All Forum Posts by: Mark Fedorov

If the New LLC is just the managment of the first cabin, then draw up an agreement between you (personally) and the LLC to have the LLC manage the property and then the LLC is the "landlord" and you are the owner, no need to move ownership or existing money.

Two other points: 

-This will not save you from personal liability from anything that happens in the first cabin, keep your good insurance in place.

-If this situation is confusing to you, you need to talk to a lawyer before you set this up, the tracing of the legal entities and responsibilities are crucial to making sure you get the liability protection that an LLC provides.

Two things I can think of:

- I know that some HUD programs require that the buyers live there. If it is a foreclosure or a short sale, I would guess that.

- If there is an HOA, there could be association laws forbidding the rental

Otherwise, denying a person from purchasing real estate could be red-lining and sort of really illegal.

... of course the best way to find out is to ask the person who told you.

Though I never executed the plan, I was told to do that you would structure the deal so that you had a put option on the property. So you pay them a few thousand to have the right to buy it when you are ready

Around here you can go to the board and apply for a variance provided that you have a contract of sale, (or "an interest" in the property.

The other option is that you make sure that your building plans are conforming and don't need a variance.

I suggest you talk to a local lawyer about the process in your area, there might be better ways around it and/or, the lawyer may know that if one board member votes yes, all will follow, so you just need that one members opinion. Go to a few board meetings and talk to the representing lawyers who are there with clients to find a good one, AND check the last few meetings minutes and find the lawyer that was most successful. 

Are there people in the house to evict? If so, let them be kicked out, if not contact the Marshal AND the bank and let them know the house is in new hands.

 I think we can conclude 1) this rumor is probably not true 2) even if it is, if you don't have $100K-$200K you will not be able to get a reasonable mortgage, and there are probably issues you would need to fix (and spend money on). 

Before you spend time figuring out if YOU can get this deal, find out if the rumor is true, talk to the owner, if it is true, but the price is wrong, then you find someone else to buy it and either make a commission on the sale or negotiate you getting some equity of the deal from the buyer.

I do a lot of things myself, list properties, find tenants, fix sheet rock, write loan docs, fill out legal paperwork to start LLC's... but I would NEVER write my own agreement of sale for a property... there is just too much risk there, you mess something up and you may have given the seller money and not gotten a building. Hire a lawyer. (and make sure you do a title search)

You need to take special precautions when the temps are low, here is a summary: http://www.cement.org/for-concrete-books-learning/concrete-technology/concrete-construction/cold-weather-concreting

To get from cap rate to cash on cash return you need to plug in a down payment and a mortgage assumption. I have always found that riskier properties have higher cap rate and higher COC returns. That is the basics of economics.

I have no problem buying a 5% cap rate property if its location and market position means I have no vacancies and I can bump up rates above inflation for the near future,

There are properties in Slummy areas that I would not buy at a 10% cap rate.

I find that you can not generalize about these things.

@Kaila Turner I would not disclose the extent of my funds to use as a down payment (use a range), I would not disclose my salary (that should not be in the conversation), I would not give them any docs with account numbers etc.

Also, at the same time, you should start a relationship with a bank (try small and local first) to understand where the interest rates are and where they are going (not a good place, thanks Don!), and an insurance broker since mortgage and insurance are 2 of your top 4 costs.

@Mark S.I am not adverse to risk, however I beleive it;s important that everyone know what risks they are taking. So, sure, put everything in one LLC, but be aware of the risks.

I have multiple LLC in PA and NJ, in PA they only cost $125 to set up if you mail in the forms to the State yourself, so I do not see that as cost prohibitive, but I don't do what you do,