All Forum Posts by: Daniel Dietz

We have always used NASB for Non-Recourse Loans in our  SDIRAs and SOLO401Ks. I think @Dmitriy Fomichenko or @Brian Eastman might have a list of lenders who SPECIALIZE in this type of loan, which is different than a 'normal' rental loan.

Dan Dietz

When will you have borrowed it has been 5% interest with various length of loan depending on the situation. The current one we have was a five-year term. It was for a house that did not qualify for traditional financing due to the conditions, so for those five years we are throwing basically all of our cash flow from a few other properties at it too paid it off

when we partner on a place, the private investor  brings all down payment, typically 20%, and we need to all of the finding, rehab management if needed, secure financing, all of the ongoing paperwork in Property Management. Please put cash flow 50/50 at the end of the year. When we either refinance or down the road we will split the quality growth 5050 also.

To find our partners the first thing I do is to let everyone knows what we are doing as far as having rentals. Our day job is being remodeling contractors oh, we are well known in our small town after 30 years of doing that.

then when the time came that we needed partners I would work into conversations something along the lines of, we are looking for partners to do some more rental properties if you know of anyone that might be interested.

the other thing I did was make me a list of everyone I could think of who might be in the situation to have excess money to invest, made a list roughly fifty names, and then put them in the order of who I would like to work with the most and also who would be the most likely to be interested. I called the top three people float the idea buy them. Two of the three we're interested. One is a good friend that we have borrows money from in the past oh, but this time he became a partner. The other was a long-term customer who has become a friend over the years.

I would contact a lender in the space, we use Jason Zook at NASB, and see what they can direct you toward in the loan verbage. And also check out Mark J Kohler's You tube and website. He/his firm does both legal and accounting work and they have a TON of good content out there. We have used them for setting up 3 different multi-member LLCs all make up of retirement accounts, which also HAVE to be non-recourse loans.

Not a book but an excellent YouTube channel – podcast is Mark Kohler from kkos lawyers and accountants. Listening to him was a game changer for us

When we ran out of capital for our last 4 units we brought in a Silent Money Partner (not lender). They brought all of the 20% down and 6 months reserves, we found, acquired, managed rehab if needed and place and manage clients.

We split all cash flow and equity growth 50-50. If we are unable to perform the duties of property management the cost to hire that done comes out of our 50%. It is a win-win that makes us each at least a 10% return over time.

Dan Dietz

@Mallikarjun Reddy Pateel my understanding is that each year you need to separate the interest portion from the principal portion as they will remain taxed differently-throughout the life of the contract. Similar to how for taxes you can 'write off' your interest, but not your principal.

Dan Dietz

@Ashish Acharya, Am I understanding you correctly that the 'early payments in the first few years would look something like this (Lets assume 90K of depreciation recapture) ;

Year 1,2,AND 3 = 50K interest and 3Ok of "Principal" in the payment. Interest is taxed at sellers ordinary income tax rate, and the 30K would ALL be counted as depreciation recapture at the sellers ordinary income tax rate UP TO 25% (meaning even if they are in a higher bracket, 25% is the max for that).

Then in the remain years the interest would remain at ordinary income tax rates, and the "principal portion" for the rest of the term would be counted as capital gains tax rate, which would likely be in the 15% group instead of the 20% if sold traditionally.

Is that close to correct? :-)

Could you also clarify the Social Security comment please?

Thanks, Dan Dietz

I am involved in 6 LLC's, 5 of which involved property and 4 of those multi member ones. Of those 4, 2 of them involved Self Directed Retirement Accounts which are a specialty all their own!

The first one we use a local lawyer who was about $1000 for a 3 way  LLC. The next ones were the Self Directed ones, and we used KKOS Lawyers, @Mark Kohler  and @Mat Sorensen's firm, who specialize in Entities, SDIRAs, etc.... (they have some great free educational content on YouTube also). Their pricing was around $1500 for a 3 way self directed LLC (I think it is about $800 for a single member). BUT, with that slightly higher price, you get a TON of expertise on not only the LLC, but also Entity Structure, Taxes, Trusts, etc....

To me when you are going out and buying hundreds of thousands in real estate it is short sighted to not speed a little bit on getting things set up right.

Dan Dietz

@Khaled El Dorry I would *highly* recommend that you check out Mark Kohler, Mat Sorensen and KKOS lawyer on Youtube or even give them a call. The special in Entities, Real Estate and Small Businesses. TONS of good info. My partners and I have used them to set up 3 3-way llcs for us for real estate.

If you google Mark Kohler Trifecta you should find some good stuff.

With that being said, I am almost certain that you will learn that Neveda is NOT the way to go unless you are doing business there, and that Trusts in general do NOT give 'liability protection' but ARE great for many other reasons.

Dan Dietz