All Forum Posts by: Christopher Broussard

@Nicholas Aiola, Thank you so much for answering my questions.

@Nicholas Aiola, I have been compiling a list of questions, and would like to throw them at you, if you don't mind.

I bought my first investment property in May of 2017. This was a flip, and I paid $55,500 for it, planning to sell it for $160,000 after $44,000 in repairs. A friend of mine entered into a silent partner agreement with me and invested $99,000. The house is not finished, and we anticipate putting it on the market in mid-April. Do I need to report this money as income on my taxes?

I did not issue 1099 forms to my contractors and did not file form 1096 with the IRS. How much trouble am I in, and how do I get out of it?

When I first started the process of looking for properties, I formed an LLC (in 2011) that has sat dormant ever since. I've never filed a tax return because there's never been any business conducted under that name. It's a member managed LLC. Am I in trouble?

While we're on that subject, the LLC that bought the house last year was established in 2015. I've filed no tax returns on that one either. It's also member managed. Am I in trouble?

Finally, when the property sells, and I divide the profit and pay off my investor, how will I account for that?

Thank you for any help you can give me.

Very interested in this. Is this really a thing, or was it only wishful thinking?

@Jeff R., South City, off Grand.

Thomas, we did, but I'm afraid I may have allowed for too low. We've already learned that the wiring is knob and tube and will need to be replaced, which we hadn't planned for, so that's gonna tear up the budget a little. We're not too worried about it, though. Even if we walk away with only a couple of grand, we're learning so much that we will carry into future projects.

Thank you, Andrew. We did budget for the holding costs in our rehab budget, but the closing costs/realtor fees will come out of that gross profit number.

Not really new, I've been lurking on the forums, asking a question here and there, and listening to the podcast for a few years now. In January, my wife and I finally decided to make it happen this year. 

Last Friday we closed on our first property, a 3 bedroom, 1 bath, two story brick home in St Louis, with a detached two car garage. Purchase price was $55,500, and we've budgeted $40,000 for rehab, which will include a new kitchen and bath, an additional 1/2 bath on the first floor, and opening the space up a little. Comps in the area are around $140,000, so our anticipated gross profit is around $45,000. 

I'm nervous, but excited. For years, when I overanalyzed every deal and couldn't pull the trigger, it was because I thought we couldn't do it (the actual rehab). Now, I've already noticed a shift in my perspective and attitude. I am fully confident in our abilities to do it. I'm still a little concerned about the budget, but overall, I feel good. 

Wish us luck.

@Account Closed, thank you for your reply. The property is actually in St. Louis. After spending the last few hours looking at all the options, I think a simple silent partner agreement would work, don't you? I considered setting up an LLC for just this property (or whatever property we end up working together on), but since he's putting up the money, I'm confused about how to manage the disbursements at the end of the deal. Could he easily secure a lien on the property until it's sold? Thank you again for your help.

So, I'll try to be brief, but include as much information as needed to give an informed reply.

I've worked with a guy for seven years who has a lot of money in savings and stocks. He has, over the years, discussed real estate investment with me. This is a guy who reads the books but will never invest on his own, because he's painfully shy and awkward. Several years ago, he asked if my wife and I would like to partner with him. He'd provide the money, we'd do the work, we'd split the profit 50/50. At that time, we put in hours and hours of legwork, found a property, and he flaked out, so we moved on it with a family member and made $100,000 in equity at closing.

Recently, he's been asking me to do it again, so we started looking, found a great deal and presented it to him. He said he was willing to do it, but wanted something legal in writing before we proceeded. This morning I called a lawyer, and the lawyer told me that since I live in St Louis and my investor lives across the river in Illinois, that this would be an SEC regulated thing. 

I've been reading BiggerPockets and listening to the podcast for years and I hear about people working with investors across state lines all the time. 

What would be the best way to structure this? A personal loan with a balloon, and then we just split the profits with him? A joint venture agreement between him and our company? Please give me your 2 cents.

I understand that you are not an attorney and will not accept your advice as legal advice. (Unless, of course, you are an attorney)

Thanks for your help.

I am thinking of getting a real estate license for my investment business, and have heard that some brokers will take a monthly payment to hold your license. How would I go about finding one willing to do this?