All Forum Posts by: Jonathan Orr

@Joseph Dimaria are these commercial units or mostly SFR? I have a friend who does asset/project based lending but only lends on commercial properties, development or land. Let me know if any of those fit your needs and I would be happy to connect the both of you.

Originally posted by @Taylor Nielsen:

Hey Jonathan, thank you for your reply! I would love to jump into their LLC but they only want the partners of the oral surgery clinic to be partners in the LLC. Essentially I am just a cash investor on my fathers portion and that is why him and I are creating an LLC to do the deal. I would like to put much more money into the deal due to the projected return approaching 30% cash-on-cash but I am unable to (my max is %16.66 of the deal)

My question about limited partner was not referring to a non limited company rather a passive investor who does not take an active role in the development other than putting money in (a limited partner). The second to latest episode of BP talks about how the new tax code will benefit active partners more than limited partners and they talked about structuring future deals to make all partners "active". I did not really understand that part and what are ways of structuring the deal to make my father and his partners appear more "active". It is a true triple net lease so management would be at a minimum. Maybe share management responsibilities albeit very few? Any advice on that? And yes, we will be seeking legal council for this in the coming months as we structure it. I am just seeing if anyone out there has done something relatively close to this. Thank you all for the help!

I can understand about your fathers partners only wanting the Oral Practice Partners in the LLC. Guess it keeps everyone a bit more honest and committed from that standpoint.

I have never heard of anything about a "active Partner". I wouldn't focus on that too much, especially since most of the BP Podcasts focus on SFR and non development sides of Real Estate. However, I could be wrong and would be very interested in learning more if I was. My impression of an active partner being in the General Partnership rather than a Limited Partner. I don't think management responsibilities would have a tax effect, except other than the reason of maybe being able to right off some more things. You are correct a NNN is the most simplest form of management in terms of expenses coming out of the ownership side. Nearly everything now is run on a NNN platform because it is easier on management, ownership and produces the highest incomes. One bit of advice I will give, if you do have a management company to manage the property, let them do their jobs. Don't feel you have to be involved with every step. Remember, managment is there to run the day to day and you supervise on a monthly or quarterly schedule by reviewing the expenses and performance. I have seen too many owners try and meadle in management companies with having no idea what they are doing and it ends up being a disaster. I always tell owners, if you want to self manage then go for it. If you are unsure, get a company to do it and then manage the management company. It will be less headache and in the long run will keep the property stable longer.

Overall, I wouldn't work too much about a "active" vs "limited/passive" partner because no one in your deal from my understanding is doing the actual development and entitlement.  I would first just make sure when money is brought in, it is brought in under a company for safety. 

If you have a project in mind I would start by going to the municipality it’s in to get the costs necessary from the government standpoint. Once you have that, I would reach out to some contractors and/or architects to see if you can get any idea on costs. If have to build a relationship with them anyways so get started earlier the better. Then I think you can piece a back of the envelope underwriting together and present it to the investor. It is then critical to get with the investor to see how much and when they are willing to infuse capital. A second option would be find a development partner that has some of those tools and work with them to build some costs and knows how to navigate the development sector.

Would the municipality they are in just allow gravel roads? No curb or gutters? Also need to check water hookups and water availability for the property as those would be required and a individual buyer/builder would want that to the property. Additionally with the roads that you need to complete you will need to get all the engineering completed for that. Also a land loan to close on it so time would be of the essence. Check with the local city/county that the land is located in to find out what is required to get the lots to a maximum value to sell.

Hi bigger pockets community. I have Been listening to some real estate podcasts and it is great to hear others stories but I have been seriously thinking about frowning my knowledge. So after looking at lifestyles and goals of some people I admire I have made a goal to read more about real estate.

Being in the commercial development industry, there are a ton of information and materials out there. Can anyone recommend books or materials to read that talk about commercial development? Can be anything from how to’s to individual stories to investment strategies, etc... really open to anything, and I wanted to see what you have read that you feel has improved your skill set and knowledge.

Thanks!

Hi bigger pockets community. I have Been listening to some real estate podcasts and it is great to hear others stories but I have been seriously thinking about frowning my knowledge. So after looking at lifestyles and goals of some people I admire I have made a goal to read more about real estate.

Being in the commercial development industry, there are a ton of information and materials out there. Can anyone recommend books or materials to read that talk about commercial development? Can be anything from how to’s to individual stories to investment strategies, etc... really open to anything, and I wanted to see what you have read that you feel has improved your skill set and knowledge.

Thanks!

@Matt Inouye I have a buddy who is local in Southern California that may do what you need.  He normally lends on Commercial purchases or land deals but if the size if there is enough cash he may be interested.  PM me with some detail and I can pass along to him.

@Taylor Nielsen are you stating that you and your father would create a separate entity in addition to the entity that you father has with his 2 other partners? Why wouldn't you just jump into their LLC and contribute?

A non limited company can (depending on tax laws per state) mean that the individuals that are non limited are responsible for debts for the company.  I would stay away from that.

The creation of a LLC would be find because the business and development is going under that LLC which provides some protection if anything goes sideways.

As an example for my developments. I have a corporation that I operate under (corporations are better for taxes. I take that corporation and partner with other corporations (my development or investing partners). Thus creates a general or limited partnership. From there we create a single entity LLC (the LLC that the project goes into).

I am no a tax professional so I would consult with a tax attorney or CPA to see how you would be taxed under any scenario.

Good to see professionals getting in with development partners to get the building off the ground, I see so many people with money that try and do the development themselves and they end up putting the project underwater.  If you are ever looking for development help, let me know.

@Ryan Campbell I would take a look at another lender.  May find more favorable leverages with a hard money lender who looks more at the deal and not as much on your income potentially?

I have a guy I know that does that sort of thing if you are interested.  Happy to connect you too.

@Matt Charette

A friend of mine is a hard money lender that may suit your needs.  They look at the deal more than personal finances.

If you are interested I am happy to put you guys in touch and see if his platform works for you.