All Forum Posts by: Baha M.

Hey guys, im in process of selling a 50% interest in my duplex to a business partner who will be paying me via funds from a 1031 exchange. We will be tenants in common/joint tenants. He wants me to sign a grant deed and a preliminary change of ownership report, but I am hesitant because I'm afraid of all the headaches it can cause down the road. I'm also concerned I will have to pay capital gains and/or transfer tax on the sale, is that the case? What is the safest, legally sound, most secure and cost effective way to transfer 50% ownership interest (entitling him to half the property - equity, proceeds, costs, etc) without jeopardizing myself too much? The way he has proposed bypasses escrow, title insurance, disclosures, etc, he just wants to pay me and I sign off on the title change. Thoughts from the pros out there? i'm new to all this, and in over my head.  I will probably also consult with an attorney asap but want to hear thoughts from people who have done this before. I know there's a method that uses a lien and an operating agreement to establish the partnership, is that a better route and would that work via  1031 exchange? 

hey guys, thank you all for your replies, great stuff here!

I'd like to re-direct the discussion back to the primary purpose: learning how to transfer 50% interest in the property to a business partner who will be paying me 50% of my downpayment in return for sharing in all profits, appreciation, costs etc etc. 

If I cannot grant title to him, how do I go about ensuring him his 50% of the downpayment is secure and he is half owner of the property, without jeopardizing triggering the due on sale clause? I'm happy to keep the property in my name and do not want to complicate things by going through an LLC. He has sent me a grant deed and I have told him I cannot transfer title to him, but would find a way to secure his interest in the property. That's where i'm stuck, thanks in advance!

Hey all, I'm new to the world of REI and recently purchased a duplex (Dec '16) that was supposed to be a 50/50 deal with a partner. At the time of closing, my partner did not have the funds because he was still closing on another property and wanted to use those funds (via 1031 exchange) to buy into the duplex (all this was disclosed up front and OK with me).

We initially created an LLC together to hold the property in, but then Wells Fargo told us we could not put title in the LLC's name because it would (read: could) trigger the DOS (due on sale) clause. I decided I would stick with having the property in my name, and purchase an additional umbrella policy, which gave me ease despite the fact that I'm stuck paying the $800 LLC fee in California for this year even though we will not have even used the LLC.

Anyway, the problem is my partner now has come up with his portion (50% of downpayment) and wants me to transfer 50% interest in the duplex to him via a grant deed. When I checked the wording on the mortgage docs (mortgage is solely in my name) it says "We do not allow a contract for deed that results in a change of title to another party, as this may require us to declare your loan due and payable."

Now i'm confused, how do we do this? Neither of us have partnered up in a deal like this before, and were not aware of the hurdles we would face. How do partners normally handle this? Do I have to put him on title, or can we have an outside contract drafted essentially granting him half interest? Or, can we put his Trust on title, would that satisfy the "estate planning purposes" exemption, or would it have to be for my estate?

Any advice on how to proceed would be much much appreciated, as I am not getting my money until we resolve this! Also curious how the write-offs will work at the end of the year, if I get a 1099, can he write off half the interest even though it was all in my name as long as I wrote off only half??

I may have left out some info, so please feel free to ask!

Thank you all! 

@Larry Fried Very informative post, thank you. That is definitely another way to look at it. I guess it comes down to finding a turnkey company that you trust and can count on to stick with you in the long term. I will consider turnkey companies as the advantages you listed are clearly desirable and worthy of a reasonable premium. As long as the premium is not outrageous and the company isn't just dumping cosmetic fixer uppers on you, you will get what you pay for I suppose. 

Any particular turnkey companies you recommend based on your experiences with them?

@Sydney Hall Thank you for the introduction! I wish you the best of luck with your career in SLO! 

@Chris Erwin I will take a look at your company's website and get in touch with you, thank you!

@Avi Garg  Yes that seems to be the struggle, picking just ONE market to focus on, but once I do that, it'll be time to seriously investigate! I have not looked into St Louis but will consider as well. 

I have been strongly contemplating: Milwaukee, Chicago, Indianapolis. Any recommendations or votes for one of the other for a new investor? 

hey all, after attending a Marshall Reddick seminar over the weekend, I have become obsessed with the concept of out-of-state investing! I have been on BP propably 71 of the last 72 hours lol. I have been researching various markets for buy and hold investments with a bit of cash flow. I'm looking to start with my first purchase, but still deciding on the ideal location. I was initially interested in Memphis, but after reading up on various websites, forums and blogs, it seems the best days to invest in Memphis are behind us. I am now interested in midwest cities such as Milwaukee, Chicago, etc. I'm looking to zone in on 2-3 markets then check out the MLS on those markets for multi-family listings that are in pretty decent shape (to avoid using a turnkey company- is this realistic for a first timer?) I have good capital and can qualify for conventional financing, I don't need a ton of cash flow, but I do want to net maybe $200 or so and build up my portfolio to eventually bring in 1k-2k in supplemental income and then retire on these properties.

Anyone that is willing to share advice with me on the following:

1- What are some current hot markets that give you the best bang for your buck? I'm not looking for crazy appreciation, just steady buy and hold strategies. I'm interested in Milwaukee and Chicago, as I mentioned, but what else?

2- I've read a lot about turnkey companies, but i'm uncomfortable with how they lump together their broker, lender, property manager, etc and they all play on the same team, with interest in not necessarily getting you the best deal, but primarily in making a sale (at a premium rate). Of course, I understand they add a lot of value and should be rightfully compensated for what they do, but is it possible to find a realtor in the right area and find a listing through the MLS that doesn't need a ton of work? Or are those tough to find, hence people's reliance on turnkey companies?

Thanks everyone for listening, i'm very exciting for the opportunities that await. Just need to get the first one in the books!!