All Forum Posts by: Dennis Tierney

Please double check my thinking to be sure I've got it right. I'm setting up a syndicate for apartment purchase. The amount needed for the 25% equity and closing costs will be $550,000. There will be $50,000 needed to cover operating expenses till it is stabilized. I plan on charging a $60,000 fee for the syndicator and will use $50,000 of it as my equity buy in. The units are $10,000/unit.
$550,000+50,000+60,000=$660,000 equity raise but when the 5 syndication units are added that equals 71 total units that will be divided into the income to determine the quarterly distribution. Am I correct?

Thanks

I will second what Jon said. I have a SD IRA I set up with Guidant and have purchased 2 apartments with it and am investing in a third in a syndicate I am setting up with other investors. All of the profits and expenses must come into and out of the LLC bank account. One other caveat is that you can get a loan for property purchases,but, it must be nonrecourse as your credit can't be used and nonrecourse loans are more difficult to come by these days. You can sell the property and pay no capital gains if the sale is 13 months after all you pay off all of the loan.

A commercial loan is unlikely these days with only 10% down. 25% is more realistic and will more easily cash flow.

I am in Omaha so have no personal experience with them, other than listening to their radio replays on the internet. They seem to work with both single family and multifamily, but, sound like they know what they're doing.

Bill:
Since you are in Dallas you might want to check out the Unlimited Lifestyles group. They are in multiple locations in Texas and promote themselves as mentors. I agree with the others that mulitfamily is the way to go and I started with multifamily so am proof you don't have to start with single family.

Linda:
I'm new to the board and don't know how to private post. I can refer you to a lwayer in Des Moines who can do the co-op conversion for you for multifamily. You have to remember the county will recognize the residential vs. commercial status on the 1st of January of each year so you'll have to get the legal work done before the end of the year and then request the new designation from the county in the first few days of 2012. Unfortunatley Iowa pays the property taxes 18 months in arrears so you won't recognize the profit gain until the 2012 taxes are due.

I have an apartment in Council Bluffs and found out there is a loophole in the Iowa law that allows you to declare the mulifamily property as either a condo or co-op. I'd suggest going co-op as the building codes are less strict than condo. I did this with my apartment and had it recognized as residential by the county and dropped the property tax in half. The reduced tax paid for the leagal expense in less than a year and dramatically increased the profit. Branstad has introduced a bill that will drop commercial property taxes over 5-6 yrs but only by 40%. Going co-op drops it by 55%.

I'd suggest you hook up with several good commercial brokers in your area. I've purchased 3 apartments and have 2 in the works and all have been "pocket listings" the brokers brought to me and never were advertized. That certainly decreases the competition for the property.