All Forum Posts by: Jerel Ehlert

Up to you on how much you want to raise, but the attorney's fees will start in the $10-15K range on the low end. Sounds like you are doing it just for the experience, and that's fine, but you might want to join another's syndication to get experience.

Lots of pitfalls for the unwarry. Use a lawyer who does this often (even if not me). 

There are several posts around BP describing what's involved. Note, lien, disclosures. Big difference if there's underlying financing or if you own it free and clear.

Some title companies can, but I recommend hiring the attorney to draft docs yourself.

I do both residential and commercial.

Like any industry, there are both legit and illicit. In law school, I would hit the legit places for a therapeutic massage just before exams and the bar.

If there's a performance default, you can still evict, but it gets awkward. Local laws aside, there's a general principle that LLs have a duty to mitigate losses. If they get evicted and you replace them with another tenant when you still have their pre-paid rent, you will have to return (you cannot get paid 2x for 1 month).

Real estate laws are local to the state where the property is located. Treat your family private lender like (or better than) any other private or HML: promissory note and lien recorded against the property. Have a lawyer represent them to draft the docs. Don't let the title attorney draft them.

While an investment advisor might be good, use a securities lawyer. There are LOTS of ways to legally make a good deal bad for passive investors. Once you hand over cash, the only rights you have are in the legal documents.

Hire a VERY GOOD commercial leasing attorney. Pay the "outrageous" hourly rate and consider it a small measure of assurance.

First problem: nature of the business. Asian Massage Parlors (AMPs) can be sexually oriented businesses (i.e., prostitution). Face this one directly and tell them no prostitution or other illegal activities. Monitor for such. Ask law enforcement about this from your area.

Second problem: pre-paying rent. Another indicator of illicit activity (more so in residential leasing). Unless there's a good reason, rent is usually an overhead expense paid for from operations. It also means that you won't have a "non-payment of rent" reason to start eviction, only default in other performance under the lease. 

Leasing to an attorney, by itself, isn't much of a reason to deny the application. Sure, we can be a pain in the butt to deal with sometimes. We need a place to do business and live, too. And sometimes you might need one. 

Always use low maintenance landscaping in rentals. Most tenants don't want an extra job keeping up with shrubbery. Unless you include landscaping in the rental, it will be done poorly, at best.

Selection is based on region. Your landscaper should be able to pick out varieties for you.

1. Don't invest in anything you don't understand.

2. "investing in a holding company" sounds like a syndication, and that's a security regulated by the SEC.  Unless you have a massive trust fund hidden somewhere, you probably don't qualify as an accredited investor.

3. Keep your money in the bank. You need to learn about real estate investing and building a network. Pod casts, books, and BP are great sources. Networking is hard in quarantine, but not impossible. Zoom meetups, etc.

4. ATX and SA are still viable, just have to pick an area, pick a niche and get good at it.

Dealflow comes from putting your name out there as a lender. This is by going to networking events. 

Problem is, you have limited funds, so if you get too much dealflow, the people with the deals will start dropping you from their list because your money is always out on another deal. Better to find a handful of lenders that you know/like/trust who already get deals sent to them, and see if you can lend with them. 

ALWAYS do your own due diligence and check everything twice. Once the money leaves your hands, your leverage is much reduced.

The classic answer: It depends.

Depends on where you are (state income tax?) and where you invest. Depends on what type of RE you invest in, too.

One overall strategy is to take as much of your W-2 and plow it into real estate until your RE > W-2.

Syndication can take some of the time investment out of the equation. But you have others controlling your deal.

You can put capital into a small commercial building with a few commercial tenants, and have a realtor manage that. A small office, retail strip center, or stand-alone space (restaurant, convenient store, doctor/dentist office). These tenants tend to self-manage, pay regularly, and stay forever. Biggest concerns are major economic downturns (like now), that should be relatively rare. (YMMV) Putting 40% down will give you a good rate under most circumstances, and you can offset the cashflow against depreciation.  To take other advantages in the tax code requires proof of "significant activity" in the RE industry, but check your tax person for this.