All Forum Posts by: Martin M.

@Arron Paulino

Delaware Nevada are "anonymous" LLC states. They're also "charging order" states which makes them popular.

Looks like you're doing rentals. A very common structure for rental properties is a "Holding" LLC in WY, NV, DE that owns an LLC in the state where the properties are, but that structure may be over the top if you're just starting out. That's where a solid atty and cpa can advise

EIN you can apply for online. It's pretty quick

@Arron Paulino

Hey Aaron nice work getting started on investing. Search the bigger pockets forums here and you'll find a lot of useful information around LLCs. Many of the questions you have might've been answered in other posts. It's also a good way to get better educated on LLCs.

Here's some of the basics....

The legal side of LLCs and how they elect to be taxed or not taxed (google pass through) are two completely separate topics. Don't comingle these two concepts, legal and taxes. They're typically not one in the same.

In most cases (not all), especially when just starting out, you want your properties in an LLC that's in the same state as the property. If the property's in Idaho... you want an Idaho LLC holding that property and so on.

You apply for an EIN for the LLC. think like social security number for the LLC that you pricier to a bank to open a bank account for the llc.

Insurance coverage is more important than LLCs for your liability protection.

Keep it simple. Talk to an attorney about what you actually need.... maybe google LLC attorney or business attorney in your state. Meet with them and show them the properties that you have, and what you envision you'll be with your properties 1 or 2 years down the line. Ask what they'd recommend. Yeah it'll cost a few bucks to start but you'll be doing it right.

You want to start with an attorney that knows your specific state, (assuming that's where the properties are) because even though LLCs look very similar across all states, the laws around them are not identical across all states. There can be important differences from one state to the next.

Google real estate cpa in your state. ask them, based on your real estate model, how should the LLCs file federal taxes... none/pass through, s corp and so on. Hope this gets you started.

Good luck!

@Carlos Ptriawan

Nice write up. One thing you may have missed is the impact of technology. The technologies that enable people to work remotely, where they never have to enter their employer's office has gotten really good. Meaning, in many job sectors the employee does not need to live in the same region or even the same country as their employer.

You may not have factored in a recession in your projections. Recessions and how strong they will be are notoriously hard to predict, but if a significant one occurred in the time period you've listed, that changes a lot... job loss, people unable to cover mortgage, interest rates dropping and so on. Interesting write up though

Hi Brett,

A lot of factors to consider as others are pointing out. Generally speaking, HOAs can make renting out a unit challenging or flat out prevent you from doing it. For example, the HOA may only allow a certain percentage of the units to be rented out at any one time. They may prevent rental leases shorter than 6 months and so on... and even if they don't currently have limitations like this in place today, there isn't much to stop them from introducing these limitations in the future... and in 1 unit vs. HOA disputes, e.g. a unit owner wants to rent their place out and HOA rules say they can't, it's often tougher for the 1 unit owner to achieve victory. HOA has strength in numbers and typically cash on-hand to hire attorneys to enforce the HOA rules.

If you do go the townhouse route, I'd likely go into it knowing that the HOA could put you in a position in the future of not being able to rent it, even if you can rent it today.

Shared walls.... most townhomes have walls that border other townhomes. If your walls are thin and tenants are noisy, especially in an STR scenario for example, the bordering units will complain fast which is understandable.

All of that said, there can be some benefits to townhouses, e.g. your HOA fees cover the HOA managing your landscaping for you, big ticket items such as roof repair/replacement.... but then the flipside to that benefit is the HOA can sometimes require every unti to pay special assessments $$$$ that may benefit the community as a whole, but really doesn't do much to improve your individual unit. Lots to consider. Hope this helps.

Good luck!

Martin

Hello BP!

Hoping that someone can help me to understand this. What circumstances would provide the federal government with 1 year to redeem a property purchased at auction?

I'm reading USC 2410:

...Where a sale of real estate is made to satisfy a lien prior to that of the United States, the United States shall have one year from the date of sale within which to redeem, except that with respect to a lien arising under the internal revenue laws the period shall be 120 days or the period allowable for redemption under State law...

All good on the IRS 120 days piece, but I'm not clear on the 1 year piece. It seems to imply that there are non IRS federal government liens that can be attached to a property, and if one exists, the government has a full year from the date of sale to redeem that property. 

Thanks in advance to anyone that answers

Martin

@John Currey

It looks like a shut down's been avoided. At least for now. The house has agreed to a short term funding deal... now the Senate's voting on it

@John Kilhafner

It's not clear from your post if you've purchased an auction property before. You may know this already but if not, do your due diligence on the title as others have said here; paying particular attention to the lien positions. This is critical.

As for the property being occupied and what that may mean... after the auction sale in IL, the sale then needs to be approved by the court. It's during this court approval that the judge specifies a date for when the pervious homeowner has to vacate the property by

@Stacey LaBarge

Thanks for sharing this. El Paso is a bit intriguing. If you don't mind me asking, how did you calculate the rent to sales price ratio?

And did you include CapEx and property taxes in the calculation?

@Alex Ficco

Man that stings. Very cool of you to share this. Good learning experience for others. It sounds like you've got enough in reserves to weather this one storm. If this was your first property the skyrocketing interest rates might've put you out of commission for a few years. Thanks for sharing it

@Paul V.

If you don't mind me asking after Cook County and IL transfer taxes, title fees, realtor commissions (and HOA costs?) atty fees did you make a profit? Was it only 1 month of property taxes in arrears?