All Forum Posts by: Sergey A. Petrov

Yup, good catch. Eminent domains are rarely imminent 😁

NC is not a community property state, so a single member LLC with more than one member is out of the question. It is a standalone LLC taxed as a partnership

Are you selling/gifting/giving it to your daughter or just letting her live there, maintain it, and pay the mortgage? The structure of the “deal” follows once the above is known 

 Exactly! Imminent domain is different. The Seller would have received compensation, there would be a recorded easement or a sale of, at least some, property rights especially if it is a tunnel 60 feet below your property or taking of 10 feet of your property (outside of the right of way). It would show up on title, it would be disclosed by the seller, and, again, it would be a matter of public record.

You bring 20% and your partner brings 80% equity to the table. You get a 20% stake and your partner gets an 80% stake. You get paid for project management out of the newly formed entity. Or you get paid a salary as a managing member to handle everything not just the $5m construction project 

If I am the Seller and I know the City is widening the road, I look at my required disclosures. They are typically related to my property and my actual knowledge. Using widening a road as an example, my answer is no to most legally required disclosures. No studies have been done on my property, no part of my property is being affected, and I am not aware of adverse impacts (now, if the City were building a nuclear reactor or a moon rocket launch in their right of way abutting my property, I would maybe think twice before answering no). Roads get widened, overpasses get built, tunnels get dug, municipalities give plenty of public notice. It is not on the seller or the title company to disclose municipal projects that have nothing to do with my property. It is in the right of way, someone else’s property. If I know my neighbor is building a 10 foot concrete fence with an ugly finish next year, do I or the title company have to disclose that?

These are common municipal projects that are publicly known for months if not years before they commence. Most affected property owners will know. Most buyers familiar with the area will also know. By the time a property hits the market for sale (and certainly well before the project commences), its market value will have already been adjusted to account for project impacts by the market itself. Maybe that is why it felt like a “good deal”.

There is a point where “right of way risks” are common sense not requiring additional legal disclosures.

Yourself plus your CPA after getting your property’s estimated market value from a licensed broker. Once you know how much your property might sell for, deduct 10% for selling fees, and have your CPA calculate your estimated tax liability. That’ll tell you how much cash you’ll walk away with (unless you are doing a 1031 exchange). Then decide what you’ll do with that cash and how much money it’ll earn you. Then compare that against what you are currently netting with that property being a rental. Whichever has a better return wins

Unfortunately this is common. A part of the property is almost always in the city’s right of way. You may feel like it is yours but it is not. Many buyers feel the same way when they buy a property with great views and then something is built in front of them. The survey and the lot boundaries should delineate the right of way and your property line. Laws to disclose vary but from what I know it is usually on the buyer to review and confirm to their satisfaction. 

If you are asking the question, you are likely thinking it is too expensive (personally, I’d agree that spending nearly half of your pay on housing is too much). If the property appreciated between the time you signed the contract and the time is built and ready to close, you can just resell it (maybe even without closing on it) and pocket the difference. Then move on to a property that better fits your budget 

You don’t need any of that with one rental. If you really really really want to form LLCs and make it super complicated, pay an attorney a couple hundred bucks and a CPA another couple hundred bucks, then call your insurance broker and they’ll sell you a new insurance policy. Should be all done in under $1k, filing fees included