All Forum Posts by: Ethan Cole

Thanks for the welcome Kevin Kachin and Carolina E.

Joshua Dorkin Thanks for the great welcome. This definitely is a well run forum with a great member base

Jon Klaus Being in the area my whole life, I never really knew the etymology of the term, I just accepted and used it. Like you I'd guess it traces to some buggers from the old country.

*********** and Mehran Kamari No worries on the fire. My best friend (and business partner on the building) woke up to the fire breaching one of his windows and entering our building. He got out with his dog as the firefighters were coming up the stairs. He got out ok. As for everything else its just property, meh. As for the city, I've been somewhat impressed with the process so far. I guess there is still time though. I have not needed to use the eviction process yet.

Brandon Turner Thanks. Photo is coming.

Wendell De Guzman My goal is to obtain freedom in the absence of a job. Once this fire nonsense is over I may be looking for a wholesaler.

Doug Perry I've just started looking and I'll likely be sitting in at both to see what they have to offer.

Steven Hamilton II I actually work in Round Lake, so I'm not too far from you.

Hi all,
Should of done this a long time ago. Too much reading and too little participation on my part.

My name is Ethan and I'm located in the Chicago region. I own a 4-flat in Humboldt Park and I've been renovating and running the show on my own. I've educated myself through hard experience so I'd be able to competently converse with advisors when the time comes (General contractor, CPA, lawyer, financing, etc...). I've even been lucky enough to have a major fire in the building so I'm getting comfortable with insurance claims, and the city permit and repair processes (gotta value that hard knocks education... ha!).

Recently I've been approached by some family, friends, coworkers and even my general contractor about getting into real estate. As such I'm starting to research partnerships, equity structuring and operations to accomplish 'my investors' goals.

Always interested in talking to, and working with good people. Best of luck to you all you BPers.

**INSIDER TIP: Invest in Humboldt Park- its the new Logan Square, just with a few more speed holes on the brick!**

Thought about my last post last night, and you would not want one entity to own the other. It would be at risk for transferring liability.

Say the original building was under my own personal entity and I wanted to borrow against the improved value-

I borrow the cash for liquidity and then purchase the 2nd building afterwards. The 2nd building has its own separate entity.

Would the 1st entity own the 2nd to account for the transfer in cash? Therefore the 2nd is an asset of 1st and could have deductible items like the original loan interest. Otherwise it seems to me that it would not be a business related transfer.

This would not work with my partnership scenario because my partner would therefore own half of my "income" entity. But I am curious as to how this would work were I to be doing this on my own.

Thank you Chris and Ebere,

Ebere,
I am not all that knowledgeable with LLCs. Is taking out a distribution equivalent to a percentage change in ownership, as though my 50% stake in a building would become 25%(or however much agreed upon)? And therefore I should receive 25% of the profits of the partnership rather than 50%?

Also, though you did not directly state it, a guaranteed payment would be taxable. Is that correct?

This is hypothetical:
I have joined a partnership with one other individual to purchase a multi-unit building. For simplicity of argument, I have performed 100% of the maintenance and improvement of the property. My partner has performed 0%, and we both agree to that work distribution. After improvement, the property is now worth $100k more. Could I borrow against the new value of the building to obtain cash, and then use that cash to buy a building for myself? This would be using the equity from the partnership LLC to buy a property for my personal LLC. Though I would not think the interest on the $100k loan would be deductible to the partnership(not for the business use), would there be any tax to be paid for this transfer between LLCs? Is this to filed under IRS M-1?

It seems to me that some sort of tax would have to be paid, otherwise this would appear to be $100k in income personally. However, this is borrowed money which isn't really income. You don't pay taxes when you take out a mortgage (% of the mortgage).