All Forum Posts by: Al Lev

Thank you for everyone who reached out privately. Your help and advice are much appreciated.

Hey Charles,

Section 8 housing can be very successful strategy. I personally have not done it but have a former colleague of mine who did this exclusively in Brooklyn, NY. There were few keypoints that he shared at the time:

1. Property condition: HUD has rather strict safety conditions that needs to be met and you have to balance requirements with practicality and cost. There are youtube videos describing how people solve this in the most cost effective manner.

2. Tenant selection: Rather tricky here because while the majority of the rental payments are guaranteed by HUD, you must collect the remaining from the tenant. (I understand that you can't forgo that payment or will be disqualified). He has a rather interesting angle due to fact that Brooklyn, NY has very limited availability for Section 8 vouchers and made it work.

3. I've looked in Philly about 15 years ago and decided against it as you need to do rather deep research where to invest. Goes block by block.

I am wondering if anyone is interested in investing their 1031 funds into a syndication. I recently completed a sale of a rental and looking for a replacement property. While I like managing small rentals (1-3 units), I prefer large syndications. After some research, many sponsors accept 1031 exchange funds (via TIC structure) but the hurdle amount range between $500k and $6MM.

Has anyone tried to pool their 1031 funds and this way meet the threshold?

The reason I would like to consider a syndication as it allows for better diversification, less maintenance at the cost of somewhat lower returns (marginally).

Having the ability to roll 1031 funds in/out of syndication is far superior to any other strategies unless you like to be hands-on.

You might be onto something here. It appears that both trusts and "certain single owner entities" would quality for the exemption. I would consult a CPA as the first step.

https://www.irs.gov/publications/p523/ar02.html#en_US_2016_publink1000200611

I believe you can arrange something that may work but advice from both CPA and attorney would be advisable.

If the property is owned by LLC whether single-member or multi-member, it will not be considered owned by you/your husband hence exclusion unlikely be available. The 1031 exchange will be available in this case.

However you could structure it so that the property is held in a land trust with with you/your husband and LLC being the beneficiary. The ownership interest can be freely transferred within the land trust without public knowledge. (Attorney can advice on the proper way of achieving this and some advanced planning is likely to be required).

As a beneficiary of the trust you will be considered an owner and exclusion can be applied for.

Hope this helps.

P.S. What is "slow flip"?

You may consider more sophisticated strategy while saving your money.

1. Open the LLC in Wyoming (Cost $150 + $52/year + 25-50$/year for Registered agent)

2. Create a Land Trust for each new property

3. Place the property in the Land Trust initially naming yourself a beneficiary (banks should allow financing in that case)

4. Do an assignment of interest to LLC in exchange for LLC shares.

5. Maintain the insurance and require rental insurance on each property with the liability coverage.

This would eliminate the need to maintain multiple LLCs in different states.

Alina, I personally have not attended this bootcamp however somewhat familiar with David's work as I read some of his books and materials (you can find them on ebay). For the entrance price of the bootcamp (even if you split it with someone) you can get better value trying to partner with someone locally.

The question is rather complex and the best answer I found is from @Clint Coons from Anderson Advisors is to create WY or NV holding LLC and have Holding LLC own all other Ownership LLCs. The real question you are asking is how to protect equities in the properties if one LLC owns more than 1 property. It is generally done with Equity stripping. Given that you use BRRR strategy and buy for cash your risk is with initial phase where your purchase is with cash. You can implement two strategies:

1) LLC that buys the property borrows money from Holding LLC for both purchase and rehab - hence if you sued the lien will protect the equity. Once you refinance your risk stays the same but the lien moves to financial institution.

2) Using Land trust - purchase and hold each property separately in a land trust (with Holding LLC loan) with Owner LLC being beneficiary. You affort rather wide leeway here. The trustee of these trusts could be another LLC or trusted friend.

Since any LLC can be a pass-through entity you can eliminate a significant number of admin work.

Disclosure: I am NOT an attorney and above is not a legal advice.