currently own.  I'm treating this investment essentially like a bond (safe, simi-low return, etc). 

From what I can tell the economics on making a large lump sum pay-down on my current loan all to principal (thus shortening my loan life and greatly reducing the interest paid) ; and the economics of recasting the loan are the same... the recast seems to increase the life of the loan even though you put your lump sum to principal, however, your investment property's cash flow month to month is higher. 

• So does the interest savings + increased cash flow of a recast equal the larger interest reduction afforded by the normal pay-down? 
• Has anyone used this strategy to increase their cash-flow and make a humble return on reducing interest over the life of a loan? 

Cheers,

JK

Thanks for your input Tory. Sounds like I need to talk to an attorney. 

I've been investing in real estate in Texas for about a year now. I currently have 2 rental properties. I bought both with 20% down under my own name. I currently have a $1M dollar umbrella policy that encompasses the properties without an LLC. I currently manage the properties myself and have home warranties on both of them. However, I plan on placing them under a property manager (renterswarehouse) due to me not having the time to handle a catastrophic problem with a busy full time work schedule.

My net revenue from the 2 properties is around $800/month after all is said and done. This averages to a yearly 20% cash ROR for each property. The 30 year project NPV10 is $57,837.

I've developed some questions over the last year that seem to be hard to get a simple answer too. 

Questions:

1.) Are there any tax benefits that I can't take advantage of without an LLC? (Do we create LLC just for personal liability protection?)

2.) Does anyone have positive results with bringing their properties into their LLCs with Quit Claim Deeds in Texas?

3.) Can an insurance company (in my case Allstate) cover my properties with umbrella if the properties are Quit Claim Deeded into my LLC?

4.) After I create an LLC can I change the members and the opperating agreement? Say I wanted to invest in a different industry then real estate or add my wife as a member (when I get married).

5.) How solid are Series LLCs? It sounds ideal for real estate.

If anyone knows of any good books on the questions I asked, I'd love to know about them.

Thanks for the help,

JK

Thanks for posting this Andy... I've been trying to figure out my next course of action on this topic for a while now.

Say I've been managing my residential rental property for 2 years and my company moves me to a new location. I would like to hire a property manager to take over.

What are the liability implications of doing this? Does the Property Manager assume any type of liability? Should I transfer my property into an LLC/Trust before letting the Property Manager take over? Does this effect how I have to file my income from the property? (i.e. passive income)

Thanks for the knowlege,

James

I'd really like to see the answer to this question!

Do yall have any good suggestions for a real estate investing book(s) that is heavy on the details and math. I plan to venture into REI pretty soon and have been reading what I can find from amazon. It seems that most of these books give me an idea of how certain types of deals are done but not the nuts and bolts.

I have a strong math back ground and would like to use it to my advantage.

I guess I'm looking for a book that has more to do with learning and less to do with "motivating me to be the best I can be." I need a text book.

Thanks,
James

(Info on me: I'm a 23yo Petroleum Engineer working in ft Worth Texas. My short term goal is to purchase a duplex. I will be living in one side for at least a year. My long term goal is to start purchasing 1-2 multi-family homes a year.)