All Forum Posts by: Sam Mathew

@Bill Brandt

Great thoughts. I never considered selling my primary and taking 1031 investment to become my new primary.

Please prove this strategy wrong, but I have not been able to.  

I bought an investment home in Charlotte, NC (I live in FL) when my child was born (14 yrs ago) for $124k that is now worth $340k today.  Because I switched it to a 15 year loan, it is almost paid off in 2 more years (I have been paying much more than the minimum mortgage payment as then yearly rents have increased).  I originally bought the house so one day I could pay my child's college tution and costs (rather than invest in a college 529 plan).

She's in 8th grade this year, so by the time she graduates high school in another 5 years, I'm projecting that it will be worth approx $380-400k, more than enough for college.  

I'm might switch my plans now (and thus why requesting if someone or a tax expert can prove me wrong).  I will still need to seek a tax specialist in the future if laws change. Again, I'm in FL, but she may go to a college out of state.  Boston, Chicago, Ann Arbor, Austin, Raleigh.  No idea yet, but she talks about it.  Whichever city/state she picks, even here in Florida, my new plan is now to 1031 exchange to current investment home to a 4 bedroom property whereever she goes to college.  She can live in it and rent the rooms out to pay her college bills.  But if she lives there for at least 3 out of 5 years, than I am planning to gift the house to her.  You can do a lifetime estate gift to your child up to $13.61M as of 2024 (these limits change).  And then later she can sell it and if it was legally her primary home for at least 3 years, then she will receive all the funds tax free, and I pay no gift tax.  A win-win for her and myself, if legally possible with no issue.

So now my orignially "small" downpayment on the original $124k house, litereally will pay for all her college costs and after I gift the house to her, she will likely receive maybe $550-650k (projections of house in year 2030) tax free once she's done with college and sells the property.  

Do you believe this is possible?  I have researched and it seems completely legal and legit to do.  Again, please prove me otherwise.  Thanks.

Thanks Michael. 

Quote from @Michael Smythe:

@Sam Mathew

You'll also need an LLC resident agent in Michigan.

Be careful using one of the online companies, as we just had a client that one of these firms was NOT forwarding their mail.

Finally, depending on where you are investing, you may need a local agent to meet city requirements. In Metro Detroit, most cities require some type of city inspection and license to rent out a property. You must then have an agent within X miles of the property.

Quote from @Greg Scott:

Quote from @Sam Mathew:

I think you may be confused about the naming. 

When you register an LLC from one state in a another state (foreign LLC), you don't get to change the name.  You are simply telling the new state how to find out about the existing LLC that was registered in another state.

Greg, thank you for the information.  In all these years, this has never been an issue even with financing, but for the first time, a private lender is requesting my foreign LLC filing docs.  So this is helpful.  Thanks again.

Hello Members, seeking opions and past experience to how best set up my Michigan Foreign LLC.

I live in Florida and have a local Florida LLC.  But I invest quite a lot in Michigan and am trying to see how to set up up a Foreign LLC.

Any thoughts?  Do you use the same name?  Any other tips?

Example:  

Main Florida LLC:           National Real Estate LLC
Michigan Foreign LLC:   National Real Estate LLC or something different like USA Real Estate LLC

Please let me know your past experiences on this.  Thank you.

Hello Bigger Pockets Members,

I purchased a 4/2 1200 sq st home at auction at 50% of ARV for $70k. Market Value should be $145-150k. Rent of about $1500/month.

I purchased home all cash and I had to evict the occupants.  The home is ready to rehab work and then rent out.  

Since I already have several projects already in-progress, and my team spread thin, I decided that I will sell this one, most likely will need to be wholesaled since rehab work needed.

If you can help, please let me know how I can find local wholesalers in the Metro Detroit, Michigan market.  Or let me know if you may have other thoughts/advice also.  Thank you.

Quote from @Ray Hage:

Quote from @Sam Mathew:

Hello All, it’s been quite some time since my original post but I closed on this home a few months ago in Nov 2022, for $290k and the rehab work continues. I will show you the latest picture if I can post it. Again this is a 3,800 sf home on 5.2 acres, so pretty excited to get the work done and  see what I will do with it. Likely sell it unless some better idea to keep it and be profitable. I appreciate all the feedback received from you all

Hi there. How's the project going on the whole? Do you still have the expected costs and ARV? I am an investor myself but have never taken a project on of that size. I hope to get to a big fix and flip like this eventually

Hello Ray, thanks for the response. So the rehab project is going well overall, pretty happy with it so far, and the team. With any rehab, you tend to have surprises but for the most part if you're planning 20% for unexpected work (25% in this case), that's pretty good buffer, and even buffer if not needed. I have bought a dozen SFH rental homes (but far smaller) over the past few years needing some rehab. From thoses rehab experiences I tried my best to predict the project items and costs for this home, which now has about 30-40 line items of work and then their realistic exstimated costs. And then, of course, on top of that are all other unexpected, unknown work that will definitely come along. But again, so far, it's been good. One of my biggest items that I'm not sure about yet, is that this house will need much more luxurious furnishing/finishes than my typical small rental homes, so for that, I might need to seek professional decorator help to see what colors/materials I might use for those work items like flooring, paints and such.

As for you question about ARV, that is basically my own research conducted of neighboring homes, communities and rough estimations. It's a guess of course as risk involved with what the the future be in six months, interest rates, demand, and market conditions. But my best guess right now is that conservatively, ths house should go for at least $850k with basic rehab done. Or possibly over $1M if we can capture that amazing breathtaking feel when someone walks in. I am trying my best to make it nicer than just basic, adding a 7' water fountain in front, pergola, fire pit, maybe green house in back (all very affordable to add), plus plenty of land for horses or other animals that the new owners may wants to have.

Hello All, it’s been quite some time since my original post but I closed on this home a few months ago in Nov 2022, for $290k and the rehab work continues. I will show you the latest picture if I can post it. Again this is a 3,800 sf home on 5.2 acres, so pretty excited to get the work done and  see what I will do with it. Likely sell it unless some better idea to keep it and be profitable. I appreciate all the feedback received from you all. 

Quote from @Nachiket Pai:

Does anyone have any recommendations for a property management company? I have a couple of properties in Canton, Michigan, and looking to change my current property management company.

Thanks

Hello Nachiket, I have many properties up in Wayne and Oakland County and I live in Florida.  I've worked with 3 property managment companies there until after several years, I finally consolidated them all under The Mutual Team in Farmington Hills.  Big difference between other PMCs.  Ask for Nick Heppard; mention Shelby from Florida recommended.  From my experience, they are the best, mainly because they are strict screening my tenants, hardly any issues (and they don't want any either) plus they have specialists for each area, listing, contracts, maintanence, accounting and such.  It works out great.  Just sending some sincere advice that took me years to learn. 

Hello, please let me know more about the property.  Thanks.