All Forum Posts by: William Morrison

@Andreas W. I have three in North Carolina and I understand that the loan guaranteed by me does not cause me to loose the corporate veil.
I have however received conflicting answers on a Single Member LLC in North Carolina. Seems the courts aren't done with how they look at them yet. There was a release on the Secretary of State site but I can't find it today (at least that's where I thought I saw it). Those rules are changing quickly meaning 5 to 10 years is quick, Grin.

What Gino said is true for a class of investor you may wish to become.
The less you have in the way of assets and disposable income the more likely you are to need the more favorable terms of a personal loan.  Maybe you need the cash flow as well and aren't ready for cash neutral investments that focus on wealth accumulation only.
You may also need to self manage and self maintain your properties. Normal course of business activities by you may not get you in trouble if someone is hurt on property in your LLC. But maybe not so much for negligence on your part intended or not. What change out the gas hot water heater using videos and advise from the big box store and you violate state code. They don't care about intent.
The big boys Gino referenced are not doing their own maintenance personally and thus veil stays in tack.  They are hiring contractors licenses and insurance or have a staff with credentials and insurance as required.  BP is great for beginners and the universal advise will not fit all.

@Russell Brazil gave you one reason for the banks looking the other way may not be permanent.
Call your lender and ask what happens if the suit includes them?  What will they do then?  You  could be in a law suit and have only a few days to find replacement financing.
Do a search on LLCs here and see how many threads talk about successful law suits after moving personally financed properties with "due on sale" clauses to their LLC.
@Parker Ihrie has the right idea.  His lender is on board from the start of the loan with a personal guarantee.  A commercial loan is an other posibility but terms are not as favorable.

Great thread I hope more people get their LLC or not with a longer view with the what if's considered. Then make their decisions based on their future situations and possibilities.

Thanks @Ivan Vargas very informative.  My experience as an accredited investor has been on the commercial/light industrial side.  A 10 year or more horizon and a maximum number of shares or partners is pretty standard (say 10 or 12).  They are more of an asset growth or preservation strategy with little beyond cash neutral positions, thus low to no tax event early on.

For each suggestion ask how, why and when will it fail?  Insurance, LLCs, S-Corp etc all have positives and negatives.  If he doesn't come with a combination and clear examples of weaknesses move on to next attorney.   All of them have strengths, where is your attorney making his money and has he/she separated it from his suggestions or solutions.
What if you do maintenance or repairs?  What are the different type repairs and maintenance that have different risks?
 

@Tony Velez you have received some great suggestions on how to be firm and act as a business in this thread.
Rentals should be a business   Some house hacks rent to friends and family, that's tough enough.  When you move to the next level it's tough to be firm and business like and keep your humanity especially when you see the tenant every day like in a duplex/4 plex etc that you live in.  But that is the goal, I would think.  My wife is better at it than I am.  I have to work really hard not to get irritated with stupidity (of course it's whatever I think is stupid Grin is correct).  I'm not just talking rents.
Not so stupid situations are coming.  My sister is going to stay a couple weeks, then becomes months.  We are just keeping this dog/cat for a friend for a few days, then not so much.  Can I fix the xxx____ for a reduction in the rent.  Your post does not suggest you haven't thought of these things but they have a connection in the sense that you want to have a plan/rule on how you will expect to respond before they occur.
My wife and i used several books on how to be a great landlord before we started and came up with a business type set of rules that fit our personalities. We started before some of the electronic methods of rent collection and communication were around.  So one of the books by Irwin are a little out of date but the fundamentals are the same.  We do not allow text as communication and phone calls are followed by a letter (that's the thing with the stamp Grin).
If you haven't I would suggest (separate from this current "have to act now" issue) that you check a couple references out on land lording and come up with 8 or 10 business rules and responses and then add to them.  Write them out, what you think is intuitive will become obvious that it's not so easy when you have to clearly write it down.  Then when things come up you can respond firm and without anger or irritation, ie "we allow pets with additional pet deposit or not".  "Our rent due rules are"  be matter of fact.  If you have to say more, say "we are running a business".  You don't have to tell the tenant about how or when your associated bill are due, just we are running a business.
When we started we had a short list of in the county resources with numbers for someone that ran into job or health trouble, that so we could separate our business from the charitable resources available.
Just old guy thoughts.  Have a plan.      

@Ivan Vargas great recap.  Do you know if on the marketing side those project descriptions will have the same restrictions.  What I have received on the accredited side (not Crowdfunded) is more like the stock market side which has pretty strict pump and dump or hype rules on what can be said about the project and expectations.
Much of what I see here and on other sites marketed to investors in threads and emails would not cut it.
Inflated ARVs, haphazard repair estimates, estimated rents, quick sate (one month) estimates, experience resumes, etc are just few areas where there does not seem to be any accuracy accountability now.

Ian, @Russell Brazil said it more to the point.  Grin.  A lawyer maybe a waste of time, ie the dolloar threshold it low for the time involve.  Don't misunderstand, I'm not saying this amount the damage is insignificant to you.   That's what I meant when I said to ask enough questions to see if it was worth it to both of you.

 Ian, I see you're in Baltimore, are you saying contractor is not licensed in Maryland?  Maryland requires insurance.  PA may as well.
You might try Brandy Peeples out of Frederick.  You'll have to ask enough question to make sure it's worth it both of you.

I have loans with them.  The process went smooth and Jason Zook was very helpful.
Rates are very competitive as well.
Their book Leverage Your IRA by Matthew M. Allen is also very helpful.