All Forum Posts by: Gerald Demers

@Claudio Trevisan, you are still confusing DBA usage. Doing Business As simply states "while I am this entity or person", in the public eye, I am also calling myself this name."

If you start a company, that company has a name. I told my CPA what I am going to be doing and we decided I should operate under an LLC as an S-Corp. The first questions he asks is what is the name of your business and who will own it and by what percentage? No DBA comes into play here. You need a business name.

Once your company is created, you operate by that name, but if you ever need a different name but the same type of business LLC need, instead of incurring all the expense of creating another company, you can create a DBA. This way, while you have one business name and one or two or three DBAs, you have just the one LLC to manage, one set of taxes for your CPA to do, one bank account, etc. We have 5 DBAs for MapleStar Real Estate Investments, LLC including one to shorten our name for credit cards and one called MapleStar Real Estate because it is shorter to write out on offers. :O)

When you apply to the state for a DBA, it asks you who will own the DBA. Your LLC will own the DBA.

One other note, when you get a general liability policy for your LLC, make sure they know about your DBAs as well. If you create a new one, simply call your agent and add it to the list.

Another nice thing about a DBA is that if anyone asks or is concerned, you simply point them to your state website (in Florida, it's www.SunBiz.org) and they can search by the DBA and they will see your company as the owner.  All nice and transparent.  

I hope this helps you clear things up, 

Gerald Demers

Hello @James Montgomery.  Yes, we use websites.  

More importantly, I love your approach of needing help so offering your expertise as well.  Too many people need help and all they want to do is get info; they don't look to see what skills they have that they can provide so they are adding value as well.  Getting value, giving value.  

I could use some help with my websites.  I will PM you. 

Gerald Demers

Hello @Divya Bharathy Parthasarathy.  It is difficult to answer your question so my response is best served asking you questions.

1. You have 50K available as cash and that is awesome.  The best part of real estate investing is leverage so that is what I believe is your best investment option.  So, how can you leverage that 50K?  Do you have W2 income?  Can you finance a purchase?  What about other partners?  25K down each on two 100K properties would be a great use of that 50K.  Can you leverage it even greater without increasing risk?  Example, 10K down on five 100K properties is riskier because you have stripped all the equity out.  But partnering with someone else with a complementary skill set and their 50K can buy you four 100K properties.  It may seem the same but when the market goes up 10%, two properties creates 20K in equity; 4 creates 40K.  
2. Will you manage the property yourself?  What areas of Charlotte do you want to invest in? We self manage as well.  Our rule is that if there is an issue with the property, I should be able to send my lady there at night.  If I cannot, it is not a self managing purchase option for us.
3.  Best investment option number two.  Whatever you do, leave some cash as a reserve to fix things.  If something breaks and you have the cash, you don't have a problem; you have an expense.  

  Gerald Demers

Hello @Antonia Partridge.  First off, well done on your investment.  I don't have the DF info you seek, but I do have a suggestion.  If you use an investor friendly MLO, you will create a full doc loan; all the official paperwork.  The advantage to doing this is that if, in the future, you ever need to sell that note, the market for buyers of a full doc loan is much bigger and it looks like a much safer investment to other investors which means you won't have to discount it so much.  

Gerald Demers

@Claudio Trevisan, if you use option 2, partnering.  What is the goal of the partnership?  will it be t hold the property long term or will it also be a flip or a fix/flip?  

Unless we are absolutely sure the property we are making an offer on is a long term hold, we always make offers with MapleStar Real Estate Investments, LLC, our S-Corp. If we decide that we want to hold this property, we simply move it over to MapleStar Property Management LLC to own for a long time.

So, what is your plan if you choose to partner?

Gerald Demers

Hello @Robert Taylor, if you want to avoid the MLS and I agree with you doing so, then start marketing. Decide what area you want to pursue - probate, properties owned free and clear, under water, etc and then get or create a list and start communicating with them.

Gerald Demers

Hello @Claudio Trevisan, I AM NEITHER AN ACCOUNTANT NOR AN ATTORNEY.  You really need to talk to a CPA that understands and focuses supporting real estate investors.  

Your question, "should I get a DBA or an LLC for this" does not make sense as I think you are confusing some terms. The first and most important question is "should I be operating under a company name or personally?" and the answer to that would be a company name. Now what type of company? Well, if you are wholesaling, you need a company structure that can take full advantage of these activities. We have a multi-member LLC with a tax classification of an S-Corp. In this structure, all real estate is considered inventory so no depreciation and I don't think you can even do long term capital gains. This is no matter because we are flipping all of our properties through this entity. With this classification, we can pay salaries, create retirement and medical accounts and do all sorts of fun things to seriously reduce our taxes payable.

We have a second multi-member LLC with a tax classification of a partnership. Real estate here affords the best real estate deductions: long term capital gains and depreciation to name just two. We use this LLC to purchase and own our long term rental portfolio.

Should your LLC have a DBA? If it suits you. A DBA is just another legal name for your LLC to operate under. Our LLCs have several DBAs including one that simply shortens our long business name from MapleStar Real Estate Investments, LLC to MapleStar REI LLC so our business name fits on our corporate credit cards. We also use DBAs to create a different look and feel of our company to our audience. When you have a DBA owned by your LLC, you just go into your bank and register that DBA with your accounts and someone can write a check to your LLC or your DBA and you never have issues cashing it.

Some people don't have a business and get a DBA owned by themselves PERSONALLY. Doing this means any liability your create will be attached to your personally and that is NOT good.

So, talk to a CPA that focuses on real estate investing.  If you know other investors, ask them who they use.

Gerald Demers

@Christian Wathne, I can pay a seller $100 from my IRA for an option to purchase a property and then I can sell that option to an investor for $5,000 right away (effectively wholesaling it). $100 to $5,000 in two weeks is an annual rate of return of 127,400% tax free if done in your Roth IRA!

Your biggest partner in most investment transactions is the IRS. Why wouldn't you want to eliminate your partner? There are some that I know that generate thousands each month into front door of their ROTH IRA and because they are over 60, they take those thousands out the back door as distributiions tax free!

In a taxed investment, assuming you are in a 30% tax bracket, 30% of your earnings are gone.  A 10% return becomes 7% after tax.  In a ROTH, 10% return is 10% return after tax.  

I am 53 so I am investing in my IRA for tax free income tomorrow AND investing in my business today for income today.

Gerald Demers

Wow, long thread.  One item I see that has not been addressed is that with Section 8 here in Central Florida:

• They won't do an inspection on an occupied rental.  This is crazy to me.
• They need 5 days from inspection to move in to get all the paperwork in place.
• Tenant cannot move in until everything is approved.
• If tenant moves in for partial month (like on the second), HUD won't pay for partial months.

We have nice properties, even in the more difficult parts of town.  I have yet to lose a month's rent because I could not re-rent after the current tenant leaves.  If the tenant is moving out July 31 and I want a Section 8 tenant, I have to have my property sit vacant for August to get September rent.  

We had one section 8 tenant on one property we just completed the rehab so working with HUD's inspection schedule worked. This was our first Section 8 experience and the tenant destroyed the home and we paid for it because of my lack of understanding managing a Section 8 tenant and all the rules.

This one experience aside, I am in no hurry to rent to the program again.  I just don't like what happens to most people when they get support without accountability.

Our properties attract working families and market rent so as long as we can still provide that, I don't see jumping through all the hoops for Section 8 funds.  

Gerald Demers  

Hello @Justin Morris, here is something you can do. Find a broker you have a relationship with and be an assistant in their office. You will have your own MLS id, your own login and it's about $150 a year.

You are not an agent, so you cannot see the property viewing information but you can set up your own searches and see realtor only comments, etc.  

Gerald Demers