All Forum Posts by: William Bronchick

I am quite familiar with the IRS rule on prohibited transactions, and there's no rule that prevents co-investing with a disqualified party.  There are some guidelines you have to follow, but there's no blanket rule against partnering with your own account.

What rule says you can't can't co-invest in an equity deal with your IRA?

You can absolutely "co-invest" with a disqualified party.  Make sure that your distributions of income match your contributions.  Meaning, if you are 60/40 on capital contributions, you must take profits 60/40, not 50/50.

I can't comment much on the details of this case or my lawyers will have a cow, but suffice it to say that I deny every allegation except the spelling of my name.  Those of you who know me know that I'd never do something as stupid, selfish or sloppy in my real estate business as they have claimed. Our state securities commission is populated by some very ignorant people who have chosen to regulate real estate transactions which they know very little about. I will report back when I win the case.

Here's your attorney post...

The Xarin v. Gamboa case was based on language found in nearly EVERY state statute that defines "brokerage", ie, the words "For Another".  Thus the same case and logic can be applied accordingly. Simply assigning a contract is not brokering because you are not acting "for another", you are acting for yourself, selling what is yours.  The horror stories you hear around the grapevine almost universally have a "catch" they are not revealing (eg, the investor either said or did something improper in the transaction that caught the eye of the state regulators). 

We literally comply with the law and name the County Public Trustee as escrow agent in the contract. However, the buyer does NOT actually make payments to the PT if there's an escrow in the underlying loan. The buyer makes payments for taxes to the seller, who makes payments on his loan to the lender, who then pays the taxes. I've spoken to almost every PT in the Denver, Boulder, and Colorado Springs metro areas and none of them want to collect the taxes. They agree with me that the statute did not envision a wrap, and they are fine with it. You do have to file the notices with the Treasurer and Assessor.

As for the penalty, it does not happen. I was in court with one person who wanted to cancel his contract because my client didn't know about the statute. The judge said, "Fine you can cancel the contract, but you don't get to live there for free". Then he allowed my client to counterclaim for reasonable rental value of the property, which ended up being the same as the payments the buyer had made on the contract. It was a wash.

What you described above sounds and smells and lot like a net listing agreement, which could get you into hot water with the state commission if a realtor complains.

Look in the legal notices section of your paper - you are looking for "Notice to Creditors" which gives the name and address of the personal administrator of the estate.

Before you take any advice from someone in real estate, ask them how many deals that deal LAST YEAR, not 20 years ago. I did 12. JTR, uh... none.

I am not a big fan as you can tell because I believe what's he doing is very self-serving in that he does not give away or share anything for free, but instead bashes others to get you caught in the search engines so he can SELL you info. He won't participate on any public forum, which shows that he's afraid or selfish.

While he makes some very good points about SOME bad people, about 1/2 of what he claims to be the truth is really his twisted view of the world.

When he says, "this doesn't work in the real world" when in fact we know from experience it does, it only ticks those of us with experience off and discourages people who are newbies from learning new ideas.

The only reason we are talking about him is because his website hits high in the rankings, mostly because he's been doing it (the website) so long.

The FLP is more of an estate planning device used in conjunction with LLCs and corporations.

While every situation and every client is different, here's how it might look:

Hold your rentals in multiple LLCs, all of which are owned by a master FLP.

The LLCs give liability protection while the FLP is an asset protection/estate planning tool.

I think FLPs are starting to fade out as LLCs become more popular. The FLLC (Family LLC) is starting to replace the FLP. They are sort of the same thing, but the LLC offers more flexibility.

In some states (TX, CA), the franchise tax is lower on FLPs so they are still common.

And, by the way, don't rule out an S corporation for your flipping activity.