All Forum Posts by: Doug Maye

@Chris K.

I certainly do not wish to step on the toes of real estate professionals.  I just want to be able to manage our own rentals as professionally as possible.  I will definitely do some further research to make sure I don't get ourselves into hot water.  

I'm planning on working as an associate for a few years, but just want to keep my options open at this early point in my career.  I truly do have a passion for real estate and hope that this can be a sizable part of my life into the future.  That's most of the reason why I want to get this all set up correctly from the beginning.  If I planned to just dabble with one or two units I wouldn't bother with these structures.

Thanks!

@Chris K. Wow thank you very much for taking the time to write out that detailed response.  I truly appreciate it and owe you one.  A few responses:

2. I've come to realize I had no idea what I was talking about when I first wrote that question.  I was under the impression that mortgage principal was tax deductible. I've now learned that isn't the case at all.

3. That makes me happy to hear. Hopefully I don't have to find out about this for awhile.

4. I read this on another thread :  "Sign a master lease between the owner and the managingLLC. This way, the LLC is a controlling interest in the property to get around any statutes requiring a manager to be a real estate agent. The master lease will pay the owner 90% of gross income after expenses. Or 99-100% if you don't want to keep any money in the LLC. Then, everything to do with the property is done through and by the LLC... with a check or deposit going to the owner every month."

I'm not sure if this is applicable.  Even if this set up was in violation of any rules, would it be likely that I could be reported?

5. Yes I do agree that this is a really convoluted set up.  I'm hoping for this first property to be the only one set up this way but right now both my brother and I are reluctant to be on the note for a few reasons.  My brother is 21 and most likely would not be approved for a mortgage.  I am about to graduate dental school and hope to purchase a paractice in a few years.  Until then I don't want to have any other debt on my record that could interfere with getting a practice loan.

Thank you again!

Thank you everyone for the advice.  There's definitely a lot to learn in this business.  

@Matt A. - I greatly appreciate your input and would definitely like to hear about what you learn with your advisors.

@Steve Oxenreider That would be the best solution, but I was under the impression that a bank wouldn't give a mortgage unless all of the owners were on the note.  Basically my father is the initial money man, being he is going to pay cash for the property and then after a 6 month seasoning we will get financing.  If its possible for us all to be on the title, and only have my father on the note, that would be perfect.

Hello Everyone,

I've spent hours and hours researching this topic and haven't come up with a clear answer.

Myself, my brother, and my father are starting to invest in real estate and we need to come up with a way to organize ourselves into a formal entity. Currently our plan is to:

1. Purchase properties in our individual names and get conventional financing, i.e. My father buys the first house and is the sole name on the title and takes out a mortgage in his name. Depending on the deal my brother and I will pay for 1/3 of the down payment each. Even though on paper the house is only in one of our names, it is understood that everything is going to be an even 1/3 split from purchase price, to expenses and profit. I realize that this isn't the safest way to do things, but we are just going to have to trust each other at first.

2.What I would like to do is set up a 3-person entity that will deal with all of the management duties for our rentals. We plan to manage only our own properties with this entity. The entity will not hold the property in it's name, it will only serve as the management company. What I'm thinking is we get the lease in the company name, have rent paid to the company, and then pay the mortgage and all expenses from the company. Whatever is left over at the end of the the year will just be distributed equally between the 3 partners.

My questions:

1. Is an LLC the best way to do this in Pennsylvania? I

2. If there is profit at the end of the year, can we just pay the profit into the mortgages and avoid paying any taxes?

3. I've read that an LLC can not be represented by an agent in PA court, so we would need an attorney to file evictions, etc?

4. None of us are brokers and don't plan to become brokers, would it be an issue for us to simply manage our own, and only our own, properties through the LLC?

5. Are there any glaring issues I'm completely missing?

I understand that all of this may be overkill at first, but I want to do things correctly from the start because we plan to be in this for the long haul. We are closing on our first deal next month and hope to acquire a couple more units in 2017.

Thank you in advance for your help.

Doug

Hello Everyone,

I've spent hours and hours researching this topic and haven't come up with a clear answer. 

Myself, my brother, and my father are starting to invest in real estate and we need to come up with a way to organize ourselves into a formal entity.  Currently our plan is to:

1. Purchase properties in our individual names and get conventional financing, i.e. My father buys the first house and is the sole name on the title and takes out a mortgage in his name.  Depending on the deal my brother and I will pay for 1/3 of the down payment each.  Even though on paper the house is only in one of our names, it is understood that everything is going to be an even 1/3 split from purchase price, to expenses and profit.  I realize that this isn't the safest way to do things, but we are just going to have to trust each other at first.

2.What I would like to do is set up a 3-person entity that will deal with all of the management duties for our rentals.  We plan to manage only our own properties with this entity.  The entity will not hold the property in it's name, it will only serve as the management company.  What I'm thinking is we get the lease in the company name, have rent paid to the company, and then pay the mortgage and all expenses from the company.  Whatever is left over at the end of the the year will just be distributed equally between the 3 partners.  

My questions:

1. Is an LLC the best way to do this in Pennsylvania? I

2. If there is profit at the end of the year, can we just pay the profit into the mortgages and avoid paying any taxes?

3. I've read that an LLC can not be represented by an agent in PA court, so we would need an attorney to file evictions, etc?

4. None of us are brokers and don't plan to become brokers, would it be an issue for us to simply manage our own, and only our own, properties through the LLC?

5. Are there any glaring issues I'm completely missing?

I understand that all of this may be overkill at first, but I want to do things correctly from the start because we plan to be in this for the long haul.  We are closing on our first deal next month and hope to acquire a couple more units in 2017.

Thank you in advance for your help.

Doug

Thanks Brett, 

Since I'm new at this I can't help but get emotionally invested in the properties we bid on, so the rejection hurts right now.  Just need to get one under out belt.

My name is Doug from Quakertown, PA and I am new to the forum and real estate investing. I've always have had an interest in real estate and have read many books and sites over the years to lean more about investing in rental properties. I have been in college for the last 8 years, so that has limited my ability to pursue deals. Fortunately I will be graduating this may an am ready to jump into the real estate game.

As of now my father, brother, and myself have formed a partnership to invest in properties around our hometown of Quakertown, PA. Over the last few weeks we've bid on several properties but have had no luck in winning a bid yet. We are eager to get the ball rolling and close on either a good rental property or a solid flip.  

As of now I have just been using craigslist and zillow to find potential properties, but I hope to network and expand my list of contacts so that I will have access to properties in the future.

I just want to thank everyone on the site for sharing their vast knowledge on things real estate