All Forum Posts by: Daniel Dietz
Daniel Dietz has started 149 posts and replied 1396 times.
Post: changing llc members.....a tax event?

- Rental Property Investor
- Reedsburg, WI
- Posts 1,409
- Votes 857
Are things any different when it is a multi-member LLC, say with 3 equal partners? If partner A wants to sell all or a portion of his interest to an existing memeber of that same LLC. It is buy and hold real estate that is the main assets involved.
Thanks, Dan Dietz
Post: Self Directed IRA - how to with other people’s money

- Rental Property Investor
- Reedsburg, WI
- Posts 1,409
- Votes 857
In regards to family members and who is 'dis qaulified' it was explained to me this way;
Think if a family tree as a 'cross' with you at the intersection. Above you is parents, grand parents etc... below your kids, grandkids etc.... to the sides are brothers and sisters, aunts uncles, cousins etc.....
The up and downs are a no-go. The ones to the sides are fine. This is a WAY over simplfied way of saying it :-).
I invest with a sibling, uncle and aunt.
If you search the forums there have been some good discusins on this in the past.
Dan Dietz
Post: Self directed IRA question

- Rental Property Investor
- Reedsburg, WI
- Posts 1,409
- Votes 857
@Carl Fischer or others,
In regards to a business partner being disqualified.......
I understand what you are saying if it is the "housing" partnership that creates that in this case.
What if I am a partner in say a completely unrelated field, such as we have a retail store together that is an LLC.
Now, we want to do buy and hold rentals together in an LLC, or with me just borrowing from him. Could he use his SDIRA funds in this new venture that would be set up just using each of our SDIRAs?
Thanks, Dan Dietz
Post: Has anyone worked with Silent Investors?

- Rental Property Investor
- Reedsburg, WI
- Posts 1,409
- Votes 857
@Randy Forcier I invest both by myself and with two partners where we each put in 1/3 of needed capital on purchases. We have 25 units that way.
I just started, after about a year of planning from things I learned here on BP, investing with a 'silent partner' on a 4 plex. He brought ALL of the down payment 20%, we (2 partners and I) will do ALL of the acquisition * ongoing PM. All cash flow and equity growth will be split 50-50. Each of our intentions are to hold for at least 10 years and then evaluate again.
I have a few other potential silent money partners also as they have heard how we are working on this deal together. We set up an LLC to do this, and would set up a separate one for each potential investor and only have 1 investor per property/LLC.
Dan Dietz
Post: The New 20% Pass-Through Deduction and You

- Rental Property Investor
- Reedsburg, WI
- Posts 1,409
- Votes 857
Could one of you Pros chime in on a detail I have seen come up in converstaions here and elsewhere please?
Besides real estate, which show a 'tax loss' so this is a non issue for that, I ALSO have a 'day job' of being a partner in a kithcen & bath remodeling firm that is family run. We do K-1s and operate as a multi member LLC.
The two of us each take a monthly 'draw' since we cant 'take a paycheck' so to speak. That montly amount has remained steady (and reasonable for what we do) over the last few years, and then at the END of the year, we 'split the extra'. In two of the last 3 years there was substantial 'extra', in the other it only amounted to about 1K. One year we actually had a 'negative' at the end of the year and had to reduce our 'capital basis' ( I think that is the wording) by how much we were 'over drawn' on our month draws.
I read that 'guaranteed payments to partners' is NOT eligible for the 20% pass through, only 'the end of year profit' is? Is what we are doing eligible or not?
We are going to talking to our tax pro too, but just wanted some feed back here and it might help others too.
Thanks, Dan Dietz
Post: How to Structure the Partnership

- Rental Property Investor
- Reedsburg, WI
- Posts 1,409
- Votes 857
We just set up an LLC VERY similar to what you are saying. You got good advice from the guys above.
IF you want to 'split profits' instead of borrow money from him, you have a business TOGETHER. There is nothing wrong with that, you can always do deals on your own in the future too.
My now 3 partners (two long term and a new one on the latest deal) how things in 7 differnet entities to make it all work. Some singlely, some in cash partnerships, some in retirement accounts fo various types, and the then the latest.
On the new one the 'private money partner' brough ALL the down payment (20%), my other partners and I will do ALL the work, and we will split short and long term profits 50-50. We were out of down payment capital currently, he was looking for somewhere to make an 8-12% return over 10 years or more. It was a win-win. "50% of something is better than 0% of nothing" as @Brandon Turner is fond of saying.
The LLC give great protection, direction and flexibility also.
Depending on the situation, a TIC partnership agreement could also work well IF there was any thought of one partner buying out the other down the road, but that is a whole other conversation :-)
Dan Dietz
Post: Rural Multifamily, who is doing it?

- Rental Property Investor
- Reedsburg, WI
- Posts 1,409
- Votes 857
Great discussion going on!
It is interesting to see the perspective of 'the other side' in the small town/metro debate.
We, two partners and I, invest in a rural county - 60K county, two towns of 10-12K and the rest towns of 500-5000 people. LOTS of open farmland etc... It sounds like we have a very diverse economy compared to some rural areas maybe? Two medical centers that each have over 500 employees, almost 20K industrial/manufacturing jobs in the two largest towns, etc... HUGE tourism base too. We are also 1 hour from Madison which has a huge stable jobs base in health care, tech, and education.
What I like about it is a lot of what others are saying - good deals, low turnover, low crime, etc....
I have to disagree on appreciation though. Historically our area has seen about 3-4% over the last 40-50 years. We budget 2.5% when using the BP Rental Property Calculator to be conservative.
Our general 'target' is 1-4 units that we can get 1% rents on that are 30 years old or newer in good shape. When leveraged with 20% down on 20 year notes we project a 16%-20% return all day long. It seems like that would be harder to find in larger more competitive markets, at least when looking at the metro areas within say a two hour drive of us.
Dan Dietz
Post: The Intention Journal is Back... Get it while you can!

- Rental Property Investor
- Reedsburg, WI
- Posts 1,409
- Votes 857
@Dillon Wyatt mine was a link in the 'welcome message' for the Mastermind Group.
Dan Dietz
Post: Transferring Equity Investment From Solo401K into Roth

- Rental Property Investor
- Reedsburg, WI
- Posts 1,409
- Votes 857
Good discussions going on here.
I am wondering if any of the professionals on here, or others, are familiar with the techniques in the book "Keep-Advanced-Tax-Strategies-IRA" in regards to doing roll overs to ROTHs?
Essentially from what I remember from reading it, the author suggests that you can have certain IRA assets appraised at a deep discount if they are part of an LLC that you own a 'minority stake in', and this would make the taxes due less.
An example would be if I had invested 60K of my SOLO401K into a 1/3 ownership of an LLC that holds rentals long term. Each owner but 60K in for a total of 180K toward a 400K property with a loan of 240K and 20K in reserves.
If I now want to convert my SOLO401K to the ROTH portion, I need to have it appraised. Since it is only a 'minority share' it would be expected to bring a discounted.
My 1/3, 140K, might be discounted at say 30% since it is a minority share, making it worth 98K. Subtract the loan on my portion of 80K, and the value of the remainder is left at 18K. If I am in the 25% tax bracket that is 4.5K in taxes, instead of 15K if I converted the 60K before the purchase.
Does/can this type of things happen in 'real life', or is this just a theory? If so, how does one go about finding a qualified appraiser?
Thanks, Dan Dietz
Post: Finding SDIRA investors for note deals is like chasing ghosts

- Rental Property Investor
- Reedsburg, WI
- Posts 1,409
- Votes 857
I think @Don Konipol hit the nail on the head. With that said, I do NOT do Notes, but plan to far in the future when I don't want to do rentals any more.
I DO use 'other peoples money' for rentals. My two partners and I put our own funds, both cash and retirement accounts, together for the down payments on the first 20 units we bought. Had them going for 5-10 years with great success - under 2% vacancy, 6% cash on cash, nice mild appreciation, outstanding tenant references as to our responsiveness, etc.... We HAD A RECORD. But we were 'out of cash'.
We THEN did a Private Loan on a unit we had paid off and used it for a down payment on a 4 unit. Then with that same Private Lender we just did a deal on another 4 plex where he brought 100% of the down payment, we will do all of the work, and split things 50-50.
Where did we find him? He is a long time friend/acquaintance who knew we were looking for 'partners' as I would often mention that to him, as @Brandon Turner teaches in the Podcasts, as "If you ever know someone who would like to partner, tell them to call me'.
As far as how to find them, I think it IS just about networking, build up a 'resume' for yourself, and PERSISTENCE. A couple of years ago when I first wanted to find partners I made a list of about 50-60 potential people - friends, relative, business contacts and past customers (I am in constructions, and we do a ton of work at peoples second/vacation homes). I 'numbered' my list with a 1-5 score of who might be most likely to be interested/capable and stared to make contact with the '1s' in the order I would like to partner with people. Of my first three calls, two were interested, one is the partner mentioned above, and one had no interest.
I really do think it comes down to persistent 'networking', which is as easy as telling everyone what you do. Just over the Christmas break I saw a person on my list, a "3". As we were talking about how life was going (we only see each other a couple times a year) I updated him on my 'day business' and mentions that we just added some rental units by using a Private Money Partner and just a few details. He made a point of stopping by before he left town to say 'if you would have me as a partner, I would love to invest with you'. I had simply mentioned it to 'plant the seed'... THAT seed sprouted pretty fast! :-)
Dan Dietz