All Forum Posts by: Michael Glaser

@Travis Sperr I have a 4 property deal I'm putting together. I sent over my title company's contract which was 15 pages. The seller said he'd take a look at it and sent back an ONE PAGE contract.

The contract consists of:

Seller & buyer names
4x property addresses, neighborhoods, parcel/lot numbers
Purchase price
"As Is" language
Lead-based paint exemption
Seller will maintain good relations with current tenants throughout transaction
Closing date
Signatures

Seems awfully light to me, but I also hate the fluff.

I'm wondering if the banks appraiser finds something crazy I won't be able to back out.

Thoughts?

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Welcome. I like the introduction.

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@Bac Nguyen & @Naseer Khan ,

I'm about to close on a 4 property deal in Kansas City, KS. I'm doing a commercial loan through a local commercial lender. For their application process I'll need an LLC to put them under. I'm wondering if I don't Legal Zoom an LLC for now to get the loan going and then set things up differently in the beginning of 2017.

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Originally posted by @Eric P.:

Bunch of other threads on this. Here's one:

https://www.biggerpockets.com/forums/432/topics/34...

Looking to keep all my dealings in KS for the time being.

Any KS based bank recommendations would be appreciated.

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I have a list of lenders I plan on shopping around with over the next couple of weeks.

Short List:

First Federal Savings & Loan - Olathe
Country Club Bank - KCMO
Bank 21 - Blue Springs
Arvest - Mission
Freedom Bank - Overland Park
Community America - Overland Park

I'm in the process of ironing out a deal for 4 houses in the $175-$200 range, all-in.

Are any of these banks GREAT, terrible or a waste of time? I'm looking to close by November.

Thanks in advance BP!

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Originally posted by @Robert Smith:

Have you asked him to finance the property for you so that you can get someone in the 4th property and do any repairs needed? If your current goal is to refi in 6 months you would pay financing fees and closing cost now just to turn around and pay financing fees now. Pitch to him that you would take care of the management and worries and all he would do is collect 1 check for all the property directly from you. This would give you time to shop around for the next few months while collecting rents from the tenants. If he is an investor he would be more open to this then a traditional home seller, especially if he has no loan or would allow you to take the loan subject 2.

For your list, is this in the correct order you plan to do things or just a list as these things came to you? If in the order you plan to work your plan I would personally put the home under contract pending inspections so that you are not spending money on a deal that may get swept out from under you, this is the reason you have a due diligence period built into your contract. I have renegotiated deals after the inspection if you find out there are major issues with the home. Offer a low earnest money or due diligence fee until inspections are over then bump that up if he requires more down.

Current leases are a must have when doing your due diligence, and I would talk with each tenant to see if they would be willing to sign a new lease and application so that you can view the most recent information on them, some of the worst issues I have had has been taking over problem tenants, I would almost rather homes be vacant so that I can screen and fill as I see fit. Maintenance records and profit and loss statements would go a long way for your lender package as well as your peace of mind when formulating your numbers.

I have financing figured out.

I'm going to get us to the right number and then go under contract. After that I'll have each property inspected and see if there's anything I missed in the price.

As far as the tenants he's offered to give me their lease agreements. I'm not sure if he'd let me talk to them until the deal was done.

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Originally posted by @Naseer Khan:

@Michael Glaser As a California resident, you will still be subject to the California LLC franchise tax, even if your rental property is located outside California due to CA's far reaching rules. For example, Nick is a California resident and a member of a Nevada LLC. The Nevada LLC owns property in Nevada. The LLC hires a Nevada management company to collect rents and provide maintenance. Nick has the right to hire and fire the management company. He occasionally has telephone discussions from California with the management company in Nevada regarding the property. He is ultimately responsible for the property and oversees the management company. Nick is considered to be conducting business in California on behalf of the LLC. The LLC must file Form 568 and pay the franchise tax. (FTB 3556 LLC MEO (REV 01-2015).)

Accordingly, you can open a Delaware LLC but you will still have to register as a foreign business LLC in California because you are considered to be conducting business in California, merely by you having some management control of the property and being a CA resident. On the same token, if you setup a California LLC and you decide to transfer your Kansas City property to the CA LLC, you will have to file as a foreign registered business in Missouri and pay the same fees as other LLCs because you are conducting business in Missouri.

Either way, you will have to pay the CA LLC franchise tax, so you are better off opening a CA LLC as your primary entity and then open LLCs in other states that you invest. The CA LLC can be a member of the other state LLCs, so all income can flow to your CA LLC.

This can get expensive (primarily from CA's fees) so you will have to assess your cash flow situation to determine if it's worth it. However, I generally recommend using business entities for liability protection, especially if you plan to buy more properties. essentially, this is a decision based on risk averseness and cash flow. Let me know if you need additional help.

This response neither constitutes legal or tax advice nor establishes an attorney-client relationship. Inquirers must seek the advice of their own legal counsel prior to undertaking any course of action related to this inquiry.

Here's my situation:

I live/work outside the United States 6-7 months out of the year. I'd say about a month or more of that time is spent in Kansas City researching, scouting, purchasing properties, conducting my business. The other 4-5 months is spent working in mostly California & other states.

I'm in talks to acquire more property and if executed it would be wise for me to form a formal business(LLC, S Corp, Corp).

I'm wondering where I should set up the business and if it HAS TO BE California? Does the IRS see me working in CA as me conducting business for my properties there too?

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Now...

What does it cost to run an LLC in CA that owns my LLC in another state? Is it worth it with only a few properties or should I just do it and get it over with?

My goal would be to have 10 properties by the end of 2017.

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After running the number on over 50 deals I recently scouted 10 properties last week. 4 of those are with a long time real estate investor that's too busy to manage the properties and getting to the age where he'd rather sell.

After listening to BP podcast, books, etc, etc I'm wondering if I have my process down correctly going forward. I'm looking for the system I should have in place for this and NOT to go over the finer details of numbers at this point. If and when the deal is done I'll share it for all on BP.

I currently own 1 property and looking to take on his 4. Possibly a 5th of his if I can get enough from TBD Bank.

I've walked and inspected each of the 4 and taken pictures of everything. I told him I need a few days to shop around for lenders, but here is my next plan of action I need some help with:

Already Completed:

1. Prequalification Letter

2. Numbers: Positive cash flow/CoC return good/3 of 4 have existing long term tenants with competitive area rents as a whole.

3. Inspected properties with the owner, met 2 tenants of the 3 properties.

Yet To Be Completed:

1. Ask for additiona info on the houses: Current tenant leases, last inspections.

2. Using a simple marketing packet with all the info on each property and it's cash flow, etc, I'll shop for more competitive loans through KC area banks.

3. Hire my own professional inspection on each property.

4. Make an offer. Buy properties through title company. No realtor.

5. Get tenants in 4th property.

6. 6x months refinance and pull money out for my next investment property. *If I can get the properties with my numbers and there's forced equity.

Am I missing something? Is something out of order? Is anything unnecessary? Is this thing on?

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After digging around I was able to find it from the county site.

Thanks for everyone's replies!

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Kansas City, Kansas

All Forum Posts by: Michael Glaser

Michael Glaser has started 41 posts and replied 158 times.

Post: Do title companies care about contract format

Post: Warning! New Investor has Arrived!

Post: LLC: Which State Is Best?

Post: KC Based Lenders

Post: KC Based Lenders

Post: Buying A Package Of Properties

Post: LLC: Which State Is Best?

Post: LLC: Which State Is Best?

Post: Buying A Package Of Properties

Post: Adding 2nd Unit: Zoning