All Forum Posts by: Chris K.

@Anthony Venezia

You would need to review the sales agreement to see what it says about U&O and other related issues. In most situations, these end up becoming non-issues. But COVID-19 and following shutdown threw a wrench. I would find a local attorney to help you since your roadblock is with a local issue. 

@Sandy Gabin

These issues are dealt with at the municipality level and not at the county level. Some municipalities have stricter requirements. So it would depend on where you bought the property from. 

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.

@Anthony Liguori

With Section 8, you have to check what the local rates are. The rates for Luzerne and Lackawanna County are fairly generous. Not sure about the other areas. 

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.

@Anthony Liguori

Try reaching out to @Adam Guiffrida and @Marc Winter. Adam is a very successful investor in the area with a large portfolio there. Marc is an excellent property manager in the area and very involved in the real estate community. There are also other investor friends of mine with multi-million dollar portfolios there. Not sure what their schedule is like but perhaps they can give some insights if they have a second. 

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.

@Lyle Cooper

While I'm a frugal person, sometimes it just makes sense to hire an expert and let them figure it out for you. Yes, they will charge you. But they will give you an answer tailored to your situation. 

I'm a lawyer and I have expertise in certain fields. In other areas, all I know about it is what I needed to learn for my bar exam. That's why I currently have six other lawyers/law firms that I hired. They are experts in fields that I know nothing about. My knowledge about Pennsylvania real estate law, for example, means little when you are dealing with a complicated issue involving the Department of Transportation or immigration matters. Likewise, I also work with multiple CPAs. A CPA who specializes in real estate may not have answers to convoluted sales/use tax issues or tax issues related to my business dealings in other countries.

You already have three tax experts here. Maybe one of them could help you find an answer to your specific situation. Good luck!

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.

@Anthony Liguori

If you look at Pennsylvania as a whole, you have the following markets:

1.Philadelphia/Pittsburgh: the two largest markets. They have millions of people living there.

2. Allentown/Lehigh Valley Area: the third-largest market. This area has almost a million people living there.

3. Tertiary Markets: Scranton/Wilkes-Barre, Harrisburg, Lancaster, York/Hanover, Reading, and their suburbs. Typically they have around half a million people living in the area. 

4. Everything Else: places like State College, Stroudsburg, and Erie where fewer people live.  

Each market has its version of Class A areas and War Zone areas. But as a general rule, cap rates get higher as you go down the list. An investor can make money in any of them. But the strategy will need to change depending on what you want to do.

If you want to look at the Scranton market, look into the suburbs as well in both Scranton and Wilkes-Barre. Everything cash flows at least on paper. The number one mistake I see people make is underestimating reserves. Also, there's no meaningful natural appreciation in these tertiary markets. It more or less keeps up with inflation but not much more. Not an expert in other markets, but I would say that's true for other areas like Harrisburg, Lancaster, York/Hanover, and Reading.

My number one advice to remote investors is to: (1) pick a market; and (2) create a good team around you. Most remote investors do not fail because they picked a bad market. They fail because they don't have a good team. Now the common problem is that most remote investors cannot build a good team because they cannot afford them. Savvy team members understand the Pareto distribution --- so they want to work with investors that they can get consistent work from. Your goal is to make sure your incentives line up with your team members. In my opinion, that requires the investors to focus on a market to get to a point where they have enough projects there to sustain a good team. 

Just my two cents.

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.

@Tom Gimer is correct. You can purchase those online and quickly receive them (unless the entity is really old).  

One item to keep in mind: when you purchase a property from an entity in Pennsylvania, the best practice is to request something called a bulk sale clearance certificate. It's kind of a moot point if your agreement of sale didn't require it. But it's generally a good idea to request it as the buyer if the seller is an entity if you want to avoid any unknown tax liability. 

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.

@Lyle Cooper

I own a construction company. While I still practice a bit as a lawyer, I spent most of my time running my construction company and actively investing in real estate (e.g. self-managing properties, managing overseas properties, being a general partner in syndication deals, etc). Despite all that, my CPA and I had to do a ton of research and planning to make sure that I qualify. For example, he had to look into many tax court cases to make sure the kind of construction company I have qualifies for the exception. There were a lot of interesting cases dealing with companies that engage in "glazing" services. Saw a very interesting case where the company owner failed to qualify due to his company doing too much work in automobile glass.  

As @Michael Plaks pointed out, you also want to ask if it is even worth it. I personally have cost seg projects so I can take advantage of the accelerated depreciation to offset my other income. But if you are not in that position, it may ultimately not matter.  

So I guess my advice would be to work with a CPA that has expertise in this realm. As I like to say, you pay professionals a lot of money because they can answer difficult questions. And this is a difficult question. 

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.

@Garrett M.

The fact that you are doing it for free doesn't really matter. The idea behind these laws is to protect both the landlord and the tenants from property managers that do not know what they are doing. To take a somewhat extreme example, imagine someone performing free surgery without proper training. Maybe the person's heart is in the right place. But we wouldn't feel comfortable having that person perform surgery without medical training. 

Now the Ron Swanson in me says these laws can get rather extreme. But until we have a libertarian coup in Pennsylvania, it is what it is. 

You could try to see if you guys can do something to rely on the owner or employee exception. But that has its own set of headaches as well. 

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.

@Steven Mckeon

To add to what @Lydia R. wrote, you'll want to be familiar with all the oddities with Pennsylvania law. Just using a random agreement you find online could come back to haunt you if you fail to follow the applicable laws. Also Pennsylvania has draconian realty transfer tax laws so you would need to become familiar with that as well. 

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.

@Ethan Ross

I'm in the area but I can't call myself an expert on the Scranton market. Maybe @Marc Winter or @Adam Guiffrida could offer their thoughts. What are you looking 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.