All Forum Posts by: Jerel Ehlert

What @Rick Pozos said. Do some deals, earn some money, then get an entity. If this isn't for you, an LLC will just go to waste.

I moved to Georgetown in June (home office), just up 35 from you, and have a main office in Houston where most of the daily work is done.  Let me know if I can help.

Interpreting leases:  Lease controls where it speaks on a topic (and not void or voidable under statute).  Where the lease is silent, statute controls.  Where lease and statutes are silent, Texas and Federal common law control (rare).  There are specific statutes that a written lease cannot override control, and are void or voidable.

When the lease expires, and there is no provision for extensions or renewals, it becomes a "tenancy at sufferance" with a period of what was under the lease (commonly, rent is due monthly => a "month-to-month" lease).  To terminate a tenancy at sufferance, the old common law is/was notice of one "period".  By statute, because it is so common, unless otherwise stated will be 30-days' notice.

Fun fact: notice for eviction after a foreclosure in Texas is 30-days' notice.  This is also the notice period for terminating a written lease for anything other than non-payment of rent (unless written lease says otherwise).

If you are going to play the game (landlord-tenant), you should know the rules. Ignorantia juris non excusat.

If you are going to lease property in Texas, you might want to have read the Texas Property Code chpt. 91 and 92:

https://statutes.capitol.texas.gov/Docs/PR/htm/PR....

https://statutes.capitol.texas.gov/Docs/PR/htm/PR....

Specifically, look at Sec. 91.001.

Assuming the property is in Texas, be careful of "large down payment".  If they want to pay more than 40%, make sure it is by wire transfer from a domestic bank.  Better yet, use a title company.  This is a prevalent method of money laundering.  Also, when you hear about "sanctions" against countries and people, there is a federally maintained database of verboten persons.  Banks and title companies used by them filter for these people.

Next, go through a title company (notice a theme?).  You can have your attorney draft the docs.  If you let the title company do it, the attorney works for them not you.  We are at all times very clear about who our client is, and protect their interests accordingly.

Talk to your IL attorney, lender/loan officer, and underwriter.  They will tell you what is required.  Texas, the only state I'm licensed in, is a community property state.  Here, that would be a big "no go" until after the final divorce decree was signed by the judge (plus 30-days after for pleanry power).

An attorney opinion letter is about the most dagerous (for the attorney) work product we produce, so expect to pay accordingly.  Any attorney you ask will make sure to narrowly define the scope, have no fear of that.

For most SFR, it happens frequently enough to ask a lawyer for doc review. This may be more what you are looking for. If your transaction is pushing into the million dollar range, that might be time to have a lawyer as part of the transaction, not after the fact for an opinion letter.

For general knowledge, your local REI groups will be better on a cost/hour measurement. While I started as an investor, then went to law school after the crash, and can teach every aspect of REI in Texas, I highly doubt anyone wants to pay my hourly rate to learn the ins and outs of real estate investing.

BTW, I live in Georgetown (just North of Austin) and have a main office in Houston.

Though I don't disagree with any particular legal point @James Miller made, my perspective is slightly different.  

Yep, your first line of defense is always going to be insurance, however you arrange that (property, umbrella, excess-lines, etc.).  

James seems to have more experience in dealing with charging orders than I do, though I've put both the LLC and the member on the same suit but that's more specific to the facts of my cases. It's up to the defending attorney to argue against the propriety.

As for an LLC for each property, this is a point that everyone has multiple opinions. My preference for clients will depend on their situation. I tend to divide this by character of the income, parties involved, and nature of the risk, as well as the client's apatite for risk.

Assuming a catastrophic loss that burns through all the insurance resulting in a large outstanding liability, the assets of the entity will be liquidated to satisfy a judgment. One-company-per-property will certainly shelter other assets, but is burdensome. Keep as many in a company as you feel comfortable putting at risk. Many do one large asset (apartment complex) in one entity, and many small assets (SFR) in another.

Flipper income is taxed at dealer rates.  Rental income is taxed at much lower rates.  If you are good at working with classes in your accounting software, you might be able to avoid using different entities, but it may be easier to split income by entity.

"Partnering" (a dangerous word, btw) with people can be done with a stand-alone entity. A JV for short-term utility; a special-purpose entity for longer-term projects (multi-year).

Rehabbing is a dangerous activity.  Electricity, chemicals, scaffolding, spinning blades, etc.  Whereas leasing space is not so much a danger.  

Military veteran RE lawyer (no specialty - it's a Bar thing) - here.

Basic LLC formation is a flat rate, but will need to discuss if that's the right approach. If you've never done a deal before, I usually suggest new investors go do at least 1 first, to make sure this is something you want to do because spending money on forming an LLC then letting it go dormant and then administratively shut down is a waste.

Non-consumer (e.g., you, the investor) receiving a L/O: all day long and twice on Sunday.

Giving a Consumer a L/O: no-go.

Search "Lease options" and "Texas" (and variations thereon) for lengthy discussions on why you don't do that.

The Sister sounds fishy, like she's trying to take Brother's share. That's why underwriter won't take POA. QCD is a dead issue. Legally conveys nothing and doesn't address the doctrine of "after acquired title" (which is why underwriters reject them). @Wayne Brooks is mistaken.  Under Texas Estates Code, equitable title vests upon passing of the decedent.  Here, title to the property passes to the heirs at death.  Just because this brother/sister are the remaining living kin of the owners, doesn't necessarily make them the heirs if others were alive to take from the estate *at the time of the owners' death*.

If you really want this property, figure a way to stop the tax foreclosure (anyone can pay property taxes) and work it the right way through the underwriter.