All Forum Posts by: Rodney Smith

Hello everyone! So I have a question (really more of an accounting question) but since many of you are shockingly savvy and have been involved in many deals i'm hoping to glean some wisdom from people who have maybe been down this road already or been involved in a deal of this nature. So heres what we are trying to achieve!

My siblings and I are purchasing a portfolio of properties and are using some inheritance money from our parents (still living) to help fund the transaction. Naturally my parents dont want any connection of any sort to the properties, but rather are helping fund this to jumpstart the family biz. My question is - how can we structure the payment portion from our parents in a way that does not bring on tax liability but also does not require our parents to stick their necks out by being "on the title , LLC, etc." and increasing their exposure?

We have considered buying the properties under a separate LLC entity and drafting a private loan contract between the LLC and parents (which has no legal requirement to be recorded) but i'm sure it wont be that simple. We've also considered doing an interest only loan with parents and having debt forgiven / re-nogotiated / re-fied etc each year to lower our principal balance.

Your thoughts?

Thanks in advance!

Chris, welcome to BiggerPockets and I'm glad you found us. I'm sure your investment will continue to pay off with the contacts you will meet. I live in Central Oregon however feel free to add me to your list as well since I am beginning investing in Kansas City with a small group of investors in my area.

Welcome!

I'm honing in on an investment market (which will primarily hinge on networking and the team building that takes place), but I seem to be coming back to Indianapolis and Kansas City. 

However, having said that I came across a property in this general area of Indianapolis (see attached pic of map) and i'm wondering if anyone might shed some light on the quality of this general neighborhood / area? What are the areas of Indy that a smart investor would stay away from? Are there exceptionally favorable areas, and why?

Looking forward to your feedback, thanks!

(for some reason it doesn't seem the image is working but the property is near East 38th St & N Emerson Ave.)

I would be interested in hearing about the opportunity. I lived in redding for 5 years and I'm still not that far away from the area.

Thanks

@Pete T. 

We got all the docs signed to submit the short sale to the bank and the guys mother who had P.O.A. got nervous and just backed out. She was a sweet older lady (in her 80's) and was basically nervous that in the fine print of short sales there is wording to the effect that the seller could be liable in the future of a portion of the short sale difference. -- we were offering $21k and the seller owed $50k, so according to technical fine print it's possible he could be liable at some point in the future for a part of the $29k difference. That was the straw that broke the camels back.

But i'm honestly not heart broke about it... it was in rough shape and needed a lot of rehab and will be going to auction.

Hello, I'm looking to re-vamp my REI strategy to upscale my startup 4-plex and SFR propeties and 1031 them into a commercial property. I'd like to buy something large enough to support staff or low maintenance enough that it can be managed from a distance. My goal is to be involved as little as possible on the monthly operations.

I'm looking into 30+ unit apartment complexes (location is very flexible assuming I dont need to be there for extended periods of time) which can provide enough revenue to adequately hire management. I'm not certain how realistic this is (or rather at what scale / revenue does the complex truly have the ability to financially be sufficient w/out my labor). Any thoughts or wisdom from you experienced people would be appreciated.

As an alternative thought i've considered RV / Mobile Home Parks. The thought process here mainly differs in that the majority (I think) of the mobiles are owned and therefore maintained by the tenants. Rather, I would be responsible for upkeep of the grounds, electric, and water hookups. As well as any "Clubhouse / Community" buildings or amenities. Basically my thought here is that I might delegate a large majority of maint. issues to the tenants thus making managing from a distance much easier and cost of a property manager less? Can anyone speak to the validity of this thought process?

Thanks in advance!!

Hello BP, I am looking to 1031 a few properties that I currently own in Redding, CA and roll them into a larger investment with better cash flows. In short I have sort of house hacked a 4 plex and an SFR and would like to now sell and collect my appreciation to put down on a larger multi-unit apartment complex or Mobile home park. I'm looking to purchase in the $900,000 or less price range and i'm looking for 30+ unit apartments as well as a few mobile home parks and RV parks that seem to be in the 50+ sites range.

My question is this - I've been putting together my #'s to forecast income and expenses, but I'm not sure what kind of expenses to accurately project my management costs (assuming I'm not living in proximity to property and not managing myself), as well as estimating a monthly maintenance costs. I thought about allocating $75/unit in monthly repair costs which at first seemed a little high to me but may avg. out to be a good #?

Any feedback here would be appreciated (as well as pointing out other costs that I might not forsee). Right now i'm accounting for debt service, Taxes, and Insurance (although i'd be curious to hear more educated opinions of what a reasonable insurance est. would be on a 30+ unit complex). I still need to come up with decent estimates for grounds maint. , paid staff / mgmt. , monthly / annual repair budget. ??

Thanks in advance!

@Bill Gulley Ya I spoke with his attorney and he said he did not have POA (at least not anymore... the guy went to prison about 4 years ago).

However, the mother does have POA and is authorizing me to deal with Bank of Amer. regarding this loan / property. So hopefully i can go work face to face with the originating bank this afternoon or early next week. They said they have no plans of listing the property for sale until next month, so hopefully that give me enough time to work something up.

Thanks again for your advice. As far as making the bank an offer have you done this very much? The original loan was $49k ... trying to find out for certain, but i think the remaining bal. is ~$35k but not sure ... all i know for certain as of this moment is that the NOD shows $20k plus a little change for late pmts. fees, interest etc. but i dont think it is a payoff balance .... given the current condition of the property and amount of rehab i'd like to offer somewhere around $25k for the property as is ... They might laugh at me but we'll see.

Thanks again!

well, I've received word back that the owner is interested in selling the property to me, however, I may have other issues now. It appears after some more research that the late fees and penalties may have added up to enough to kill the deal. I may need a more accurate repair estimate, and I need to get the exact payoff amount (which i'm having a hard time getting since i'm not authorized to talk to the bank regarding the loan and the guy who can authorize me is a pain to reach).

Anyways i've spoken with his old attorneys and they dont have POA's but I did get a call from his mother who was corresponding on his behalf. I will ask her if she has a POA or something similar to help speed things up a bit.

@Bill Gulley Thanks for your advice in this matter, i found it quite helpful and logical.