All Forum Posts by: Rich O'Neill

Welcome @Stephanie Althouse! Let me know if there is anything I can do to help. I have a rental portfolio in Delco and run a project management company in the city and surrounding counties. Best of luck to you! 

@Jason Forman when did the lease end? If it was "recent" (I don't have a good cutoff for that) then you may be able to claim they were bound by the lease and did not leave upon non-renewal. If notice of non-renewal was never given then it could be trickier, but worth a shot. Like @Dan Powers said, it is much better to go for an eviction than an ejectment in the city. 

@Wanda Alderfer If it is slated for Sheriff Sale, there has probably already been a money judgement issued. If that is the case, it is unlikely that the bank will be interested in maintaining the note, even if you caught up on payments and penalties, and I don't believe they have any obligation to do so once they receive that judgement. It is probably too far gone to go Sub To. 

You may be able to redeem the judgement prior to the sale- meaning you pay off the entire loan principal plus the back interest and fees before the date of the sale (and I believe you would pay that to the court, not the bank, then the court would pay the bank), but it doesn't sound like there is a financial ability to do so. 

This is a complex transaction you may want help on from an expert. 

One thing I am not sure that you mentioned- did the entity disburse ALL profits throughout the ownership, or did it retain some profits year over year?

Like Greg said, is there any reason you can't keep the property in the LLC and buy out the partners in the LLC, but keep the entity in tact? Talk to your CPA/Title company, but I think this would ultimately save you transfer taxes as well.

Another benefit to doing it this way is that maybe you could simply refinance the property in the LLC (without the partners as guarantors on the loan), then have the LLC buy the equity back from the partners based on the parameters you used above, simultaneously with the loan closing. Now you as the sole remaining member of the LLC have your shares reverse diluted to 100%, in a way.

In a simple transaction, the company would buy the stock based on the "value" of the company: Value of assets (appraisal) + Cash in the bank - liabilities (last month rent and security deposit, and any other debt in the company). There is an argument to be made that the Appraisal should be discounted by the transactional costs you mentioned in part III. 

I think you captured all of those transactional costs. Think of it just like the HUD if your were to sell the property.

"Purchase Price" (Appraised Value)
Minus Transfer taxes (split in half like a normal transaction)
Minus Commissions (not split since that is a seller expense)
Minus Prorated RE Taxes (this would change depending on if the company paid taxes for that year or not

Not a terrible idea to consult an attorney to make sure everyone is treated fairly and your within any laws. 

By setting it up in the Balance Sheet Equation, it makes it pretty easy to understand for everyone. 

I hope I am making sense there. Let me know if I wasn't clear on any of those points. 

Hey @Orlando Watts if you are looking in PA, we may be able to help. Land is pretty readily available in the city of Philadelphia, but outside the city it gets a little trickier. I have access to all of those people you are looking for in PA, but not so much in DE. I would talk to @Vincent Garman for anything DE related. 

@Mel Park syndications take a lot of different shapes and forms, but in general, they consist of limited partners and general partners. The GP’s generally have some active role in the deal as either a fund raiser, deal finder, or operations manager (or some combination of the 3). The LP’s are generally the money in the deal, with no active role or decision making authority. Depending on the structure of the deal, a certain percentage of the equity is allocated to each group. Generally, you want the GP’s to also be LP’s, meaning they have invested some of their own money in the deal. Sometimes the GP’s are called the Sponsor of the deal. 

The idea behind the whole thing is that the GP’s organize the logistics of the deal and provide a passive return to the LP’s. 

Most of these funds are limited to accredited investors, which means you have a certain level of net worth and sustained income production. I believe it’s $1m in net worth and $300k/year for the last 2 years, but please verify these numbers. 

Your business background should help you sniff out the bs and look for well structured deals.

@Freddy German, 2 other pieces there: I am not positive, but I believe you need to have 2 forms of direct egress for basement units. Someone else here may know that part better than me. @Dan Powers is talking about LOT area, not necessarily unit area, so what he is saying is that in order for the LOT to have 3 units, the LOT needs to be at least 1080 sqft. The actual unit size is irrelevant as far as this is concerned. 

Exciting stuff! Thanks for sharing @Dan Powers I hadn't heard about the Amazon facility but that is huge. 

Trust me, I am a contractor and it sucks finding good help. We try to do a lot of things to add value to our subs and their businesses including all of the things said above along with some others. Fortunately for us our scale has allowed us to essentially move guys from job to job without a whole lot of lost time in the middle. That is not possible for most investors, so the relationship building is huge. Of course pay EARLY, be honest, don't waste their time etc. One thing I often recommend to new investors is to offer to pay contractors for estimates and a little education. $100/estimate on a few estimates with a good contractor is worth way more than that in the education and the resource. Then if you close on one of those few you took them then you show them how serious you are about building a business, and you might not have to pay them next time (though I would still recommend it). 

Hey Freddy, One big consideration you should be thinking about is fire alarm/sprinkler system. Once you get into triplexes and up, you are technically supposed to install those systems. The question will be whether the city make you add it or not based on the SOW when you pull a building permit. My guess is that they will require it if you are adding a 3rd unit. You may be able to argue that the current occupants would be disturbed by that process but they may or may not care about that. 

If you need to add those systems they can be incredibly expensive and time consuming to install, especially if you have to deal with current tenants.