All Forum Posts by: Brian Kloft

 We aren't quite there yet, still finishing doing some restructuring. Feel free to send me some properties so that I can start looking at them and getting more familiar with their financials. 

I did Business Brokerage for a couple of years right before covid hit. Here are some of my thoughts for you. In Arizona in order to sell a business you need a RE license just like you do to sell RE, so I am guessing that you could do wholesaling the way you would in RE. 

House sales is the easiest and fastest to do but you make less per transaction. Commercial RE deals take longer and more work but there are fewer people doing them and you can make more money. Business Broker deals take even longer than Commercial RE and there are even fewer people doing it than Commercial RE but the commissions can be even higher.

I am not sure that I can even fathom how to do this. However if you are good at calling tons of people to try and get a deal then you might be able to make it work. I would probably try and focus on certain types of businesses that sell quick. Most businesses take well over a year to find a buyer and sell it. However there are some businesses that sell quickly and always have a bunch of buyers out there. The one that comes to mind first is property management. PM companies are always looking to acquire others to grow. Construction companies as well (HVAC, electrical, plumbing). There is such a demand for employees that companies often buy another business just to get their employees. 

If you decide to get into this make sure to keep info confidential. If you let it be known that company A is looking to sell and the word got out because of you and; they then lose a bunch of their clients because of that, then you could open yourself up to a lawsuit.  

Oh and the whole Baby Boomers wanting to retire and not having a kid to give the business to is well known and talked about in the Business Brokerage world. In fact one of my favorite advertisings dealt with just that. Something about this ad just always made me smile. 

@Blake Dailey sounds like I should be following you to learn more about this segment. We already own a number of long term rentals on the Oregon Coast. We are interested in doing something different for our next purchase up there. I have been thinking small office or retail (which I have experience in); larger multi family (10-20 unit), RV Storage, and have even thought about beach front hotel, or at least ocean view hotel. There are so many run down hotels along the coast and I love to take a run down property and turn it around. 

Sherwin Williams Flooring. I know you may think of them for paint but they do flooring. I like to use the quality MSI solid core LVP. They actually charge me less for the actual flooring than I can buy it at Home Depot so that cost savings helps offset the cost of the install and their install prices are good. I have installed a bunch myself but they can do it so much faster than I can and of all of the stuff that I do I find this to be the biggest benefit to pay them to install. 

The problem I have with Floor and Decor is that often once they sell out of a specific flooring they don't get it again. Thus if you want to try and use the same flooring in multiple units you can't get that same flooring 2 years in the future. If you aren't worried about that then they have some great prices. 

Also check for the resellers. Those that buy all of the Home Depot returns or when HD clears out their flooring or gets rid of overstock you can often find the flooring at a smoking price. You just may be buying it out of a storage unit. 

Medium Term Rental, typically furnished like a STR but minimum of 30 days. Often 1-3 months. Some common renters are long vacationers, traveling nurses, people who are having work done on their house that they needed to move out for (ie a water leak happened so the place is getting fixed and it will take a couple months to do all the work).

 Yes you need to keep up to date with legal items like for notices, rent increases etc. My response was long enough as it was I didn't want to bring up yet another item. When only managing 1-3 properties, like I suspect most people have, the amount of time spent managing them should be very insignificant. 

All of these people on here telling you to just evict the person. Great for them but they won't be paying the price for that decision, you will. You hired a property manager for a reason so let them keep doing their job. You hired them to collect the rent and you have said that they are doing that. I understand that you are frustrated that it is not all up front like you expected but they are getting it done and that is what matters to your pocket book. I have been managing properties for others and myself for more than 25 years. My guess is that most of the people here have only a few rentals. The more properties you have the more likely you will run into this. It is a numbers game and it sounds like you just got unlucky and got it early. This practice is not uncommon. The goal is to collect the rent and avoid eviction. Working with your tenant will get you a lot further than constantly fighting your tenant. Over the years I have had many tenants that have had to break their payments up into 2 or 3 payments, and they were tenants for 5-10+ years. It is not always a sign that things are going to go south. As long as they get paid by the end of the month they are fine. When it goes beyond the end of the month that is when it can start to become a problem.

What truly is your alternative? Yes you can evict them. What is that going to cost you? Depending on the state it could take you 1 to 2 months for the eviction and then potentially another month to get the property back. Now the tenant is out of the house you will have to fix it up so you are probably talking $1,000 - $5,000 for that, depending on how much needs to be done. You are also talking about another 1-2 months before a tenant moves in. Plus there is a leasing fee. So at a minimum you are probably looking at $3,000-$4,000 expense to you but that number could easily be up to $10,000 depending on your state's eviction proceedings and the condition of the property. To me this is not worth it to get rid of the annoyance of the pm company taking partial payments over the month. This is also why, unlike others, I said that they are doing their job. I think the better pm company saves me the $5-10k and does the extra work that they are doing in collecting the rent in payments and sending out all of the notices. Make no mistake, doing this is extra work for them. From what you said, while they keep late fees, they waive those late fees if the tenant pays the rent in full by the end of the month so they are not making anything on this.

I understand that it can be frustrating seeing this happen. This may sound bad but stop looking at the property financials mid month. Don't worry about it until after the month. There is no reason to be looking at the financials mid month. 

As far as you being worried that the consistent late payments won't look good when you try to sell the property. It sounded like this is a single family rental or condo, but either way just a single unit. Are you planning on selling it any time soon? If you are, is this a specific market where there are a lot of places being sold to investors with tenants in them already? For single family homes the value is going to be based on the house itself. When you go to sell it I have found that most of the time it is best to sell it vacant. There are still a lot more home buyers out there than investors so if you are trying to sell it to just an investor you are going to limit your market and most investors are looking for a deal while many home buyers are just looking to get a home at a fair price and not have to compete against investors. If the property is a multi tenant property then that might have an impact, but even then I doubt it. Report ledgers are monthly and you don't see partial payments on them and most evaluations are looked at that way. 

As far as I know there are not any limits. 

 I am now confused. You are the one that started this whole post asking "Can I personally take that extra finance money tax free into my own name or personal bank account to do with what I please, or does the refinance money have to stay in that Llc company and I cant use it personally." and now you are telling others that are answering the question that they are wrong and that you know the answer. 

FYI @Jay Hurst is correct. Moving money from your LLC to your personal name is not a taxable event. When you file the taxes they look at what income the property/LLC made. Now if a corporation (not LLC, I am talking about Inc.) pays money out to individuals that is income to the individual thus a taxable event. If your LLC is just you or you and your spouse then most likely it is considered a pass thru entity and thus the IRS basically ignores the LLC and it is just considered all you.

First and obviously you need to talk with your tax person about it or potentially lawyer is you think about LLCs the way Jay does. With that said, here are some basics on the way they often work. You need to be keeping good books on your property so that you know where all money has come from and gone. I say this because a lot of people don't keep good books and this can cause lots of problems both with taxes and what Jay is talking about. Typically when you are buying the property you had to start with some money. Unless the LLC already had money from some other venture you did an Owner Contribution to the LLC to give it that money. When your property (LLC) is making money and you want to pull money out of it you do an Owner Draw. So an Owner Contribution is personal money going into the LLC and an Owner Draw is money coming out of the LLC into your personal hands.

Now if your LLC is just you or you and your spouse then they are probably a pass thru entity for tax purposes. So with taxes the contributions and draws don't mean much as it is the net income that will matter.

My guess, and this part I am not as familiar with, is that if you do take out the loan, whether it be in the LLC name or your personal name, you will want to follow some rules to keep safe. Most likely you will want that money to go into your LLC name and then take an Owner Draw to get the money out into your personal name. That way in the books it will show that the loan was to the property even if you had to use your personal name for the bank to give a loan.

Again check with an accountant and lawyer to verify. You don't want to mess with the IRS based on free advise.