All Forum Posts by: Jeremy Kuchenbecker

@Henri Meli will do!

@Nick B. @Michael Bishop

I'm a believer in "trust but verify" but probably good advice in just going straight to the securities attorney for direct answers.  I have a referral to a securities attorney from a from a from in a law firm so should be reliable. 

Appreciate it fellas.

I've had numerous friends and colleagues offer me substantial amounts of money to invest (in one case $1M) and have finally decided to take a serious look at combining some of my funds with my friends and colleagues to purchase an apartment complex. 

Initially I do NOT plan on syndicating, and will rely solely on using friends/colleagues funds for the purchase of 1 property. I'm looking at forming an SPE to hold the funds and secure the loan. Funds raised should be around $200k and will most likely be the only 'fund' set up for the year. 

Most of my questions revolve around SEC rules, protecting myself, and giving full disclosure to any investor. Would this be considered a Private Placement? Then subject to any Reg D rule 504/505/506? Would a private placement be different then setting up a JV LLC, with a GP/LP structure? Would this allow me maintain all financial decisions regarding the asset, without risk of getting sued or removed from the entity?

Sorry for shotgunning questions, any suggestions are greatly appreciated!

@Dave Toelkes I have the final say on pretty much every aspect except contractors where I will generally let my dad's do the work, but I have input and ultimately final say on them. My dad will give me the details of tenant applications i.e. credit score, income requirements (3x rent) etc and his recommendation, and I will approve or disprove. Similar process with contractors, setting lease terms, pet fees, and whether to repair/replace items etc. 

@Ashish Acharya I think you may have understood it, but the net effect for the scorp would be zero, however it would show there I am personally paying the scorp to manage my properties, thus allowing me to substantively prove I am managing my own properties. I could be way off base but that was the thought behind it. I've got a >2x debt service on all my properties but because hurricane Irma turned out to be quite expensive last year, I'm trying to maximize the tax benefit as much as possible. 

Love the feedback though - after digging up active vs material participation I can probably justify to my CPA that I qualify for that which will be a huge help. Appreciate it!

I've got several properties with the unique advantage of having my father, a 20 year veteran in the property management business, manage them . He works for a property management company that I pay a 10% management fee to, and then he receives his portion from his employer that is paid to his Scorp.  I have a full time W2 job outside of real estate and also have an active license, although I haven't used it in the few months I've had it. 

The main barrier I have with not 'materially and actively participating' is the fact that I am still paying a property management company. 

My question is this: is there a way for me to get added as an officer to my dad's Scorp, pay 'my' Scorp the 10% management fee, and then pay the management company through from the Scorp? *His employer is fine with this, and would then pay him his portion back to the Scorp* 

Thanks in advance!

In my opinion this is an extremely vague question that depends on the deal. I would take notes on what you think needs to be done and/or what is found by the appraiser and then work to get quotes from your contractors, your experience, and google before proceeding. Depending if you’re renting or flipping, you’ll likely have different things you will want to take care of. If after you account for the work needed to be done the deal makes sense then great, if not, don’t be afraid to walk away or ask for seller concessions. The more often you go through the process, naturally the easier it gets. I normally recommend more turn key properties for your first go at it and go from there.

If you see rents continuing to rise long term on the condo, cash out refi and pull ~$40k out to reinvest. If you're not bullish on rents in the area, sell the condo and reinvest in a larger asset. Rates look like they're going up for the next few years, my goal would be to lock in as much long term debt (safely and with appropriate leverage/reserves) as possible.  

Under your name is fine, especially for your first couple. If you have an LLC, it can still be pierced under several circumstances by a decent lawyer. Your home owners insurance policy covers you for just about any possible form of liability with the exception of negligence. Most lenders won’t finance in an LLC either.

I’m in

Average credit card debt is over $8k. That’s insane.