All Forum Posts by: Drew Shirley

I've seen this quite a bit lately, wholesalers asking for non-refundable deposits. I get why they're doing it, but I would never put up hard money with no contingencies unless it was still a great deal even if it had foundation and mold issues, etc.

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You'd have to look at the terms of your policy and your loan documents, or better yet, ask the bank what is their authority for holding the funds. If flood insurance was not required and the lender had no part in the transaction, I'm not sure how they are claiming the right to withhold.

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@Lance Lvovsky Thank you for your reply!

What if my ownership interest was an S-Corp. or an LLC taxed as an S-Corp? Could I avoid paying tax if I retained the earnings and reinvested them in the holding entity?

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Originally posted by @Dave Foster:

@Casey Miles, Syndication is a word that is used very loosely to mean many different things. What is most commonly referred to as a syndication by multi family investors is a Limited Partnership or Limited Liability Company structure. @David Thompson's blog is absolutely correct. In these two types of investing you are purchasing membership interest or shares of an entity. This is not allowed as acceptable replacement for your 1031.

In order to be eligible for 1031 treatment you must be selling investment real estate and purchasing investment real estate. Shares of a company do not qualify. So in this sense you cannot 1031 into a syndication set up as an LP or LLC.

If a "syndication" is set up so you receive a deeded interest in real estate itself then yes you can use a 1031 exchange. Structure, control, and financing issues usually steer contemporary syndicators to the LP/LLC structure. And so your 1031 into that is usually going to be a non-starter.

There are certain passive instruments that qualify for 1031 treatment. They act and look like a typical syndication format but are specifically structured so that you receive an interest in real estate itself. These are the Delaware Statutory Trusts, and Tenant in Common projects. DSTs and TICs offer the passive role and 1031 benefit while letting you invest into something bigger than you could do on your own. Because these two types of investments are heavily regulated and structured returns tend to be more compressed than in a typically syndicator LP. But risk is also usually much less as these products are more often than not underwritten by national credit tenants.

What if he deeded all of his SFRs into one LLC, sold the properties in a bundle, then used that same LLC to purchase the multifamily? Wouldn't that qualify for a 1031?

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Where are you getting your ARV number from? If it's from before the flood, you'll need to knock off quite a bit.

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Anyone? Bueller? Bueller?

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@Michael Le Thanks for the info on the meetup. I'll be there and I look forward to meeting you. We can hit up @Kyle Bryant for some free drinks.

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Houston, Texas

Thanks @Will Gaston, terrific info.

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Originally posted by @Joseph Bramante:

Originally posted by @Brian Adams:

@Joseph Bramante I hope you will re-consider what you stated and shared, specifically "myself and several of my mentors have or currently write our own PPMs".

I don't know you and not aware of your background. My guess is you probably don't have the legal or securities experience to be drafting PPM's.

Why suggest to this platform to cut corners?

You are playing in a big boy world when you are pooling money, especially with SEC. SEC would most likely frown upon you DIY'ing these very important investor documents.

Yes some of the documents are boilerplate. What happens though if you fail to disclose something?

@Kim Lisa Taylor or @Jillian Sidoti can address, but SEC doesn't mess around.

Why would I reconsider when I am correct? If you had read the following comments, you would have seen an attorney agreeing with me. Are you an attorney? How many PPMs have you done?

The only person cutting corners here is you in how you obviously didn't read my full post or bother to check my profile with my background. I clearly stated only after a person has done a few deals. i.e. not for newbies.

Yes, "I" am playing in the big boy world. Which is why I know these things.

Let me be clear, I said that an experienced operator could probably draft a PPM on his own, but I wondered why anyone would want to. Also, I didn't say it would be wise to do so, nor did I address the potential downfalls of doing it wrong, as Brian mentioned. At the very least, the PPM should be reviewed and blessed by a syndication attorney. Every time.

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All Forum Posts by: Drew Shirley

Drew Shirley has started 4 posts and replied 153 times.

Post: Taxable Event? Reinvesting Acquisition Fee as Equity

Post: Buying from a wholesaler without lawyer

Post: Bank Holding my Flood Insurance Check

Post: Taxable Event? Reinvesting Acquisition Fee as Equity

Post: $1 million in equity and "only" making 56-64k a year.

Post: Flip flooded home in Houston, any advice?

Post: Taxable Event? Reinvesting Acquisition Fee as Equity

Post: Need resources to learn multi family syndication

Post: Nearing 1,000 College Student Tenants: Here's what I've Learned

Post: What is stopping you from investing in multifamily?