All Forum Posts by: Chris K.

@April L. Williams

I understand that your attorney is pricey but this is probably a situation to work with him/her. I do understand the logic behind trying to do your own leg work. But it actually doesn't save that much time in the grand scheme of things since — as an attorney — I still need to do my own due diligence. And oftentimes, the clients do not know what to look for so they end up sending me stuff that is basically irrelevant to the issue they are looking to resolve.

At minimum, you need to look at the POA papers and see if it got properly executed. In terms of the other heirs, I would first look at the deed to the property in question to see what the title looks like. I have my doubts that the executor and the probate attorney transferred the title to multiple heirs instead of just selling it. Not sure how they do it in NC but it's a royal pain in PA.

But long story short, I would work with an attorney. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@David Haynes

For real estate holding companies, I use an LLC from the state where the property is opened. So if I'm going to buy a property in PA, I use a PA LLC. If I'm going to buy a property in AZ, I use an AZ LLC. It's what I have decided after weight the pros and cons.

One concrete reason to open an LLC in a different state is to take advantage of series LLCs. I don't use them in PA because we have no caselaw on the topic. It took about 15 to 20 years for law on LLCs to settle down a bit. But some people may decide that the pros of a Series LLC outweigh the cons caused by its uncertainty.

Delaware is special but not for reasons that would matter to an average real estate investor.

In terms of the other factors, I don't know. People pitch Wyoming and Nevada all the time but I haven't seen convincing evidence that they are significantly better than other states. That's especially true when you take the LLC and do business in another state. And the practical reality is that if I'm doing a deal out-of-state, I'm going to be using outside counsel. The chances of that attorney also being an expert on LLC/corporate law in multiple jurisdictions is fairly low (e.g. my expertise with LLC/corporate laws are limited to PA and DE). So I would rather keep things simple.

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Prithvi Sri

Have you seen the actual loan agreement or just what is recorded in public record? Just note that many large commercial loans tend to get very convoluted with the loan agreement itself being anywhere from 100 to 200 pages. The fact that you see 2.5% in the public record may not show you the entire picture.

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Casey Caton

Some examples:  

○ I ended up doing business together with many of my formal clients and connections I made over the years as a lawyer. 

○ Being a lawyer typically means that you end up working on deals that are much larger than what you can possibly do on your own. For example, let's say you work a $50 million CMBS Mezz Loan securing a real estate project. Aside from learning how those larger deals work, you also get some "street cred" being able to tell folks that you've successfully handled large scale projects.

That came very handy with my business ventures in construction and real estate in many different ways. For example, let's say you own a construction company that you are trying to convince a GC to give you a big project. Being able to talk about your experiences in the construction world as a lawyer working on projects ten times the current project can be very helpful when you are one of the finalists. It shows that you can hang with the "big boys." 

○ With the risk of sounding arrogant, b can generally figure out how sophisticated someone is as a real estate professional after chatting for a few minutes. That comes from years of talking to people who are leading experts in their field. That's easier to do when you are a practicing attorney. As I mentioned above, you tend to work on projects that are much larger than what you could do as an investment on your own. Bigger projects tend to draw better talent --- and hence more time spending with leading experts. 

○ The legal market is an interesting place. As you probably know, most lawyers don't make as much money as people think. But that said, the hourly rate for attorneys is much higher than all the activities that you describe except maybe "syndicating" (which is a loaded word). Being a good attorney is thus still a very desirable skill in the marketplace --- even if you don't end up working as a full-time lawyer. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Casey Caton

I think the answer partially depends on what you mean by being a "full-time real estate investor." What are you going to do during those hours? Self management? Looking for deals?  

Once you have determine that, you can compare that to the potential income you can make as an attorney. That could help you determine whether you should outsource the tasks that you do as a "full-time real estate investor." 

My field of expertise as a lawyer was real estate, construction, and banking (especially on the financing end for real estate/construction projects). Being a lawyer from a smaller town, you also end up doing a lot of general corporate/commercial work. They have proven invaluable for my real estate journey.

Thank you for your service by the way!

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Jacob Bopst

Depends on several factors but most likely yes. Try reading Scenario 2 in the PDF below.  

https://www.revenue.pa.gov/Gen...

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Travis Rogers

My personal rule is that the holding entity (i.e. the LLC that actually owns the real estate) should be incorporated in the state where the property is. So if you are buying a TX property, I would use a TX LLC to own it. You could own the TX LLC as an individual or another LLC -- say an OK LLC --- if you see the need to do so. But you shouldn't really create layers of LLCs unless you know what you are doing.

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Jacob Bopst

Realty transfer taxes in Pennsylvania is a complicated system with a lot of odd issues. The attorney you met with is absolutely correct. You don't want to assign in your situation because it exposes yourself to a high risk of double transfer taxes.

I would go back to that attorney that gave the correct advice and ask him/her to represent you. If the seller balks at canceling the original contract and signing a new one, you would have to do some analysis as to what risk level you are at with double transfer taxes.

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Cameron Wilks

As @Soh Tanaka wrote, QBO is an accounting software. The purpose behind QBO is to help you organize your financials. What you do with that organized information (e.g. investment analysis) is outside the scope of what QBO is meant to do. 

If you are handy with Excel or Google Sheets, you can create a sheet that can take the raw data from QBO and instantly analyze the numbers. I prefer it since you can tailor your analysis. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

@Kurt Linwood

You need a CPA and maybe an attorney to help you with the process. Now ideally you would have hired the CPA before the transaction so that you could have planned it. But unfortunately that time has passed. 

Maybe you could do a QOZ deal now to save on taxes. You won't get the full benefit but I believe you would still a get a meaningful tax saving. But just buying real estate alone probably won't be enough. I would immediately find a qualified professionals to discuss. 

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.