All Forum Posts by: Jon Reed

Well.. no idea what 'arms length away' means... but this is what I would do.

Purchase the property in the name of the LLC and when you refi just keep it in the LLC. Not sure why you ware wanting to purchase it in an LLC then transfer the ownership into your own name when you refi. Our commercial lender will do our cash-out refi at 80% ARV as long as we have a tenant in place and the work completed. It doesn't matter if we have only held it for 2 months or 12 months.

So, go and talk to more local banks and find one that has options that work for you. Don't think you are stuck using the bank you currently have.

I would just write up a new lease with the remaining tenant for however long is remaining on their lease. 

What is the total estimate rehab cost? I would open up a bank account and each of you put 50% of that amount into the bank account. Then pay all of the reno bills from that account. If the account gets low then each throws in an extra $5K (or whatever you decide) to boost the balance back up. After the deal is done then the balance of the account is split 50/50 and closed out.

Talk to local banks. If you go to a big bank like US Bank they will tell you the deal isn't 'big enough'. I use local banks for all my deals (big or small) they are much more flexible and want to encourage local growth vs. a big bank who doesn't give two flying flips about the city/town they are located in.

First, get an attorney.

Is it 'rent/lease to own' or real 'owner financing'. If it is true owner financing then you should hold title to the property and the title should state that their is a lean on the property by the previous owner who is acting as the 'bank'. In this situation it is not that big of a deal because you still hold title and it would be as if the bank sold their interest in the note to another bank. Your ownership is not at risk.

If she is doing a 'lease/rent to own' then you for sure need to get a lawyer involved because this could turn into a big cluster mess if the person you 'purchased' it from still holds the title in their personal name (or even an LLC) and did not set up proper inheritance lines. It could get wrapped up in probate or worse the contract could even become void.

So.. I think you are getting an LLC confused with an S-corp... There is no real benefit or reason to 'loan' your LLC money and charge your LLC interest on that money (especially if you are the sole owner of the LLC). When tax season comes the IRS will see that your LLC is writing off an interest expense when is being paid directly to you so you will still pay taxes on it.

Don't hassle with all this paying Peter and charging Paul stuff when you are starting out. Just do what you have to do to get your company up and running.  

We use State Farm and have twelve doors and haven't heard of any 'limit' of policy count. Also, you should get an umbrella policy. It will increase your coverage on all of your individual units but then put in a larger umbrella policy of 1+ million. I recommend talking to an insurance agent for more details.

I have done entire home renovations with just products purchased from Lowes... never had an issue. What the real hidden secret of Lowes, if your a contractor, is don't fall for the idea that 0% APR for 6-months with a Lowes credit card is the best deal. The best deal is to become a Lowes Pro and create an LAR account (you will have to be an LLC). With this you get 30-60 days to pay for each purchase and some DEEP discounts on products. For example, I save 15-30% on electrical materials and 10-25% on plumbing materials. The discounts they provide are all variable depending on how much of a mark up they have. Your Lowes Pro Rep will help you set up the account and get pricing. I also love the fact I can email my Lowes Pro a list of all the materials I need and they will go and pull it all for me and have it ready at the front. It saves hours of time every week. They will also deliver any quantity of items right to your job site for $20, doesn't matter if it is three tons of lumber or a single bathroom vanity.

$200 per window on top of the actual window cost? You need to look around... most big-box stores and larger window replacement companies offer free installation.