All Forum Posts by: William Johnson

You may be able to hire an "Estate Sale" company to sell it for you.

Possibly hire a friend to man a garage sale for you. They keep the profit after the bins are paid. Then haul it away.

Look for a "Freecycle" on the web in your area.

You could bird dog it out. Use the contacts your appraiser employer has to find a local investor. May be difficult to find an investor as condos have issues as a buy and hold investment.

You will then start to accumalate cash on hand to later invest. Also you will make contacts in the investment community for later deals.

If I understand correctly, you want to set up an LP where SDIRA and cash investors will fund the LP and then the LP will then leverage to buy properties.

From what I understand this would be permissable without UDFI. There may be a problem if an individual SDIRA owns too high of a percentage of the LP or as a collection IRA own too much of the LP.

I think it could have have a problem if the total percentage of the money invested in the LP is IRA. The IRS may look at that as a sham way of having IRA leveraged without the tax. E.g. Only four people put in IRA money into the LP. They are the only partners. The LP leverages the money. The IRS may not look kindly on that. Now if the four investors are only a small fraction of the money involved, it may be permissable.

The above is mostly understanding the general intent of the IRS and not specific knowledge. These would be my concerns.

No one could have both IRA and non-IRA money invested.

To tag on to Don's idea:

If one would have the money is to purchase several to many properties in an area and do "private" redevelopment.
Screen tenants and keep up your properties. YOU go to city hall and make the complaints about the slumlords on the block. Start Neighbood Watch. Work with local churches and community groups.

Help redeem a neighborhood instead of being a part of the problem.

[I understand we live in a world where civil suits are filed for just about anything - but if the registered sex offender who you rent to molests a neighbor, are you liable. Or if the chronic drunk (even a college kid in a nice campus rental) with prior DUI's, has a party gets wasted and commits vehicular manslaughter - are you liable as the property owner as this surely showed up on his background check.]

From RE books I have read, there is case law where owners/managers were libel for tenants actions if they knew or should of knew of a tenant's past history.

Another risk.

Is it worth the possibility of losing your wealth, freedom, or being able to look at yourself, wife, children, and your Creator knowing you are enabling criminal inmoral behavior to make a few bucks?

"What does it profit a man that he should gain the whole world yet lose his own soul?" Jesus

Both have different roles in asset protection. You should have both.

Best to have an asset protection lawyer recommend a course of action in consultation with a CPA and insurance agent.

I'm in the same boat as you: I bought two properties with only an umbrella for several years. Now I have bought several more and I am now looking into LLCs. On complication is that I live in one state and the properties are in two other states.

Price is good for 2% rule.

Base on 50% rule I have each unit at $117/month. This is good.

With your numbers I get $168/month. I may be missing something. Our numbers do not Jive.

If your cash flow of $474/month is correct, then it is below the $100/unit many investors look for.

The repair/maintenance of $100/month may be low. I do not have alot of experience but with the SFRs I have the $50/month I budget seems to be always a bit short at the end of the year. Plus the big hits like the $1000 air conditioner repair I just got hit with. That's nine months of your budget there.

I agree with Edwin that the lower rent areas tend to have higher vacancy rates. Along with the lost rent during vacancy, there is often the lost rent when old tenent does not pay and repair/clean up costs to get the unit rentable. Easy $1000 each vacancy.

It may be a good deal. Not knowing the area, it seems awfully low priced if it is listed and not taken yet.

Also, where did you numbers come from? Make sure they are good.

I believe you can buy property that you own a share of BUT you have to convince the IRS (if audited) that this is an "arms length transaction" that you are not receiving a personal benefit from. This would be difficult.

I would stay away from this type of creative finance.

The safest way would be to form a new LLC or purchase a existing LLC using SDIRA money to purchase units and non-linier relatives' (parents, grandparents, children, grandchildren) money to purchase the rest of the units. The rules are grey concerning brothers/sisters and aunt/uncles. Best is to avoid them and stay clear of all problems.

Jaclynkb,
May I suggest in the mean time, as you check with CPAs and Lawyers, to get an umbrella coverage. Typically on your owner-occuppied home owner's insurance, you can add $1 million for a few hundred dollars. You will also need to have liability coverage of $300k on your autos and rental. This will give you protection now and allow more deliberate thought on LLC, C-Corp, LLP,....

The concern is not the fan catching the house on fire.

The concern is if there was a fire, the heat from the fire would turn on the fan causing air to circulate bringing fresh oxygen to the fire and increasing the intensity.

I do not know if this would happen but that is how it has been explained to me.