All Forum Posts by: David J Saylor III

Hello, 

Myself and two colleagues closed on our first property earlier this month. We hope to close on one or two additional properties this year and eventually scale in 2024 and beyond. We use an LLC, though one of our members purchased our first property individually and will transfer title to the LLC.

We have some threshold questions on the tax and accounting fronts and will also need guidance as a general matter. We would much appreciate any references. 

We hope to keep services affordable starting out and to expand use as warranted by growth.  

Thanks in advance! 

 Thank you!! I am talking about regular ongoing maintenance (not a contractor for full rehabs/major repairs). Let me know if you have any suggestions. 

Hi, I just made a post on this topic separately. I would much appreciate contact info for any of the above, thank you!! 

I am under contract for my first property, with the goal of buying another this year and hopefully scaling in 2024.

I am looking for maintenance referrals for the Indianapolis area. I know you get what you pay for, but leaning towards the cheaper side until I get a few more properties. If anyone has referrals, please let me know! 
 

 This is very helpful, thanks Basit. We will need to put thought into the refinance piece in particular. 

Don't be shocked if we try to recruit your services! 

Thanks Wayne! The language provides the LLC must be "controlled by or majority owned" by the transferee; the transferee is the manager of our manager-managed LLC. Our mortgage broker said that the transferee being manager works and I tend to agree based on the "controlled by" language and my own research on the topic (which is consistent with the advice from our broker). 

That being said, if you have direct experience to the contrary I would much appreciate you letting me know! 

Quote from @Jay Hurst:

Quote from @David J Saylor III:

Myself and two friends formed an LLC to acquire properties. We would like to take advantage of Fannie/Freddie loans, so we plan to have one person purchase individually and transfer title to LLC, which I understand is a straightforward process (simple deed and file with county recorder).

I know this is a common strategy and I would not have any concerns if I were using a wholly-owned LLC. However given there are three members, I want to make sure there are no material impediments (tax or otherwise) with transferring a property owned by one person to an entity owned by three without consideration, documentation outside of a deed, etc.. Given we will need to transfer the property back to the purchasing individual prior to any refinance, this will be relevant beyond just the initial purchase.

Can anyone confirm they have used this strategy for a multi-member entity with success? What should we be looking out for? Do we need to include anything in our operating agreement to address this? FWIW two of us are (junior) corporate attorneys and I'll read "not legal advice" into any and all responses.  

Thanks in advance. 

 @David J Saylor III   Here is the direct verbiage from Fannie Mae on the transfer.  You need to make sure you follow this:

https://servicing-guide.fannie...

 Thanks Jay. I am familiar with this language and it will be very easy to satisfy these Fannie/Freddie requirements. 

My question is whether there are any concerns, tax or otherwise, with transferring a property that is 100% owned by one person to an entity owned by three people for no consideration, and no documentation outside of a simple deed. Generally when one person transfer money or property to another person/entity there are tax consequences. 

Have you seen multi-member LLCs/partnerships use this strategy without issue? If so, I'm sure it's fine. 

Myself and two friends formed an LLC to acquire properties. We would like to take advantage of Fannie/Freddie loans, so we plan to have one person purchase individually and transfer title to LLC, which I understand is a straightforward process (simple deed and file with county recorder).

I know this is a common strategy and I would not have any concerns if I were using a wholly-owned LLC. However given there are three members, I want to make sure there are no material impediments (tax or otherwise) with transferring a property owned by one person to an entity owned by three without consideration, documentation outside of a deed, etc.. Given we will need to transfer the property back to the purchasing individual prior to any refinance, this will be relevant beyond just the initial purchase.

Can anyone confirm they have used this strategy for a multi-member entity with success? What should we be looking out for? Do we need to include anything in our operating agreement to address this? FWIW two of us are (junior) corporate attorneys and I'll read "not legal advice" into any and all responses.  

Thanks in advance.