All Forum Posts by: David Denney

Need some advice on the best way to structure this deal that's fair and beneficial for a 3 person LLC/partnership agreement. My father and I have formed an LLC with another friend to start buying some rentals. We found a cheap rental rehab home and and I'm trying to come up the best way to structure the operating agreement.

some things to things to be aware of;

My father and I have found the deal and will be completing 90% of the rehab.

The friend has lots of capital and is able to provide large sums of cash if needed. His goal is to diversity his money as he's been very successful in another business. He will be totally hands off and only role is to provide money.

My goal is cash flow and another investment(same as my father).

I have limited free cash on a tight budget but have access to a heloc loan for expenses if needed. My role will be running day to day operations/ property management/ taking calls and running all activities after the rehab.

Our initial thoughts are 1/3 equity.

Quick Rental details: we purchased the home for 30k. It will need approximately 20k in repairs and have a ARV of 80 to 120k. Should rent $800 to $950.

The friend purposed the following. 

He pays the 30k for the home cash. My father and I complete the repairs and fund the repairs. We would be paid an hourly rate and whatever we  spend/accumulate; the friend would get the cash rent until the differance is paid. 

Any opinions on this structure? 

If My father and I use the heloc to fund the repairs; I'm concerned to have payments on a heloc as well as giving up all the cash flow for a period of time. Plus- at that point- we would all have similar cash in the deal with us doing all the work/ management. 

Any thoughts on a better/ more fair to structure this? Thanks guys!

Hello, quick background- 

I have been buying and flipping raw farmland/ recreational farms for about 5 years. I'm on My 3rd soon to be 4th farm. I have grown my equity very quickly. Problem:Currently I own 1/3 equity along with my father 1/3 and our partner1/3. We do not have an LLC. We have been buying as tenants in common. My plan has been to use 1031 and build my equity until I own a farm w no morgage and it cash flows. The issue is that I'm giving up 1/3 equity to a partner and would like to only have me and my father own the final farm. I find the deals and so 90 % of the flip. We split expenses 1/3. Seems like I'm giving up a lot. Is there a way to let the partner cash out in between Farms and continue to 1031 to the next farm??? I've been. Told that to complete a 1031, the title cannot change from one farm to the next. So loosing a last name of the partner in the title would not allow me to 1031 I'f the partner cashes out; correct? This is also the reason I haven't converted to an LLC- 1031. Currently farm will be worth approximately 1 million at sale. Need some help if anyone has advice. Thank you!

Here's the gift of equity loan that one lender is quoting me- she rolled closing costs In and had the loan amount at 85k. My payments however are at 900 bucks! That kills cash flow on this deal. I'll post her numbers. That's way too high.

Yes they would do an LLC but I would then be splitting the profit/cash flow. My father really just wants his money back out to buy another rental or project. One local lender talked about doing a gift of equity loan. Thoughts on that?

Need advice on a single family rental. My parents bought the hime for 57k. My father and I completed a full remodel. He now has 70k in it. I helped him get it rented- 1200/ month.

My parents have decided to offer the house to my wife and I for 80k. The ARV is Likley 110k to 145k. I'm guess 130k.

Issue: we have no cash to put down as money has been tight. 

I called a credit union and they said I could do a gift of equity loan but still need 5k for savings or a heloc. Both would have My monthly payment between 750 and 900. Any thoughts on the best route to go with little or no money down? My parents are flexible and will work with us. Would love to hear thoughts on loan ideas- thanks folks!

Hello, long story short, myself, my father and a friend started buying and selling raw land. Mainly farms. We are on our third farm in two years and I have a niche for finding and flipping these things. The set up now is tenants in common 1/3rd equity. All bills like taxes, seed, and items needed are split in 3rds. I find the farms and make our money at the buy. Then I do all the labor. The other two are more silent investors. Income gets split e ways. We are doing a 1031 and want to use a tenants in common agreement until we can get the LLC. I Feel that it's only fair that I receive a percentage of equity or kick back for finding the farms as well as the endless hours I put into them. How could this be structured. Would I gain more equity or would the partners pay a fee bases on our agreement. We are all putting down similar amounts. I want to construct an agreement that keeps the money distribution fair. We also split the annual payment and any income on the farm, ANY HELP OR IDEAS HOW TO WORD THIS WOULD BE AMAZING. Kind of stuck on this but know we need an agreement.

John, do you guys do this with your primary home? Also, what insurance would one need if your doing something similar? Lastly, do you have guests sign a waiver to use the kayaks in event someone gets hurt and blaims your equipment? Thanks so much for the response!

Ok some quick background info. I am married with two kids and we own a two storey 2780 sq ft home on a lake in a rural area(not many other lake homes or STR HOMES in this area. We have a beautiful view leading down to state owned land/ water. We live 5 miles from the rural town of Pella IA. It's a tourist attraction for it's size (only 15000). We are also 38 miles from Des moines. Our thought was attempting to use Airbnb or other STR sites to book some weekends for tourists or Des Moines folks looking for a get away weekend. We have a farm we bought 45 min out we could stay in or during the summer months thought about staying in one of the many camp grounds that exsist all around the lake we live on.

Other thoughts we had: kayak paddle board rentals? 

Insurance obviously is going to be a big deal here and it's unclear what AirBNB covers of someone were to get hurt.. Seems like we could have them sign a waiver, way to easy I know!

To make this easier, our thought is to move all personal belongings upstairs and install a door to lock that area off. The downstairs would be two bed, one bath, kitchen and laundry. Thought we could have a fridge in garage to move all food out before a booking. 

Looking for advise from anyone who's done this for a little extra income. Especially while staying somewhere near by?

Also,I know several articles suggest 14 days can be done without being taxed then after that it seems to get complicated with taxes. How big of deal is this to anyone who has experience?

Main thing that comes to mind is trying to use our view as an asset and make a small amoint of money while doing so. Any advice would be appreciated! Thanks guys:)