All Forum Posts by: Bryan L.

Thanks for all of the feedback.  

I will of course be talking to my CPA before doing this but I always like to do some research before talking to him to make sure I am not missing anything. 

My other company is an S-Corp (not C-Corp) that isn't associated with Real-estate at all. 

I am considering transferring funds between one profitable S Corp into an LLC for the purpose of purchasing a property. Is it better to transfer the money to my personal account as a share holder distribution and then into the LLC? Should I transfer directly from company to company? Are there tax or legal benefits to either method?

Jerry, 

My current company is an S Corp and I already have to worry keeping everything separate in that business. It is a good point that just starting an LLC and putting a property isn't nearly good enough. I will be keeping all expenses and profits associated with the property under the LLC. I have an accountant that does my books and files all returns (business and personal). The main thing that someone starting an LLC should think about is that as a business you aren't allowed to use the business as your personal account. You have to either pay yourself a salary or take shareholder distributions with any profits. If you make personal purchases with the business account you run the risk of losing the insulation that a business entity provides. There is a lot more to it but that is why I have a good accountant.

Thanks Justin, 

That is a scary proposition from the lender. Right now I have a beach house and my primary residence. I am going to be working on moving the Beach house into an LLC starting next year. I will definitely be working closely with the lender. It is a pretty important thing to get done on my end because I have a lot of equity in both of them. I didn't want to take the chance of a lawsuit from beach rentals being able to access my primary residence equity.

I have the same concern for the rentals I am hoping to purchase next year. Once I get the beach house converted to an LLC I will do a separate post with my experience and how it all went. I am sure there are a ton of people that are in the same situation as me and want to know how to do this as cleanly as possible.

Thanks Everyone, 

I am kind of shocked at the great feedback I have received in the matter of a few hours.  

BP is definitely my new internet home. 

Thanks James, 

Sounds like a terminology change is in order for me.  I am just looking to buy distressed properties for myself directly from motivated sellers. 

I know this is a completed loaded question but here it is. 

On the converse side of buying a property under an LLC. How difficult is to get a mortgage on a property that you own outright (assuming your current credit and debt to income ratio is good) and then convert it into an LLC after the mortgage is in place?

Thanks Wayne, 

I thought that was the case but talked with a friend of mine in the area who does property management and investing. He was telling me that he doesn't have any problems getting financing when properties are under an LLC because he is the majority shareholder in the LLC. He says that his local banks look at the loan the same as if he owned it under his personal name.

Simon, 

Maybe I need to change my terminology.  Technically I want to wholesale for myself being the end buyer. 

I am an IT professional just getting into Real-estate investing.  When I need to setup and maintain cheap custom sites I always use Jimdo.  Like with any of WYSIWIG site builder you have to put the time in to build the site but this is the best one that I have found.  You can build a very professional site and have full flexibility into what you want it to do.  It is almost the most intuitive web site builder I have seen.  I have about 10 sites on Jimdo that are completely maintained by non technical customers at businesses.

Hello, 

I am planning to purchase a few houses in my area by wholesaling them myself, rehab (with contractors) and then renting them out (through a property management company).  The main reason I am looking at wholesaling is that the market in my area is really strong and this is the only way (other than a foreclosure auction) I can see getting properties at the price point I need to insure some cash flow. 

I am going to be starting a direct mailer campaign next month to try to purchase my first property.  I am planning to send out 300-500 mailers in the hopes of closing 1-2 deals next.

I have a good handle my list, what the mailer is going to say and how they are going to be sent. I have a basic purchase offer contract and am comfortable with estimating offer pricing on my own.  

Over the next month I am going to be trying to form a relationship with a good title company that is familiar with dealing with investors. 

Can I finalize a deal with myself and just a title company?  Do I also need to have a real estate attorney involved?  

I have a good inspector I am planning to use.  Is it standard practice to do an inspection on wholesale deals? 

The properties will be in the name of an LLC. I am going to use a Heloc to purchase and rehab the properties. I won't jump into any deals that aren't going to guarantee at least 20% equity after rehab. How much trouble do you think I am going to have trying to get a 30 year mortgage on a property after it is rehabbed and rented?

Hello all, 

This is my very first post on Bigger Pockets.  My intention with this post is to get pointers and feedback on my investment plan. I am a self employed small business owner.  I generally have free-time to arrange my schedule how ever I want Monday through Friday.  I also have a fluctuating amount of cash each year from business profits.  I have a 150k Heloc at 5.75 percent.  I have the ability to apply for the same level Line of credit on my business but am going to do that yet. 

Real Estate experience

I am by no means a realtor but I have been very involved in purchasing 3 personal properties and 1 beach property. On one of the properties I essentially did everything other than listing the property in MLS and the purchase agreement/title. Watching Real Estate has always been a hobby and I am very comfortable with estimating home values in my area.

3 of these houses I completely remodeled.  Most of the work was contracted out but I did a fair amount of renovating and a summer of construction my self when I was younger.

The Plan

My goal is to purchase 1-2 50-100k properties per year over the next 10 years and rent them out.  The end goal is to have a total cash flow of 150k/year in 10 years.  

Purchasing Properties

For the first few properties I am planning to wholesale or purchase foreclosures.  The main reason for this is that I am going to be using borrowed money from the Heloc and I want to make absolutely sure the rent will quickly pay down the Heloc.  To do this I need to get these properties at the lowest possible purchase price.  

Wholesaling

I am planning to do a direct mailer campaign and be very selective with the first few purchases.  I am in the process of looking for a good title company in the area.  In my area I have built an initial list of about 20k potential property owners (from an online list company) and will start off targeting a 1k list.  I am not sure if i will send multiple mailers to the first list or build a new one if I don't get enough response calls. I have a complete plan behind wholesaling which is too detailed to put in this post. 

Rehab

As I am looking for mainly distressed houses I plan to inexpensively rehab the properties.  I have contacts in my area for bathroom, kitchen and other remodeling at a good price point. 

Funding

I am going to start with 150k Heloc and shoot for 2 properties and rehab.  That is going to be a tall task in my location as it is very hard to find any single family homes under 100K.  I can use my personal funds for the rehab if need be.  I can usually allocate about 25k a year if needed. 

Property Management

I am planning to use a local property management company in the area.  I have talked to 3 different companies and it seems they are all running around 6-10 percent.   

Marketing

I am going to focus on direct mail but I will also create a small website about the company that will be linked to all mailers.  

The Company

I am going to create an LLC. I will be a 51% shareholder and my wife will 49%. To start with we will use this LLC for the first two properties. I may create another LLC to put the third house under.

This is all just an overview but I am hoping to just start a conversation and keep track of what I am doing if it can help other newbies like me. 

Thanks in advance for any feedback or criticism,