All Forum Posts by: Annu Zer

Buy tbills, no state tax, since you are in CA, yield could be ~6% with almost zero risk(you are lending money to the US govt.). You can also just a money market fund like SPAXX or FDRXX. Make sure money is not sitting in a checking account.

While you make high enough money from interests, take you time to make the next decision. Podcasts, random strangers on internet, cannot tell you a specific plan that will work for your specific situation.

For example, if you have any high interest loans, maybe pay them off first. Start a 529 plan for your kids(if applicable), put more money into Roth(if possible), also plan for any owed Taxes from this incomming windfall, taxman always has a share.....(or atleast confirm you do not need to pay taxes).

For first property, I will strongly suggest to go local. So many things can go wrong in out of state, and you will not be able be prepared to handle them. We bought our 1st out of state after 3+ in state we are in, infact city we are in. Atleast have some rough idea to estimate repair costs if it comes to it, so you are not relying on "dream team" tp help you...

If you are local, you can shop around for repairs/work that needs to be done and also check yourself, and also do plan to spend 2 hours a week on property related work(to be safe), so if you partner/family cannot help at all, be prepared you will need to be able to handle this. If no one to help, maybe a new property is your option...but again all this will depend on your specific situation.

But, do not leave money in checking account, BUY TBILLs or even money market account...very good yields on them.

Also check roofstock to see how process should work and also what kind of questions and data you can get and also ask for. I still feel out of state is more hassle then worth it.....

Any other recommendations?

Found a deal in Dallas that went in with family. He took the loan under his name and we are contributing for 30% of the cost and will own 30% share. I am based on Oregon. He has his LLC, I also created one in Texas. SO next step us to formalize the agreement in a way that it is best for both of us. He will work with me on the agreement, with our one core requirement, he owns 70% while I won 30%. Property is fully rented right now, and we already do 70/30 split.

This is our first and only deal, talked to some big firms, but they are pushing their subscriptions plans and we are not there yet. So looking for some connections, recommendations here from the biggerpockets family.

Originally posted by @Ethan G.:

Thanks, will see what can be done with joining current llc, and yes we will have trust for kids, but for now just wanted to make sure, when we setup everything for this property, it is done in a safe way, legally binding with control for everyone based on partnership, and not only trust

Originally posted by @Ethan G.:

Why is the concern deed is in his LLC? I don’t follow your question. If bank loan documents don’t allow allow a change of control or new member being added to the LLC then you shouldn’t do so.

Originally posted by @Annu Zer:

Originally posted by @Ethan G.:

Yeah you can do a joint venture between the two LLC's if you have high trust (looks like it's your brother so hopefully that is true).

I am sorry. I was asking since you mentioned there is high trust being your brother, I thought the trust factor is important as deed is under his LLC?

While I trust him, dont know if that trust will translate to our kids(hopefully it will), so want to ensure do it right for them as well, so even if our kids do not trust each other, they still have good framework, agreements to protect them.

Thanks Ethan, another option is maybe add myself to his LLC. Am not sure if that will trigger Bank Loan revaluation.

By the way concern is that deed is on his LLC?

Originally posted by @Ethan G.:

Yeah you can do a joint venture between the two LLC's if you have high trust (looks like it's your brother so hopefully that is true).

Thanks Ethan, another option is maybe add myself to his LLC. Am not sure if that will trigger Bank Loan revaluation.

By the way concern is that deed is on his LLC?

Working with a partner(brother), we were able to close on a commercial property. He used his assets, to get a commercial loan, and the deed for the property is under the name of the LLC he setup. Since it would have delayed/complicated things, only he is on the LLC which has the deed. Propert is in LLC and so is he.

Now we are working on creating an LLC that I will own, and will make a contract with his LLC, to have 30% ownership rights, starting with 30% of income, and when sold, 30% of the share of the property. I am in Oregon

It is first time for both of us, so new, so our plan is below:

1) I create an LLC in Texas, and we make a contract between LLC (mine and his) about the 30% rights/ownership

2) While he pays mortgage(it is under his name and all), I pay him monthly payments based on my share, we include this in contract as well.

Is this something normal or we way out of norm and this will not be legally possible? We are both open to change, but since deed is already under his LLC, and mortgage under his name, it is already done, so we need to move forward from there. It was the quickest way to close at the time, as it made the loan process simple and straightforward.

Working with a partner(brother), we were able to close on a property. He used his assets, to get a commercial loan, and the deed for the property is under the name of the LLC he setup. Since it would have delayed/complicated things, only he is on the LLC which has the deed. Propert is in LLC and so is he.

Now we are working on creating an LLC that I will own, and will make a contract with his LLC, to have 30% ownership rights, starting with 30% of income, and when sold, 30% of the share of the property. I am in Oregon

It is first time for both of us, so new, so our plan is below:

1) I create an LLC in Texas, and we make a contract between LLC (mine and his) about the 30% rights/ownership

2) While he pays mortgage(it is under his name and all), I pay him monthly payments based on my share, we include this in contract as well.

Is this something normal or we way out of norm and this will not be legally possible? We are both open to change, but since deed is already under his LLC, and mortgage under his name, it is already done, so we need to move forward from there. It was the quickest way to close at the time, as it made the loan process simple and straightforward.

Check roofstock, good way to learn what kind of options are available and they also have additional information that will share about property. For anything turnkey, you will have middle men who are making money by upselling it, and your margin will be really low, but you need to be able to look at deals and be able to analyse or atleast know what are the kind of questions to ask.

Give you an example, one of my friends was almost closing on a property, he mentioned and since he good friend, I looked at some of the info. It was a manufactured home, with additions done to it, I had read at some point additions to manufactured home do not count as they do to a normal home and cant be used to improve value of property. He was able to confirm that easily. Then I asked him to check with CC&R since there was a HOA< and talking to them he was able to know, none of things he wanted to add would be allowed by the HOA.

If he had not done that check, he would be stuck. He also found out that most of the work was done by owner and there was no licenses or any kind of insurance for the work done, so he was pretty much on his own. He backed out, and glad that he did.

But the realtor he was going through and when he went to check the property he did not hear or see anything.

But as you can see, while there are many good folks, there are some shady people out there as well, and in case of turnkey, you need to learn yourselves what to look out for and also be able to do some basic analysis yourself.

So easy option is not necessarily the best one, but you need to start getting your hands dirty to learn, so do not engage in anything where you feel you have to buy, if the deal meets your requirements and you feel comfortable go for it, but dont go in to buy only, but also be open to walking out and learning at the same time.

I try not to talk to folks in RE unless I have done some research on my own, as the commission system makes folks more inclined to make the deals for you, so you need to be prepared and do your own due dilligence.

Roofstock is a good way to see what retail turnkey options looks like, I am not saying you should buy through them, but they have a good way to look at turnkey properties, especially if you think out of state is an option for you.

For the first property though, it might be better to go local, but that is just what works for me.