All Forum Posts by: Fred T.

1) The title transfer of the property could trigger the "Due on Sale" clause on the 1st

2) The 2nd lien position is only as good as the 1st lien's receipt of payments..so who is making the 1st lien payments...you or the Buyer?

3) The discount rate for a non-seasoned 2nd position note is large...are you going to be OK with that?

4) If you sell off the 2nd, and the 1st is still in your name, you leave yourself open..wide open to a potential default situation that you have no control over.

5) Once the note is sold, you can not dictate how the payments of that note are dispersed

Now, with all that said above, IF you are talking about a Wrap Around Mortgage, then it's a little different. 

So do some homework on a Wrap Around, then come back and offer clarity to your intentions for additional opinions..lol/

In a Market full of competition, one should consider outside the box plays like networking with BK Attorneys, Estate Attorneys, Short Sale Consultant Firms, local Bank VPs, etc.

As a licensed Agent, your game just got more difficult as now you have to disclose 2 things: Investor and Agent

So if they didn't like the Investor side of you, how will they feel about the Agent side of you? This can help your Agent Business or it could hurt both businesses if you try to do them in tandem.

On a Macro level, you may want to play the TX Market with extreme care. Since the Oil Markets are seeing a pull back in jobs in those industries, you want to make sure the other sectors are growing and not flat-lined. My guess is you will start to see some resistance by other Investors in the market, prices will stabilize or start a slight decline and then it's up to the Micro Economics to determine if the "Hot Zones" will continue on or if the population makes a shift towards non-oil markets. This could be great news for your Agency Business but not so much for your Investor Business.

Investor Business...buy a patch of land and build a Tiny Home Community :)

TX could be an interesting landscape between this year and 2018...fingers crossed!/

@Robin Secord same way you do with a 401k. Contribute, Invest to grow the account and use the funds for related Health Care events until the age of 65.

The HSA contributions can grow tax deferred and are in addition to your IRA Annual Contribution Limits

HSAs can invest in Real Estate, precious metals, notes, public/private stock and more

Tax Free distributions for Qualified Medical Expenses (QMEs)

Age 65 starts standard distributions (just like a regular retirement account for the most part) subject only to income tax, no penalties.

Disclosure: I am NOT an Attorney, CPA, Accountant, Estate Planner or any other related Professional and Individuals should ALWAYS seek out the advise of licensed professionals in the related areas of expertise prior to embarking upon any endeavor. 

@John Myers I believe the question was geared towards using an existing IRA to produce income for today's use without incurring taxes or penalties...you can't do that with a SDRA as all of the profits have to go back into the SDRA.

You can use the IRA (through modification), so to speak, today to accomplish what I believe he wants to do as I expressed above...at least that's what I got out of the question so I could be wrong..lol

But for those interested in building their retirement accounts up using Real Estate, then yeppers..SDRAs are a way to go (SDRA/LLC)!/

@Brent Mattison pretty sure this is not the forum to discuss Estate Planning but here is a glimpse of what you could possible do.

Disclosure: I am NOT an Attorney, CPA, Accountant, Estate Planner or any other related Professional and Individuals should AWLAYS seek out the advise of licensed professionals in the related areas of expertise prior to embarking upon any endeavor.

It all starts with your S-Corp and from there you can put together 401ks for each member of the Family (Company Members), HSA Plans and put everyone (see age restriction below) on payroll. 

Some of the great advantages are of course tax deductions but you can use the HSAs and 401k plans to invest in Real Estate, as well as other things so long as they are set up in your plan, and you can pay the spouse and kids (usually starting at age 5 or so as they have to contribute to the business somehow to be compensated) through the company's payroll which creates a nice tax deduction for braces, Christmas, birthdays and more!

You can then structure a Living Trust with a Family Management Company in addition to the Master S-Corp and add some LLCs for asset acquisition and be able to save even more money on taxes and have more overall flexibility. 

These are some Wealth Creation Strategies that the Ultra Wealthy employ all the time as their biggest concern is Wealth Preservation.

I know this was a 30k foot overview of the possibilities but like I mentioned, it would take a very long post including charts and narrative to go over the "fun" and being honest probably way beyond the scope of this forum.

Get with a strong Attorney, Estate Planner and CPA to put the game-plan in action. Make sure that the team is well versed in self directing, legal entities, family asset management and protection and wealth preservation before you use them. 

While you may not need or even be ready for some of this stuff in your own life now, when the time comes you want to make sure you have the right and knowledgeable team in place with relationships formed./

Have Fun!

When dealing with humans, one should always try to be upfront, honest and deal in good faith. Anything less than that will catch up to you somehow, someway shape or form.

"Ethical" defined by webster is: following acceptable rules of behavior, morally right and good

"Moral" defined by webster is: considered right and good by most people, agreeing with a standard of right behavior

"Negotiation" defined by webster is: to get over, through or around something successfully

"Motivated" defined by webster is: to give someone a reason for doing something

Bottom line...not advised to prey upon the weak or those of less knowledge than you. A Motivated Seller should be approached with dignity and not ignorance. 

The idea behind a motivated seller is that when the seller acknowledges the challenges faced in a certain situation (and sometimes it may be up the Real Estate Agent or Investor to help them become aware of the challenges) and they are assisted by someone who can help them with that challenge, then a mutually respected deal can be done and everyone can feel good about it together./

~Do unto others as you would have them do unto you~

How about using the best of both worlds?

Disclosure: I am NOT an Attorney, CPA or any related Professional and you should consult with these professionals in your State of Record prior to doing anything!

You can form an S-Corp LLC, start a 401k sponsored by that S-Corp, do a reverse roll over from IRA to 401k and then take a loan to yourself out of the 401k (up to 50% available funds not to exceed $50,000) and use that to do your Real Estate. You would then pay yourself back pursuant to your 401k plan rules which is typically a 5yr term at an interest rate of prime+1-2% paid back to yourself in essence with some fees going to the 401k plan administrator.

Take that one step further and you can form another plain old LLC to acquire the assets with, and then "wash" the income through the S-Corp to achieve a "reasonable" salary, 401k contribution w/matching and take the rest in the form of a dividend which may reduce your overall tax burden.

There are also some forms of ROTH that can further be of benefit depending on your overall financial matters that may be worth looking into.

NOTE: There are limitations as to how many loans you can take from a 401k per calendar year, so don't be in a hurry to payoff your 401k loan just to take out a new loan. The max $50,000, when leveraged correctly, provides you about a Half Million purchasing power or so. 

Finally, if you have a spouse and/or children over 5, then o-boy does it get fun then :) ...but that's another topic of fun.

These are an advanced wealth management strategies of course and one that requires a few moving pieces to be done in order so be sure to discuss with professionals (Attorney, CPA, Estate Planner, etc.) that are knowledgeable about the issues and processes to assist and guide you./

Happy Investing!

Attend, network, leave the credit cards and checkbook at home and all will be well!

You can view their opportunity and meet like minded individuals and if you happen to see something of value to YOU (instead of what others may see or not see as value to them), then you do your due diligence and act after you are completely satisfied with your decision.

You can find wrong with just about everything, including that first new car over time, and a blog site has a ton of opinions and some facts...so take everything in, filter out the crap, do YOUR OWN homework and be confident in your own decisions. 

That advise goes for anything in life in general. When you start letting fear control your decisions, that's when you start missing out on things in life (good and bad) which in one facet or another only make you a stronger person in the end IMHO. Fear nothing yet be armed with open mind, open eyes, patience and smarts :)/

Have a Great Experience!!

Disclosure: I am NOT an Attorney, CPA, Accountant or hold any related Professional Positions. Before deploying any strategy expressed herein, consult with an Attorney and CPA within the state you intend to do business.

IF I were in your shoes, here is my plan based on the knowledge and Team I have in place:

Set myself up with an S-Corp (LLC is fine with the designation).

Tell your partner to look into that as well.

Form a new LLC (Partnership) with a split favorable to the overall business model (i.e. financing issues and % of ownership split). Both S-Corps would then capitalize the Partnership LLC so it can acquire properties (whether that's only the down payment or all of the funds, it doesn't matter).

Have the "Partnership LLC" acquire the properties and pay out to your partner's S-Corp for the repairs made. This same LLC can pay your S-Corp for the recording keeping and what ever else you do. Since you and your partner are part of this Partnership LLC, you both can agree as to each other's draw expenses as needed from the Partnership LLC. Just keep in mind that any money paid out for the project should come from the Partnership LLC with each S-Corp capitalizing the Partnership LLC as needed (keep good records on the inflows and outflows to ensure a good cost basis for tax purposes).

Once the property is disposed of, the Partnership LLC receives the profits and then disburses to each S-Corp the shares of income and expenses as outlined in the Partnership LLC Operating Agreement. The Partnership LLC would then issue K1s to each S-Corp quarterly as needed.

To acquire another property, both S-Corps capitalize the Partnership LLC, the Partnership LLC acquires the property and the process is started over again.

Then what each of you can do is take a reasonable Salary from your S-Corps, form a sponsored 401k for each S-Corp and deposit the max allowed per the plan with company sponsored funds and what ever is left take as a dividend which will save you both on your taxes.

It's always a good problem to have...but draw out a plan with the proper professionals and have a strong book keeper who also does payroll to assist you.

Good for you both!/

Georgia Real Estate Commission says:

A “Finder’s Fee” is an amount of money given to a person who brings a buyer and a seller of real estate together. A “Referral” fee is one type of a “Finder’s Fee”. Labeling a payment a “Finder’s Fee” does not avoid the fact that the fee is compensation received for providing real estate brokerage services and an individual must have a real estate license in order to receive such compensation . The Commission has the authority to issue a Cease and Desist Order to stop an unlicensed person from practicing real estate and fine the individual $1,000 for each day or each violation when he/she practices real estate without a license. Chapter 43-30-30 .

IF You are performing services for another, that is defined as Practicing Real Estate. IF you "control" the property and are assigning your "Equitable Interest", that's wholesaling.

Clarity is key to a successful future./