All Forum Posts by: Lisa T.

I cannot recommend Strategy Properties or Autumn Prop Mgmt. Interestingly,  the PM staff I've worked with are the same at both companies. I asked about it but no straight answer. Hmmm.

@Tamar.  w/r/t JAX wait of 12-18 months. I see that timeframe usually in the projects where they're building multiples in the same development.  You can get on Brian Scone's email list at no charge.  I see properties come up there with a shorter close frequently on the lists he sends out.  I suspect, although never asked, some may be a buyer who backed out but in most cases, it's an "in-fill" property (one where the development has officially closed by another development company and they buy a lot or two that wasn't developed).  These are what we prefer to buy anyway. I've not found a benefit to buying in a developing/new construction neighborhood in general because you're often competing with new similar homes and you have to take a hit as you're competing for renters.  While it might just be my personal bias, moving into a neighborhood with a lot of construction wouldn't appeal to me as a renter as I'd have to deal with disruptions, dirt/mud, noise.  It's one thing if your an owner and know the long term you wait it out and benefit when it's all done.

I was following this post so disappointed no one has any specific recommendation. We are out of state owners and currently have four Detroit properties purchased from a turnkey company.  Things were going well but now things are really bad and it has nothing to do with COVID-19.  It's completely a result of mismanagement and staffing.  Larger company -- tried to escalate to the owner.  He ignored several attempts and only got involved when we sought outside help but has again become unresponsive.  They owe us back rent in the thousands.  I'm not going to use their name.  For now, we are stuck and have to work with them.  I want to give them the benefit of the doubt they are just struggling with staffing but now have seen some red flags that lead me to believe there might also be some type of deceit/fraud and possible financial trouble. We're just about ready to hire an attorney.  Please, if anyone has the name(s) of a reputable Detroit management company, please share.  OK to private message me as well.  Thanks in advance!

@Ryan Robbins.  All good points but I did notice you're a local RE broker so maybe a little bias which is perfectly understandable.  We use turn-key/buying clubs as well as buy directly through RE agents -- it depends on the market.  We have some markets especially in Alabama and Kansas with exceptional RE agents we work with and couldn't be more pleased. They know what we look for in a rental and bring them to our attention, it's great.

As far as the turnkey/network buying:

PROS for BUILDER:  (1) Source of qualified buyers, often 1031 exchange buyers  (2) Builder knows what RE investors and renters want, builds to that standard -- floorplans, amenities -- no change orders to deal with  (3) Investors don't have the contingency to sale current home (4) Save on marketing time and costs, no open houses, flat referral fee to network, no agent/broker fees (5) I would think investors are easier to work with, less drama (that's speculation, lol)

PROS for BUYER:  (1) Builder already vetted, although you're foolish not to do your own legwork  (2) Buyer's network has some clout, the builder doesn't want to mess up that relationship so more responsive (3) Usually other investors you can network within that market to vet the area, builder, the management company (4) Ease of transaction

In JAX/Ocala we've found  RWN affiliate quality is outstanding, good workmanship, desirable floorplans, quality granite, stainless.  We purchased 7 properties in 2018-2019 thru RWN and the neighborhoods are great, A/B+ class.  ***Before closing, we always get an ARMS-LENGTH appraisal (not a bank appraisal) to be sure we're not overpaying and get an ARMS-LENGTH extensive home inspection.  We don't close until we're satisfied with both. You can negotiate lower price/repairs if you have that documentation and we have successfully. *** 

In summary, I think "how" to buy depends on the market.  Primary consideration IMO is a good market with diverse employment and a good management company.  It's nice to follow different networks because they are great educational resources on the buying process, market analysis and one on one networking with other investors.

@Tamar Hermes 

" How long have you owned your properties? Most of RWN projects are 12-18 month hold in Jacksonville, so I would love more details on the purchase and numbers you have earned."

Tamar, I'm not clear on your question w/r/t "12-18 month hold".  Maybe you're referring to some of the RWN syndications?  We haven't participated in any of those, we're strictly SF/Duplex, long term buy-hold investors, regardless if we purchase through RWN or independent of them.  While we always want positive cash flow, IMO JAX is an appreciating market so we accept the fact that with new construction initial ROIs won't be double-digits. Our portfolio is balanced geographically as well as cash flow vs. appreciation, although we always aim for B or above neighborhoods.  Of course, we'd love to have both immediate cash flow and appreciation when possible!  We purchased our JAX properties in 2018 and 2019.  Our ROIs are between 7-9%, higher in the Ocala market.  We paid cash so that impacts ROIs as you know. Hope I answered your question.

@Clint Coons

Clint, I really appreciate you taking the time to respond, especially as a subject matter expert. You cleared up the main question in this thread, the difference between a holding and series LLC. However, you left me hanging with your last sentence. "I think the more important question is how will you treat it for tax purposes." I don't expect you to give too much advice away free but could you please explain or at least give me the questions to ask so I can do my own legwork. Again, thank you. And I have to say, I've received a lot of private messages from other investors who have shared they've had a similar experience, some have just thrown in the towel because it's so complicated and others have said they wished they'd known more and made some expensive mistakes. The good news is that hopefully others reading this post will at least know more questions to ask when they do their own research.

@ Mike S. Thanks for your detailed response. Our current LLC structure is a result of several 1031s we've done over the last 2 years. We sold all our holdings in MN so the LLCs are MN-based. However, none of the 1031 replacement properties are in MN. My understanding of best practice is that (1) you want to have your LLC in the state where the property is located to avoid the foreign LLC issues and (2) you want to set a maximum value of the properties in any one of those LLC (3) Finally, by holding the child LLCs inside a holding or series LLC you can shield the assets so only the LLC the property involved in the lawsuit is at risk. I realize there is some controversy on whether a holding or series LLC will actually provide the asset protection/shield I'm expecting as it's not been fully vetted through the Courts. However, I also realize there's a lot of discussion about being sued and having insurance not cover a claim. Especially with regard to mold issues. Fortunately, we haven't had issues ourselves. We're looking at a blended plan with property insurance, flood insurance in areas needed and an umbrella liability policy at the holding/series level which we understand is another benefit because you can have one umbrella and it would cover the sub LLCs. Another big advantage of the holding/series LLC is that we won't have to file tax returns for all the child LLCs. This will result in a big savings with our CPA. We're not keen on the one LLC for every property structure because the ongoing maintenance (reg agent, state filing fees, record upkeep) and without the holding/series LLC you wind up filing a tax return for each of the LLCs. Anyway .... that's where we're at. We are at the point in our growth where now is the time to restructure as it just gets more expensive the more properties you're shuffling into place.

Thanks @Cathy Karowski.  I actually have looked at both those sites previously.  Again, I don't see anything specifically that tells me the difference between the two types.  Appreciate your feedback though!

I have spent a ton of time researching how best to structure our real estate holdings. We have them in a couple of LLCs now but want to add a holding or series LLC for asset protection as well as reduce our income tax filing fees. I've talked with several providers and most of them behave like the old stereotype of a used car salesman. It's so hard to get apples to apples comparisons. They bundle their services, in most cases, negotiate the prices so they're giving you a great deal, we're running a special right now ... you get it. I created an Excel spreadsheet and list out all the one-time expenses (set up new WY LLC, restructure existing LLCs, state filing fees, registered agent fees, warranty deed costs to transfer properties into new LLCs, etc.) I'm tired just typing that. It's taken a couple of weeks. So now that I have a way to determine the real implementation and ongoing costs of the new structure, I'm left with one question I can't find a definitive answer on but it seems like it should not be that difficult. What is the difference between a Holding LLC and a Series LLC?  (We are planning on creating one or the other in WY, you can Google why that's an advantage.  Each provider I've researched online to implement the new structure (new LLCs, warranty deeds, etc.) and/or spoken with seems to do either a series LLC or holding LLC, not both.  And most of the quick and cheap web providers (ZenBusiness, Northwest Registered Agent...including Legal Zoom) don't do either, only simple LLCs.  When a provider explains why they only will do a series LLC or holding LLC, it sounds like the two are exactly the same.  They typically have responded they can't speak to the "other" because they don't do them so a comparison remains impossible.   I've heard a couple of times the main reason providers won't do the series LLC is because it hasn't been tested in the Courts enough to know if the asset protection will hold up.

Finally my question ... Can anyone respond with a resource online?  I've found tons of information on the Series LLC but nothing that literally compares the benefits/pros/cons over the Holding LLC. 

Thanks in advance for any wisdom you can share and help me out of this rabbit hole!   :-)

@Richardo L. Knight

JACKSONVILLE/OCALA. All our FL properties so far have been new construction. Great experience with RWN's JAX salesperson Brian Scrone. Sole proprietor of Holistic REI. He's affiliated with SunCoast Property Management. A different company for new construction/builder. If you buy from Brian/builder you must use SunCoast PM. SunCoast has a huge portfolio and I can't recommend them more highly. SunCoast will manage properties you buy outside the RWN but if you buy from Brian/Holistic you must have SunCoast manage. As I said, SunCoast is probably our best prop manager across seven so I have no problem with the restriction. Having said all that, they all work seamlessly together and I have never been pushed off because something 'wasn't their responsibility. Ocala has been the real surprise -- never had heard of it before I went down for my first site visit with Brian and toured the area. They are also expanding out to Palm Coast and recently into Port Charlotte on the West Coast. SunCoast has a local PM in each of their markets so they're not trying to do maintenance/leasing out of JAX, although I believe they provide all the backend web/accounting support for the local contacts out of JAX. You might want to talk to them directly to get the full scoop on how all that works.

TAMPA.  If you're more interested in the Tampa area, I have had contact and toured available properties with Colin Murphy, the RWN affiliate in Tampa. Most of their properties are single-family rehabs.  I was very impressed with the quality of the work and products used in the rehabs.  I'm confident we will eventually buy from Colin when the right property comes along.

ORLANDO. There's also an Orlando RWN affiliate.  The properties they showed us there were really nice.  The workmanship and quality of products above normal.  Lots of nice touches/well thought out.  We just haven't been sold on the Orlando market $$$s in general. I believe the affiliate owner's son runs the property management company but it's been a while so again, if interested you'll want to reach out to them.

Hope that helps!  Lisa