All Forum Posts by: Steve K.

Why not ask this question of those same well-known RE attorneys then? Being the ones who set you up with this legal structure, they should be able to help you out I would think... personally I'd be asking them. 

Just curious, how much did they charge you for setting these LLC's up for you? Only answer that if you want obviously, and apologies if that's not appropriate to ask. I just wonder about these overly-complicated legal structures sometimes... it seems like they mostly benefit the companies who are charging people to set these things up.

I set up my own LLC's in 20 minutes on the CO Secretary of State website, it costs $50 then $10/yr. after that. The only reason I have LLC's is for commercial properties when the lender requires them.

Congrats on #2!

My understanding is that if you close in your personal name and then transfer to an LLC, you'll lose many of the benefits of an LLC. Better to hold title with the LLC to begin with.

Assuming you are in Illinois and the deal is as well, I believe you can only do one wholesale deal per year there legally (without a license) so I would make sure it's a good one. Just some food for thought. Also it sounds like this property is listed on the MLS? If so it's a bit more challenging to wholesale MLS deals because most listing agents are wary of assignable contracts and will sniff out wholesalers if they don't have the ability to close and could end up jerking their seller around, tying up the property, and not closing. Also there aren't that many deals on the MLS with enough of a spread to work in a decent assignment fee (which seems to be the case with this one). I'd focus on generating off-market leads with healthier spreads instead. Also one other thing I noticed is that 60 days on market isn't actually terribly long. It's about average actually, so the seller may not be motivated enough yet to take an offer that is 14% lower than their asking price and also has an assign ability clause in it. I would advise my seller to lower their price a little bit and look for a real offer first. Are you dealing with the listing agent or the seller directly here (assuming it is listed with an agent, it wasn't clear in your post but because you said "on the market" that's what it sounds like…).

Personally I think setting up an LLC for just one property is overkill and unnecessary, especially because many investors handle their LLC's in such a way that it makes them completely useless anyway (not having a separate bank account for the LLC, co-mingling business/LLC funds with personal, having insurance policy or mortgage in your personal name, not treating the LLC like it is it's own separate business, a sole-owner LLC where it's obvious you're the owner won't really help in a lawsuit anyway, etc.). A series LLC would be extra unnecessary IMO. Most of the time a robust umbrella insurance policy should suffice.

Additionally, I don't think an LLC is even appropriate here because you technically don't own the property. A fideicomiso is like a bank trust. The bank holds the legal title and you are the beneficiary of the fideicomiso/trust because you own the rights to it. In an LLC, the members are the legal owners. They are different ownership structures. So I don't see the benefit of adding an LLC to the mix here, and definitely not a series LLC. Waste of time and money IMO. But you might want to talk to a professional who specializes in legal structures to be sure.

Where is the property in Mexico? Me encanta Mexico. 

Well, your post about your new mentor just sounded a lot more like someone was grooming you than mentoring you. Sorry, it's just that mentors don't say those types of things, but Harvey Weinstein types definitely do. So it just set off alarm bells for those of us who have been around the block a few times. I hope we are all wrong, but I wouldn't go anywhere private alone with this mentor if I were you. 

100% agree. Underwriting a property is equal parts art and imperfect science. Some of our properties that looked the best on my spreadsheet have performed the worst, and others that looked absolutely terrible on a spreadsheet have performed the best (by far). The biggest factor in this phenomenon is location, which is why location, location, and location are the top 3 things that I focus on when looking at properties now. 

Sounds like this guy may be using the old Harvey Weinstein playbook. Lots of red flags here. Keep your head cool, be wary and don’t get swept off your feet with the cheap compliments, self-serving flattery and lofty promises. It’s easy to think you’re in control of a situation only to have it escalate quickly and become an entirely new situation that is out of control. Notice how alarm bells are ringing among the seasoned guys on here. They’re definitely not jealous or trying to ruin your career, they are looking out for you and have the benefit of seeing the situation from a distance. It's possible this person only has the best intentions, but also highly probably that they are attracted to you and this could get complicated quickly. Ask around about this guy, really do your due diligence, and be careful. If the "homework assignment" involves delivering your mission statement to him somewhere in private, I'd run the other direction. 

From somebody who gets cold calls every single damn day: Please Don’t! Super annoying. Find a way to get inbound leads. 

Personally if I had just one townhome and was in your position, I'd self-manage. It can be really hard to find a good trustworthy PM and some won't want to take on a new client with only one property IME. It sounds like the property is an A or a B class rental given the rent amount, which would make it easier to manage. If you are willing to learn the local landlord/tenant laws along with the basics of managing property, and can line up a good handyman to assist you with repairs as well as for referring tradespeople for whatever else comes up as needed, then you should be able to easily manage 1 property. Especially a townhouse where the exterior is all handled for you already. Also assuming there is a tenant in there currently? If they are good tenants and there isn't a PM managing the property currently, that would be even more reason to self-manage IMO. Another big factor is how often the unit turns over. If it is the kind of place that tenants tend to stay for several years, then it will be easier to manage from afar especially if you have responsible tenants. I'd hire someone to do quarterly, bi-annual or at the very least annual inspections for you so the tenants know you are paying attention. 

It's a personal choice though: whether you want to take the time to learn how to manage a rental or not. If you don't want to do it just hire a PM, but it won't be hard if you are a quick learner and have the time to learn. There may be a landlord/ tenant handbook available for the area which explains all of the local laws you'll need to abide by. I'd start there and learn as much as you can from books and on here. You can outsource everything you need to professionals a la carte as needed without hiring a full time PM. For example there are services you can use to place a tenant, you'll use a lawyer for evictions as needed, a handyman can make repairs, there are 24-hour emergency plumbers, etc. I still self-manage some of my units even though I have a great PM (went through some bad ones before finding a good one and bad ones can cost you a lot of money). There are advantages to self-managing over using a PM besides not paying the 7-15% every month IME. 

Sorry for your loss!