All Forum Posts by: Christian Carson

Rules of thumb are definitely variable across the country. It used to be that people followed the 2% rule, and then the federal government started printing money, and now it's the 1% rule. 

In my Cleveland rental neighborhoods, I will pay no more than 60 times the monthly gross rent and I target a multiple of 40. You'll also have to be aware of the typical expenses in your area like taxes, water and sewer, and rental registration fees. 

My favorite pastime is buying wrecks, petitioning the county to revalue the taxes down to the purchase price, then totally renovating them and enjoying a few years of unreasonably low taxes (I pay $100/year on one property that makes $725/mo rent!)

There is no annual fee to the state of Ohio for an LLC, but if you have a multi-member LLC, as is recommended, you will need to file a tax return regardless of whether there were profits. Some people skip this step with an inactive LLC and end up getting bitten with fines for failure to file returns with the IRS.

Welcome to the forum, Mike!

*ADVERTISING MATERIAL*

Estate planning is an act of love and prudence. Join us for a workshop discussing the specific strategies you should be using to protect your wealth from creditors, the courts, family discord and the IRS. Together we'll explore the pitfalls of not planning and highlight some of the most popular strategies to make sure your hard-earned wealth stays in the family.

Carson Law Firm and Christian Carson, attorney, cordially invite you to attend HOW TO SAFEGUARD YOUR ESTATE, a free informational seminar at the offices of CARSON LAW FIRM LLC.

Topics covered include:

• Take control of your assets now
• Make sure the right people are in charge if you become disabled
• Avoid income tax
• Keep your assets in the family
• Protect your assets from creditors
• Avoid probate costs
• SPECIAL FOCUS on issues for real estate investors!

Light food & refreshments will be served.

Cost: FREE
Seminar attendees will receive a DISCOUNT on estate planning services.
Date: Tuesday, December 1, 2015 at 5:30 PM

Location: Carson Law Firm LLC
12434 Cedar Road Suite 11
Cleveland Heights, OH 44106
Click HERE for directions.

Please RSVP as space is limited!

Click here to register, or

Call 888-403-1259, or

Email to [email protected]

We are estate planning attorneys and will be focusing only on educating you on the types of plans useful to you. We do not sell financial management services or life insurance. We regret we cannot discuss legal issues with attendees at the seminar. If you have a specific legal issue, please make an appointment to speak with an attorney.

*ADVERTISING MATERIAL*

@Nicholas Patrick, welcome to the forum. As for wholesaling in Ohio, I've written a few blog posts about it including this one. One of our REIA members, also an attorney, went down to the state capital to grill a few state attorneys about how the government views wholesaling. He videotaped the whole thing, and it's certainly worth watching. You'll find a lot of loud people on this forum who will defend the practice with religious fervor, so be careful and understand the risks. In short, don't make your buyer or seller upset or feel remorse.

Welcome! 

1. I just reposted an explanation about how using a quitclaim deed might void your title insurance.

2. The Garn-St. Germain Act preempts the due-on-sale clause if "a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property" occurs. This means that whoever the borrower is, not the borrower's LLC, must remain "a" beneficiary (i.e., not the only one). There's zero case law on this one, probably because it's absurd to foreclose for this reason alone in this climate, but there have been reports of people getting nasty letters from their banks telling them to undo their conveyances or face default.

3. Careful using a Series LLC if your state does not have them available. Here's a more detailed explanation. For example, since Ohio has no series LLC statute, as creditor's attorney I'm making a strong argument that Ohio does not recognize such an entity and that it's against this state's public policy to allow debtors to escape liability like this. We also don't know if bankruptcy court will respect these animals. Similar arguments have been made successfully against out-of-state domestic asset protection trusts in the past. 

3. You might wish to use an irrevocable trust to hold your property with an LLC as beneficiary, as has been done before. Consult an attorney about this one as trust and estates law is tricky.

AMIG writes builder's risk policies in Ohio. They do actual value. Typically you'll want to insure for the after-repair value and they'll usually ask you for it. I think my $25k policy cost $175/quarter. Vandalism is not covered.

 Ohio markets are not as subject to the boom-and-bust real estate cycle as the coastal markets. Take a look at the Case-Shiller 20-city composite index compared to the Cleveland index and San Diego added for good measure:

Upside is limited, but downside is also. Most neighborhoods are stable, if boring. And people generally pay their rent, go to work, and repeat. 

Are you prepared to take the stand and testify that (a) you intended to take title to the property which you agreed to purchase, (b) you did not intend to use that contract as a tool for facilitating a sale of real estate of another with the intent of receiving a commission or fee, (c) your intent in dealing with the seller was not to facilitate the sale of his real estate to another, (d) your intent with dealing with the buyer was not to facilitate the sale of the real estate of another to the buyer, (e) that the sale of real estate would have occurred regardless of your contract assignment, (f) that you performed your obligations pursuant to the real estate contract before you assigned it, creating ascertainable rights of ownership, (g) that you did not receive a commission or fee for assigning that contract, (h) that the subject matter of the contract was not real estate, (i) that the assignment of your purchase contract did not facilitate a sale of real estate you did not own for a fee that you collected? 

If you can testify to confirm these facts, you're perjurer. If you can't, prepare for the consequences. 

Your analogy is inaccurate because the state does not require you to obtain a license before crossing the street. 

In the past I offered an analogy of my own: I can either sell you $1mm of heroin, or a briefcase that happens to contain $1mm of heroin for 1.1mm. The effect is the same because the subject matter of the transaction is an illegal controlled substance. It would be the same as assigning a contract to purchase a briefcase full of IBM stock certificates without a securities license.  

 I'm not interested in trading insults with you.