All Forum Posts by: Donald S.

Hi everyone. So you know how on all the podcasts etc they say "I'm not an attorney and make sure you speak with an attorney first...." well I did just that. I spoke with 2 attorneys in the past 2 days and they completely contradicted each other.

first I spoke with @Scott Smith and his suggestion was (without going into great detail) use a land trust to hold title, a series LLC with child series a as the beneficiary of the land trust, and then have a separate PM LLC for managing the property.

then I spoke with a real estate attorney in St. Louis, my hometown. His suggestion was a series LLC, but just transfer the title into child series A and forgo any trusts or separate PM LLC.

His reasoning once I told him Scott's suggestion was the land trust doesn't have any real anonymity, he said he will (as a plaintiff's lawyer) find out who the beneficiary is, and if I am the trustee and grantor of the trust then he can still come after my personal assets as the grantor.

He also said wrapping trusts and LLCs where my partner and I at the core are still grantor, trustees, and owners of the LLC would make it easy for him to pierce the veil and get at anything we own. So I'm lost. 2 reputable attorneys with wildly varying positions on what I should do. Thoughts? Questions? Should I find a 3rd opinion.

It feels like the people who made the mortgage rules and those who made the laws for LLCs don't know how the other works.

We're using a conventional loan so we're closing in our personal names, that's why we have to transfer it to something if we want to get asset protection.

I don't mean to discourage you, but 400/mo ain't much once you account for expenses other than the debt service. if you're looking for cash flow I'd keep looking, if you're looking for appreciation and loan pay down then maybe it's a good idea. Question though, how much principal will have been paid down after 5 years? cause if and it's a big if, if the property appraises at 250k in 5 years, and the refi goes 75%, that only gives you ~192500 (top of my head calc), so will you have paid of 18500 in principal to the seller? idk cause you didn't say what the amortization would be, but a 30yr 210k 5% amort would be 1127/mo, and that gets you just barely to 192500 at 5 years.

Send a message directly to support@BiggerPockets Support support@BiggerPockets .com or @Mindy Jensen @Joshua Dorkin

Originally posted by @Carson Wilcox:

we had two offers.  We ended up offering 1  the chance to match the better one, as that buyer had tried to buy it half done, and we had told him we would give him chance to match.  

No numbers until we close, dont want to jinx.. but it was over, and as is... with all closing and transfer tax covered by the buyer.   All they asked for was a clear pest, and clear city resale... neither of which should be an issue.

We resisted the urge to start playing offers against another... as it is a high $ market, but also a fickle market... with $5k in holding costs per month... we decided against playing games.  Bird in the hand and all that.

 That's great, and sounds like the right thing to do with not playing them against each other since you will already be making a profit (hopefully) and holding costs add up quick. Can't wait to see it close and hear the numbers! 

Cheers!

what $ and type of offer did you accept? If you want to wait until it closes that's cool too. 

@Eric Groos while I'm not a CPA (yet) it will depend on the amount. You can give up to $14,000 as a gift to anyone in 1 year and not have to worry about any taxes. Above that you'll want to hear if Amanda and Brandon have more options. 

@Scott Smith I messaged you. I would be very interested in talking with you about my particular situation and seeing what you think. 

@Matthew Olszak while I thank you for the information I would say you have a pretty dim view on who/why people rent. I rented for 3 years because of work, and I know plenty of people who rent for tons of reasons other than they are poor at managing finances. My parents have rented the last 6 years because it's easier to rent their house than worry about property taxes, repairs, etc that would come with owning the house. They used to own and lost it to the recession, but don't plan on moving into a new one ever probably. But thank you for the tips on small claims. I'll look into local laws on keeping deposits. 

Any local STL people know our specific laws? 

Hi all, 

I'll be closing my first rental soon and wanted some clarification. If a tenant moves out, with or without notification, prior to their lease being over what consequences do they really face? 

What can I do to recoup losses? 

Is it legal to withhold the security deposit even if there's no "damage" to repair with it?

Do people tend to file a small claims against them for the balance that would have been due through the end of their lease? 

What other remedies or options would I as a new landlord have? 

I hope I won't have to deal with this, but things happen and I'd like to be prepared just in case. If it matters the property is in the St. Louis MO, in the city. 

Thanks

Cheers!

@Robin Shelley I wish you the best of luck, and whether you're asking about a 4 unit or 400 unit you should feel free to ask it here on BP. A few people have given good responses and I hope that helps. I don't know your particular situation, but it does appear that you'll want more help than just an analyzer for this. To that point I suggest contacting a commercial broker for the area that this investment is in, probably start with one of the big guys. 

Oh and T12 in this instance is the Trailing 12 months actual expenses from the seller, hard to come by sometimes, but for larger properties, it should be as simple as contacting the accounting dept.