All Forum Posts by: Brett Willette

I am looking for some advice from seasoned veterans regarding my options for my current real estate situation. 

My partner and I are just getting started in real estate. We are trying to make our next move a smart one in hopes it will help us expand our portfolio faster. Currently, we only have one commercial rental property that is in an LLC that we each own 50% of. I also own my principal residence. I believe there is about 40k in equity available in the house from looking at comps and considering the updates I have made. I am moving and figured converting my current home into a rental would be an easy way to expand our rental portfolio. I am contemplating a few options, but am willing to do almost anything that would be beneficial for the long run. Here are the options that I see:

1. Sell my house to our LLC and rent it out. This option would give me ~15k cash to invest in other properties(the other 25k of gain would be used as a down payment). I have looked up so many articles about related party transactions and I haven't found anything that would disallow the 121 exclusion based on selling it to a multi member LLC. Especially if the second member isn't a "related party". This seems to be the best option in my point of view(unless a real estate CPA on here blows a hole in my hopes and dreams and tells me my gain would be taxable). I currently have two people interested in renting out my home at about $100-200 cash flow a month(I have vacancy 8%, cap ex 5%, expenses 5%, property management 10% already calculated into my numbers).

2. Sell my house to a third party. This option would give me ~40k to invest in other properties. This could be appealing in order to purchase a multi family or another commercial property instead of having a single family home in the portfolio. 

3. Keep my house in my name and rent it out. This option is concerning to me because I think having a mortgage still in my name will cause me issues when I go to purchase my new home. But this option would help from a cash flow perspective since my mortgage rate is lower than what an investment property rate would be. (Yeah yeah… I know about the due on sale clause, but it's a risk I think I'm willing to take).  

I don't see any other options, but I feel like there has to be something I am not thinking of. Any advice would be greatly appreciated.

Thanks, 

Brett

@Angela Ong

Since I wasn't familiar with the area, I did a lot of research. I drove around neighborhoods, worked with a realtor that I met on BiggerPockets, read books, listened to podcasts, and did calculations on a ton of properties. Due to the busy season that my accounting job demanded, I did not have time to fully commit to purchasing a property. I had a unique job opportunity come up and actually left St. Louis and moved back to the Bonne Terre area recently. My current job is much less demanding of my time.  Since I know this area better, I am much more comfortable investing here. I still haven't bought my first property, but I am hopeful that I will by the end of 2018! 

@Jeremy Swyers I would appreciate that! It sounds like she is very knowledgeable and has a lot of experience. It would be great to hear both of your thoughts on rental properties in the St. Louis area!! 

@Dan Heymann Thank you for your advice!! I planned on renting a place and learning the area more while living in St. Louis, but I was hoping to be proactive and do research before moving to there. This would expedite my first purchase. I have been listening to BP podcasts and reading the blogs for nearly a year. I am really excited to make my first purchase! I will definitely look into the REIA! Thanks again!

I am 6 months from graduating and moving to St. Louis from Columbia, MO. I plan on purchasing either a single family home and doing renovations, or purchasing a multifamily home, staying in one unit, renting out the other(leaning towards the latter because I am a soon-to-be CPA and anticipate a busy work schedule). The only problem is, I am not very familiar with the St. Louis market. I grew up an hour south of St. Louis, so I have heard of most of the municipalities such as Kirkwood, Chesterfield, and Clayton. I know my way around most of the city. I am just unaware of the real estate values/neighborhoods. What is the best way to learn about the different neighborhoods and best areas to invest in real estate in St. Louis while I am finishing up my time Columbia? I want to make an educated decision on where I make my first purchase. Are there good websites to visit? Maybe some books or magazines to read? Or  should I talk to a realtor from the area? Any advice is much appreciated!!! 

I want to thank everyone who offered their advice on my post. I really appreciated all of the input. Due to my decision having an extremely close deadline, I was not able to contact the individuals that offered further assistance. I greatly appreciate all the generous offers! I had to make my decision already, and I went with the Big 4 firm. After weighing all the pros and cons, I felt like this was the best long term decision for myself. So, when I graduate, I will be working for Ernst & Young in St. Louis. Again, thank you to everyone for taking time out of your busy days to give your advice!!! 

@Peter MacKercher

@Ames Foley

@Natalie Kolodij

@Brandon Hall

@Account Closed

@Stephen Barton

@Peter MacKercher Thank you so much for the input! Time has been my biggest concern. I know during busy season, hours can be insane. I am hoping that I will be able to start during the summer or down times. We'll see how that goes. Realistically, I will start when(and if) I leave public accounting. In the meantime, I will do just what you have suggested; learn and save. Thanks again!! 

I am a graduate accounting student at the University of Missouri in Columbia, MO. I have been listening to podcasts and reading forum posts on BiggerPockets for the past 6 months or so. After graduation, I plan on starting a career as a CPA and trying out real estate on the side. If I am successful, I would like to do real estate full time. I have two job offers from firms in St. Louis, MO. The pay and benefits are basically identical. The only difference is that one deals heavily in real estate clientele(small regional firm), and the other has no real estate clients(Big 4 firm). Would being an auditor for real estate companies be beneficial to starting real estate investing and learning the basics? Or should that not be a factor in my decision? The companies I would audit would be a variety: commercial RE businesses, management companies, partnerships, investment funds, and financial institutions. I know there are a lot a CPAs on here, and I would appreciate any advice. Thanks in advance!!