All Forum Posts by: Benjamin Aaker

Hi @Matthew Boos and welcome to BP. Looks like you are already started investing in real estate. This group is happy to help with your future goals!

Landlord and physician here: It's up in the air right now about prohibiting medical marijuana in your rentals. You can prohibit guests from smoking in the units, but IM 26 (medical marijuana) didn't say anything with respect to rentals. Likely the state wouldn't have issue with banning tenants (state government is pretty anti-cannabis) and marijuana is illegal on the federal level. Will HUD take exception to your discriminating against a person with a medical condition? Unclear yet. I'm not a lawyer but I think they would have a difficult time punishing the landlord when the activity (using marijuana) is illegal federally.

The problem will be with enforcement. You'll have something banning it in your lease. When a tenant smokes and you find out, the proof will be in the smell, but local police won't have authority because it is legal in South Dakota. Federal authorities have said they would not enforce personal use so they won't help you either. Go to court with an eviction will be your only option and you'll be the first in SD to do so.

I would put a clause stating no marijuana use in the apartment, period. Politely remind your tenants about this. Move to evict if you have to but it is unclear what outcome you'll have. 

It is SD Real Estate Investors Association. 

@Carlos Feliciano II Congratulations on your first home. If you buy the rental in your name this will have an effect on your debt to income ratio. Depending on where that goes, it might have an effect. If you buy the rental and get a commercial mortgage you'll have better chances of getting a personal loan on your house. Sounds like you are already building so you are probably using a construction loan and will transition into a traditional mortgage. Once you have the rental deal, bring it to your current banker, who will be able to give you a specific answer.

This one looks like too great a risk. If you insist on going further, start by speaking to local law enforcement. Sometimes they are eager to partner with a new owner to clean up a place, sometimes not. 

Don't forget your cost of holding the land. It might be good to start earlier. If you haven't purchased the land yet, there is a risk someone else does.

Hi @Ryan Van Duyne and welcome. You will have to decide how the split works. I'll assume when you say 70/30 you mean 30% to the GP and 70% to the investors. You asked about cash flow so you are talking about any money left over after all expenses, taxes, and debt service is paid. If that is $100 then $30 goes to the GP and $70 is split among the LPs. That money is prorated based on their percentage interest (ownership) in the deal. If 5 investors each put in 10k then they would each have 10k/50k or 20% of the deal. They would then get 20% of the $70 LP share each, or $14. Your investors might put in different amounts, so it all depends on their percentage interest 

@Guy Idan also complete your Bigger Pockets profile. A lot of potential partners might miss you as they don't know where you are located. I found a great partner on BP who lives in the same area. We talked a while on the site and later had a meetup.

You don't need to form an LLC just to invest but I'd recommend doing so. Your liability shouldn't change because it is limited to your investment as @Taylor L. has stated. The LLC helps you keep anonymity and helps you keep track at tax time, assuming you are making multiple investments from the same corporation. When you fill out the subscription agreement for a syndication you will have to give your SSN if in your name or EIN if in your LLC. I'd rather not give out my SSN whenever possible. Also, you may not want other investors to know that you personally are involved in the deal. The LLC helps alleviate this.

For questions 2 and 3, You'll need to check the state where the property is located to determine.

Hi Frank,
Have you considered working for a developer in your area? You could get some great experience on the job. If that's not an option for you, then I'd recommend taking the course to become a real estate agent and focusing on land deals, as that is where a developer has to start the project.