All Forum Posts by: Chris K.

@Natalie Kolodij

This doesn't have to do with a real estate holding LLC. But here's a classic example that I dealt with during my private practice days.

There's a business in the area that's been around for several decades. Has about 50 something employees and otherwise doing good in business. When they formed the business, LLCs were not an option. They didn't want to deal with corporate formalities of a traditional corporation when they began. So they just kind of started a business as a general partnership. 

Many, many years later, one of the partners makes a serious mistake/commits a tort. Potential damages in the eight-figure range. Unfortunately, the conduct was done as an employee/partner of the business. Because it is a general partnership, every partner now faces the possibility of being held jointly and severally liable despite them not having anything to do with the tort. 

Had they just converted it to an LLC later, the other partners would've been in a great position. But they didn't and hence in a very difficult spot.

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.

@Matt Casella

What size deals are you looking into? Do you want big firms or smaller firms?

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 F.

To add to what @David Wrenn wrote, our glass & glazing company has worked on many large-scale, mixed-use development projects in the area. Not sure what the total project costs were on those projects and we lost a few bids. But these are projects where just glass and glazing scope is in the six to seven figures. 

I must say I never looked into investing in Newark as an investor. But based on the projects we worked on, people with serious money/clout think the area has potential. Maybe they are not as bullish as they are in say Jersey City. But they are going forward with these projects.  

Now it's hard to say how these projects would impact smaller investors in the area. But it's generally good to be in a market where folks with serious money are looking to do new construction projects. 

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 Smith

At the simplest level, you have two distinct issues to consider. First is your ability to generate cash. Second is what you decide to do with the cash. Somewhere between the two is strategic planning to reduce your tax liability.

For the first part, I suppose the answer will depend on your skillset. You could, for example, have a generational talent like Lebron James, Dr. Ben Carson, or even someone like Pewdiepie. Even you don't have a generational talent, mere exceptional talent could get you pretty far. After all, there are many folks making six to seven-figure income without being the "Michael Jordan" of their discipline. Another tried-and-true method is to become an "entrepreneur." That's a whole different topic but generally the goal there is to start businesses that can run without relying heavily on the founder's skill set. 

For the second part, you can do both good and silly things with your money. You could be like Antoine Walker and blow $100 million before you turn 40. Or you could make good investments, protect your assets, diversify, etc. While the book is a bit dated, The Millionaire Next Door is a good book on this topic.

Based on the above, I'm not sure if it really matters whether you have $1 million to start with. You can get a head start but you could also easily blow that. 

Now if you were asking whether it is possible to grow a $1 million investment into $5 million in three years, then that's a slightly different question. I believe you will need to average an annual return of around 71% for three years. 

Could you get those returns? Sure. But I would say most of your options are risky. For example, if you invested $1 million in bitcoins a few years ago, you would be filthy, filthy rich right today. Now many, many serious investors won't touch bitcoins since they look at it as the second coming of the Tulip Mania. So who knows who is right? ¯\_(ツ)_/¯

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 London

In my opinion, you always risk situations like this when you work on "smaller" projects. For these smaller projects, it becomes very difficult to make the numbers work to hire a proper GC/subcontractors. So you often end up with a construction crew that has serious deficiencies. That's typically where you would have to step in as the owner to offset such issues.

Unfortunately, I think you are in a tough spot. Based on everything you wrote, I don't think you have a very good fit. The GC might be good when it comes to workmanship but you might be their least valuable customer. It's virtually impossible for a contractor to aim for 100% satisfaction from their customers. So if you are on the bottom end of their priority, that's generally not a good place to be. 

If you want the safest option, you may have to show up at the job site once or twice a week until the project is complete. It sucks but it is what it is. You may also want to start looking for an alternate GC since the GC may just decide to walk away from the job. 

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.

I took a quick look at the proposed texts. While I understand the idea behind, it seems like it will fail in execution. The main difference I see is that it requires the magistrate and the constable to move quicker. That's fine, but what are you going to do when they don't? Sue the magistrate and constable? 

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.

Hi @Maneesh Joshi:

Try @Joe White --- he's an active member on the forums and provides property management services in the Philadelphia 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.

@Cory Lader

Commercial registered agents are folks that offer registered agent services for a fee. So the word "commercial" in this case has nothing to do with whether the underlying property is a commercial or residential property. For many of the agents, you just go online and register on an online account to get started. You just need to provide them with a few details about your LLC.

Here's a list of all the agents that the Commonwealth has approved: 

https://www.dos.pa.gov/BusinessCharities/Business/Resources/Pages/Commercial-Registered-Office-Providers.aspx

And I know many folks who rely on the exemption in Pennsylvania. So you can do it if you wish. I just personally prefer not to for a slew of reasons. For example, once I had a situation where a foreign LLC relied on that exemption. Later when that foreign LLC got involved in a lawsuit as a plaintiff, the defendants argued that the foreign LLC could not sue them yet as they did not register as a foreign LLC. In that case, that wasn't a big deal since they just filed the paperwork and put the lawsuit on hold for a month or two. But that could have more serious implications when you have statute of limitation issues.

Again, none of the issues are fatal per say. But I don't see much of a benefit in using a foreign LLC in this context.

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.

@Cory Lader

If I'm using LLCs, I always try to incorporate an LLC in the state where the property sits. It's not the only way to do it. But I think it's the simplest way to do it for many reasons.

As for the street address, I typically utilize a commercial registered agent. The fees are minimal so it has not been a big issue. 

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.

You could but the operating agreement would generally say that you need unanimous or super-majority consent to amend the operating agreement. So both parties would need to agree to it. 

I personally like to only include folks who play an active role as members of my LLC. If you are just contributing money, I prefer to just give them a note/mortgage. That way the role division is fairly clear. But that's certainly not the only way to do it.

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.