All Forum Posts by: Brian Kraft

Hello all,

My wife and I are getting a divorce, but want to maintain our financial partnership and I'm trying to navigate the best path forward for that. We co-own a primary residence and several rentals, which we plan to hold. She owns her own S-Corp business and I don't have a regular job, aside from a little consulting here and there, managing our local properties/managing PMs non-locally, working on real estate investing growth, and covering family-duty slack (2 kids) when my wife is extra busy.  

Our tax professional suggested we form a partnership entity and bring our properties into it, then get the divorce, and we operate the new business in that way. Of course, there's all sorts of considerations about how the money flows and getting me paid through it, etc. 

My question to you is -- does a partnership like this sound like the right path forward financially and "navigationally?" I'd love any insights into pros and cons, alternative options, etc. One of my concerns is the "navigation," in terms of maneuverability for refis, purchases, etc. -- for example, I understand it's way more difficult to refi a property under an LLC vs individual ownership. The tax pro suggests the properties don't need have their title's under LLC, but rather we're bringing them in as assets, which still have us as individuals on title. Also, in terms of lending -- just myself as an individual, I don't have the income to be an eligible borrower, whereas my wife's S-corp business is attractive to lenders. I'm not sure about the lending process in this proposed scenario.

We will further our discussions with the tax pro, as well as likely hiring a business attorney to ensure everything is nice and tight, but in the preliminary stages any (non-legal) advice would be appreciated! Thanks. 

It worked out fine. His customer service was a little rough around the edges, but with me keeping on top of it a bit, it all came together in the end just fine. 

Odd question maybe, but for those that market your rentals on Zillow -- have you encountered this oddity?

For an incredibly high number of people that contact me through Zillow to view a rental property I'm advertising, their contact name starts one way, then in a subsequent correspondence, their name changes. For example, Michael contacts me, I respond, then the conversation continues with Keith. This kind of thing keeps happening and I'm really confused as to why. I've asked a couple of these folks, but they haven't helped me understand what's happening. 

Should I be concerned this is a sign of some kind of scam? I'm also wondering if it's something that Zillow is doing. Especially now that I'm paying for using their services, are they (clumsily) creating fake contacts to up their perceived value? Or hopefully it's a more mundane thing. I don't know. Anyone? 

Awesome, Dave! Super helpful! 

In the end, I'd certainly get qualified legal/tax advice, but I'm looking for some more initial information here. If my wife and I sell an investment property (held in our names) and do a 1031 Tenants in Common exchange together with my mom, what are our options and restrictions? My wife and I certainly wouldn't live in it, but would my mom have the option of living in it as her primary residence? Would my wife and I have to collect rent? After a period of time (minimum 2 years?), would my mom/or another TIC owner be able to purchase our portion? If my mom did, I imagine we wouldn't be able to do another 1031, because it's non-arm's length; while an arm's length investor would allow us to 1031? If it was eventually converted to a partnership, would that give us additional options? Or could that be considered a step transaction?

I'd appreciate any info around this type of scenario -- thanks!

I'll check out Merchants. 

Yeah, I'll also look into moving debt -- I only have around $75k left to go on one. I'll think about it and maybe talk with some PML family/friends about that specifically. So, yes -- I've used/am using some private money, but I have barely done the real work of reaching out to my bigger circle. I'm also on that asap.

Is a cashout refi an easier path around lower DTI?

 Thanks, that's helpful. Would you mind PMing me the rest of the letters (not following). 

I would think there are local Denver folks who know some of those lenders. Anyone? I wonder if there's a better forum for me to ask in. 

 Thanks, Stephanie. Any advice on how to track those lenders down? 

Hi,

I've got around $1.5 million in equity in a few properties around Denver, Colorado. Without selling, I want to tap into some of it for investing purposes, but I've got the good old favorite DTI hurdle that's preventing me from more easily accessing it from a conventional lender (I checked with a credit union already). My wife and I are in a transition period -- one in which I retired my decade-long business, became a stay-at-home dad for our 2nd child, and am now doing RE investing fulltime (managing my local properties and making good progress on remote-investing in other parts of the country).

What are some ideas for tapping into that -- which would include reasonable terms (not interested in hard money, e.g.)? Please share thoughts here or feel free to contact me with any leads for local lenders. Thanks!

Thanks for the input!

I suppose it would be helpful if I knew what size we're talking about if we say "small town," "mid-size," etc. For example, I've been eyeing some places that run between 50k and 150k population. What size is that considered?

Regarding financing -- is the lending on such a micro level? I was under the impression lenders worked in a state, providing the same terms, regardless of part of that state. That's not right, I guess? 

So how about pros to smaller areas? I imagine there's less competition for deals in smaller areas and that can be a good thing. What else?