Structuring SFH Entities to Minimize Liability

[Kurt Defenbaugh]

I’m currently setting up legal entity structures for my existing SFH rental currently in the remodel stage of BRRRR method. I’m getting varying opinions from both CPAs and attorneys. If I refinance within an LLC (shifting title under LLC) the refi goes into a commercial product requiring 25% and killing my equity capture. Traditional refi under my name gives me 20% equity and no money in based on my analysis. HOW DO I REDUCE LIABILITY WITHOUT CHANGIMG TERMS W BANKER AND ALLOWING ME TO OPERATE PROP UNDER LLC FOR TAX PURPOSES? (WHAT THE HELL IS WRONG W MY KEYBOARD?)

[Cody L.]

Originally posted by @Kurt Defenbaugh:

@Richard Sherman Great feedback. What’s your advice on scaling? At the moment, my wife (industry pro) has to source everything and its slow. We have our own capital and access to capital from investor(s). Finding the deals that work seems to be a slow process. How do you source deals? In a perfect world, we would prefer more doors and less roofs ;) but a door is better than no door for our long term goals of spending less time working for others and more time working growing our net worth.

I need to just write this on my site as I am emailed this question all the time.  Here is the short version for getting deals (at least in multifamily)

1) Look on loopnet/har for the properties that look like what you'd want to buy. 

2) See who the brokers are, and introduce yourself.  Explain to them what you like and don't like about the listing (if it's on loopnet or har, the 'dont' like' is likely it's too expensive, otherwise it would have been sold before going on those sites)

3) Ask them if you can be on their email lists for other properties.  They blast their list before going to loopnet/har

4) If you see one that's fits your criteria, get it.   Doesn't have to be a home run.  Buying something shows you're not just one of the 100000000000 asking for deals but you are willing and able to buy.

But first (maybe this should be #1, but whatever), know EXACTLY what you're capable of getting.  If you're trying to get deal flow, that comes with having brokers send you deals, and that comes with building a good rep.  You don't want to chase something you can't buy as you become a tire kicker and off their list (either literally or figuratively)

5) Now you should be moved up from "on a blast list" to maybe "on a short list of people who are called before the blast list goes out".   So long as you always do what you say / say what you do, you'll move up the list of who is called first.  A small # of brokers do most deal so word will get out ("Hey, you bought that deal on 8th street right?  I have a deal just down the street -- interested?").   

6) Toss the $ from the first deal, in cash, on your bed, and roll around on it like you're in a movie.

(step 6 is totally optional)

Good luck dude.  

PS:  I'm in Houston also and while 2017 was a bit slow -- I did about 4 multi deals? -- 2018 has picked up.  I've done 5 deals in the last few months.  It seems sellers are coming back down to earth.   I've even found my last few deals on HAR and loopnet.  Two Montrose deals on HAR and a downtown deal on loopnet.  So you don't have to be part of a freemason level group to get deals.