All Forum Posts by: Jack Fernandes

@James Wise

That’s great bro but I said “anyone else” as an invitation for other people to participate with their experiences!

Anyway, James Wise, you truly are ‘Wise’ and I appreciate your contribution to the thread.

Let’s get some cool stories in here!

@James Wise

Thanks for the feedback. Good tips! Anyone else? Let’s keep the advice flowing. Deal hunters only in this thread!

@Kanita Jefferson

But thank you for the detailed response- I appreciate it!

@Kanita Jefferson

Thanks Kantina but read my post- I asked about California- I don’t care about other states.

@Kanita Jefferson

Dear Kantina-

Speak in plain English! Like why didn’t anyone say “hey, if you’re a broker selling your house, you don’t pay a commission to anyone, because it doesn’t make sense to pay a commission. To yourself. If you’re a broker buying a house, you get half of whatever fees the seller has agreed to.”

But is that even true? If you’re a broker buying a house, do you get to split fees with the sellers agent? What does that generally amount to? (1%? 2%? 3%?) and do you get a check for that or do you just roll it into the purchase price?

Not complicating the transaction, just trying to get a straightforward answer to an honest question!

Thanks all for contributing. Some really interesting deals so far!

Has anyone come in way lower? I'm talking $200k below list price. I'm in SoCal so would love to be inspired by some post-2008 crash deals

@David Goldsmith

Details, my friend! I’m excited to hear more. How did you avoid this being seen as a “sham” transaction? Was there more involved than money?

Hey Man- First off, I'm not your lawyer and this is not legal advice. 

Second off, I disagree with Ramon. LLCs and LPs can do you plenty of good, regardless of how you finance your property. Ramon might have made that generalization because, often, if you try to assign a property with a conventional mortgage to an LLC, it can trigger an acceleration clause, and the mortgage will be due in full. Most people use LLCs for the liability protection (LLC stands for limited liability company, meaning, if sued, you don't have the same personal liability as you would without the entity). For many investors, cheap liability insurance makes more sense, and is easier to navigate, than structuring an entity to hold the property.

LLC's are known as "pass through" entities which means that they are not taxed directly. C-corporations, for example, are "double taxed" which means they're taxed once on their profits as a corporation, and then the owners of the corporation are taxed a second time, on their personal income taxes, after receiving their share of the already-taxed profit. LLCs aren't taxed directly, so if you own 50% of an LLC, and the LLC makes $100 profit, you'll be taxed once on $50 at your personal income tax rate. This is in general, and there are always exceptions, but this is the gist of "pass through" status. Whether it will actually benefit you is another story, and that comes to the next part of your question:

As for who should create or advise on the entity: creation should be left to the lawyer, although the accountant may provide insight into the structuring of entities. In other words, for the tax strategy, the accountants are the ones who will be filing for you, so you should take their planning advice seriously. If you have good tax planning advice, you can then take it to the lawyer and the lawyer will actually file the forms with the state and register with all of your information, actually creating the entity itself. The accountant gives the recipe and the lawyer bakes the cake. 

Hope that was helpful! (I am still not your lawyer and this is still not legal advice of any shape or form)

 Maybe I should change the title to "Negotiation wins/Battle stories." I'd consider that a win, Nick. Thanks for sharing. How did you convince the seller to pay the 20k concession? Any tips or lessons that you brought out of this deal?

I personally am a huge fan of wonky strategies in alternative investments. One of my pharmaceutical companies is developing an antidote to nerve-agent exposure to protect the US military from chemical weapon attacks, which shows that I'm always looking for opportunities to create value in places that others have overlooked. 

Thanks for the tag, Wyatt. I'm definitely interested. I'm currently analyzing deals in the San Diego area right now, in the $750k-$1.3m range. I'd like to do one in the next 6-months, depending on how my micro-market responds to COVID-19. I also own 2 properties that I am hoping to consolidate and redevelop as part of a long-term multi-unit use-variance plan I'm putting together. Please DM and we can connect offline.