All Forum Posts by: Chris K.

@Greg Scott

When I form multi-member LLCs, I always tell my clients to check with a CPA to make sure they are good with it. In a perfect world, I would mandate it. But I cannot do that for practical reasons. 

With an LLC, you have a lot of options when it comes to structuring the operating agreement. There's a "default" tax language that most lawyers use. But that may not actually fit the clients needs. And most real estate lawyers, despite their expertise in real estate, are unqualified to advise the clients on all the tax implications that can arise from it.

@Kinju Dudhia

I would find a CPA and have the CPA work with your attorney. Depending on the state and how the realty transfer taxes work, the consideration issue might be a red herring. The more important question is the tax consequences --- especially on the capital account side. 

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.

@Joe Kamenar

As @Ashish Acharya mentioned, you can allocated the income/loss in whatever way the parties agree upon. But it will have tax consequences. When you combine that with the fact that you are dealing with a vacation rental, it's probably time to work with a qualified CPA to figure out what exactly your options are. Taxes for vacation rentals can get rather complicated with multiple layers of analysis. 

On the legal end, I'm not big fan of the arrangement. You could do it but not sure if it is worth the headache. It's one thing to spend five figures on legal fees for a large project. Another to do so for a vacation rental. 

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.

@Mark Greenawalt

In terms of reviewing the forms? My guess is that an attorney can review the forms in about two to three hours. So whatever rate they charge times 2 to 3. 

The challenge is that no attorney can guarantee that the form they reviewed will address every single situation that a wholesaler may come across. For example, take a standard residential lease. While crazy stuff happens once in a while, most landlord-tenant relationship are well defined. So creating a lease that you can use for multiple properties is a reasonable task. 

The problem with wholesaling is that there is no one type of transactions. Sometimes you are dealing with a "residential" property; other times, you are dealing with a "commercial" property. Many properties that end up being wholesaled have some odd issues that make a realtor not want to touch it. Trying to cover all those variables in a single form is very difficult to do. 

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.

@Mark Greenawalt

For what it's worth, 99% of the wholesaling contracts I run into are nowhere close complying with Pennsylvania Law. I cannot tell you how many times wholesalers fail to comply with some of the most basic laws (e.g. RESDL) when trying to wholesale their deals. It might be fine if all the parties walk away happy. But it's a pretty risky way to do business. 

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.

@Mark Sheppard

If you don't need an attorney in Fredericksburg itself, I would try @Ronald Rohde. Active member on BP with an office in Dallas, TX. 

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.

@Brett Weisman

There's really no "best" area. They all have different opportunities and require different strategies. 

I do some consulting work with different real estate investors. Once in a while, I get clients that want me to be their "tutor" of sorts for multifamily investing. One of my favorite test I like to give is for the investor to explain how they would make money in a tertiary market like Wilkes-Barre/Scranton versus say a primary market like NYC. If the person cannot come up with a cohesive answer, it tells me that the person still has a lot to learn. 

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.

@Brandon Johnson

I would try @Ronald Rohde --- he's an active member of the BP community and in the area! 

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.

@Brett Weisman

When it comes to markets in Pennsylvania, you have the following breakdown: 

     Philadelphia/Pittsburgh: the two primary markets in Pennsylvania. There's a wide range of cap rates, but the market cap rate has been around 6% to 7% range. 

     Allentown/Lehigh Valley: I would call this area the secondary market. Market cap rate of around 8% to 9%. 

      Tertiary Markets: this includes Harrisburg, Scranton/Wilkes-Barre, Lancaster, York/Hanover, and Reading. All these areas have historically had a market cap rate of around 10%.

      Everything else: this includes college towns like State College and smaller areas like Stroudsburg. 

As a general rule, higher cap rate areas will "cash flow" better than lower cap areas. That make intuitive sense. But that doesn't mean higher cap rate areas are better investments. It just depends on your goals. 

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.

@Alex Wilson

Good question. I'm not sure. It's common for a buyer to sell the property to another buyer after the tax sale. Can't say I've dealt with an assignment situation after a tax sale. It might be legally doable but getting the Tax Claim Bureau to actually do it is another matter. 

Any thoughts @David Krulac?

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.

@Brett Weisman

In Pennsylvania, most "landlord" laws are the same with the exception of Philadelphia and Pittsburgh/Alleghany County. Due to their special status, they tend to have a different set of rules than rest of the state. Nothing too crazy but something to keep in mind. 

In terms of where to invest, it depends on your goals and location. Lots of folks from NY invest in Philadelphia, Allentown/Lehigh Valley, Wilkes-Barre/Scranton, and Poconos area due to the driving distance. All different markets with their own pros and cons. 

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.