All Forum Posts by: Jason Zundel

Aristotle - Fortunately, the registration in AL takes care of this piece. Many choose to create the LLC in another state (where they live, better choice of law, etc.) and then foreign file or register said LLC where the property or business activity will take place. So long as the LLC is properly filed in AL you will get the same level of protection!

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Welcome @Cole Thompson! Glad to have your here and hope you get all the resources you need to dive in!

Amanuel - if this is your first time doing a wholesale (going out on a limb here, though wholesome contracts are valid too!), then I would strongly recommend finding a local attorney to draft a strong wholesale contract for you and use that as a template moving forward.  If you have a friend or mentor that wholesales and has one they've used successfully that is also an option, but wholesale contracts are more intricate even that standard real estate contracts and need to be done exactly right.  You will need to make sure you have places for all parties and properly identified (buyers and sellers on each piece), property descriptions, purchase price, assignment fee, contingencies, and then on top of that the standard (but vital!) terms and provisions you would normally see in a good REPC.  You also want to make sure there are no specific licensing requirements for wholesalers based on the state(s) that you will be working in, as that has been a recent trend over the last several years.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Damien, on the topic of building business credit specifically, one aspect that many new to investing and business credit forget is to report and get your name out there - your business name!  Make sure you have an EIN for your business, are opening cards and using them properly, but also register your business with 411 and get a DUNS number through D&B (Dun and Bradstreet).  Here are a few other sites for speading your name as a good way to build the credit: 

https://www.411.com/
http://www.listyourself.net/ListYourself/
https://biz.yelp.com/
https://yext.com/
https://accounts.yellowpages.com/

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Alexander: Once burned, twice shy is a real thing.  Especially where you have direct experience with the family.  That being said, family members aren't identical, especially generational family members.  I would want to know how long the Mother actually lived in the home with the previous owner?  Where there problems or issues during that time?  If so, what type?  If you have communication with the previous owner, that would be worth investigating.  From the info I do have, the Mother did show up to court despite not living there and was truthful in her responses, which is honestly a bit of a green flag.  Is it a risk to accept a tenant that's been evicted? Absolutely.  In this case though you have mitigating factors: the real problem was the sons (make sure the lease is NOT assignable, and only applies to the Mother and her husband), not the Mother. In addition, you have really great tenants there to vouch for the Mother, maybe see if they will guarantee the lease and any damages.  These will go a long way to reducing the risk, though it is your decision at the end of the day.  

I will add one caveat to be very careful of - many states specifically disallow collecting more than a certain amount for security deposits, and that's going to be applicable regardless of tenant approval or not.  In CT, landlords can't require more than two months rent as a security deposit. This limit is reduced to one month's rent if a tenant is 62 years of age or older.  

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

DeAnna - Elder and familial abuse is no walk in the park, I'm so sorry your friend is going through this and hope you are able to help them!  Unfortunately, the deed is going to take priority over the Last Will and Testament. It will likely be an automatic transfer, so even the letter will be bypassed unless the family members listed in the Will (beneficiaries) make a contest of the deed though Probate court.  Even now, the only way to remove this individual would be to file a corrected or new deed to remove them.  I strongly encourage you to obtain a local attorney to represent your friend, as this can be rife with expense and difficulty, especially of the individual that took advantage of your friend tries to contest or fight the issue.  If they are merely a pay on death beneficiary, your friend likely won't be subject to a transfer tax, but if they inadvertently (...or deliberately) made themselves a joint tenant on the property then there could be tax implications on the transfer of the proper exemption election isn't made.  As noted, no walk in the park.  Best of luck moving forward!

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Victor, unfortunately you get the attorney answer right off the bat - it depends. If you are going to pay yourself a w-2 salary out of the WY LLC, then yes you would need to register it in your home state as well. Employment is sufficient contact and use of resources within a state to require foreign filing. If, however, you are not paying a salary, but rather taking distributions then you likely would not need to register in your home state. Taken a step further, if you have elected to have the LLC taxed as an s-corp you would then be required to take a reasonable salary as the member, and thus be required to foreign file and register in your home state. If the LLC is disregarded (better option from a long-term capital gains perspective) or taxed as a c-corp (not recommended if you hold property in the LLC long-term in the LLC), then you have the option and can simply take member distributions rather than a salary or payment for services.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

I would strongly echo the recommendations of your CPA/attorney. In fact, rather than make things simpler, I would recommend one more layer of protection. Sorry, I'm an attorney, it's pretty much my job to make things more complicated. In this case though, it will serve you really well to have each of those LLCs that own property be owned by a holding LLC rather than by yourself individually. Some states don't have strong asset protection laws, other states don't allow for anonymous ownership of LLCs, and even others don't give as much protection to an LLC that only has one member. If you created a holding LLC in a state that provides all of those (DE and WY especially) then each one of your LLCs regardless of the state that you're investing in will get the best amount of protection possible. Even better, if you have each of said LLCs elect to be taxed as disregarded, you won't have additional tax filings to worry about and still maintain the protection provided. From there, you can even incorporate your existing corporation to manage all of the properties, run the income, and be the face of the active side of the business for the best of all worlds!

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Diana:  I'm always of the opinion that expert help will go a long way in smoothing a rough road, especially one that you haven't traveled.  In addition, a buyer agent usually negotiates with the selling agent so that the actual commission rate stays roughly the same and is paid by the seller.

That being said, based on the above, this is not too rough a road and not one you are inexperienced with. The only real hurdle is access to the latest and greatest search information and resources that a buyer agent has (MLS services especially), but if you have a friend or otherwise find a connection to leverage that, then you can likely dive right in. If you go this route, I would encourage you to make part of your process negotiating down the price (or points towards interest) based on the lack of a buyer's agent and the savings/increased commission for the selling agent - 2-3% is very reasonable under those circumstances.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Cole:  Absolutely the stereotypical attorney answer rights off the bat - it depends.  If you are selling to investors who won't live in the property themselves, the numbers will do the talking.  Show crime rates, turnover rates, current expenses, avg rental rates, etc.  Paint them a picture using numbers, and the more detail the better, especially of working with more sophisticated investors. 

If you are selling to a homeowner that will live in the property, but won't have an opportunity to visit before the move for whatever reason, then paint them a picture with actual pictures.  And videos.  Numbers will still be important in a few aspects, but help them to see themselves in the home and area, of course putting the home in the best light possible.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.