All Forum Posts by: George B.

@Drew Sygit thank you so much! So can you tell me how it would work? LLC 1 owns the property, LLC 2 has a master lease of the premises, and the tenant sublets the house from LLC 2 - and LLC 2 is under contract with Section 8?

Hi all, I have a question about asset protection strategies and Section 8. My LLC recently closed on a property with a Section 8 tenant already in place. My original intention was to open a separate LLC that would be responsible for the operations of the property and would take possession through a lease. This entity would be the entity with which any contracts, leases, etc. would be involved. (I confess I am neither a lawyer nor an expert, but I have read many legal articles about this sort of structure)

There was a property management company already managing this property, and I am considering employing their services. However, they have claimed to me that the structure I proposed above will not work for Section 8; that Section 8 requires the Owner of the property to be listed as the landlord with whom the lease is established and that it cannot be a second LLC that has possession of the premises. I am not equipped to argue otherwise as I have never dealt with Section 8, but I question the property manager because when I inquired further by creating an example (you own a property, a company expresses they want to lease the property for 100 years, and then the company sublets the property to a Section 8 tenant), the property manager tried to claim that what I described is "illegal," which I know not to be true...

Does anyone have any insight to share on this matter?

@Kerry Hartley thank you for the tips, Kerry!

@Kody Thompson thank you so much, this is very helpful! I will look into an attorney. Sounds expensive!

Hi everyone! Hoping for some guidance on raising funds for acquisitions.

I had originally intended to try a form of “crowdfunding” to raise money for the acquisitions - for example, if the property in question costs $50,000, I *thought* I could find individuals who would consider offering a small denomination short term loan, say $5k to $10k with interest, pool the loan proceeds, acquire/repair the property, refinance, pay back the investors, rinse and repeat. However, after learning about SEC rules, it appears this may be considered a security, which would imply a lot of required compliance that I am not currently prepared to do. (By the way, if I’m not understanding that correctly I’d welcome your feedback here as well!)

Do you guys have any suggestions on how I could possibly pool small loans from people interested in my business without encroaching on SEC rules? Or do you have another suggestion entirely?

Thank you all in advance!

Hello everyone! I hope you and your families are doing well in this bizarre time.  Hoping some of you can help with some suggestions on my situation.

I have a house in Philadelphia that is vacant and needs to be renovated.  Back in March I was looking to sell, it was supposed to close on or before 4/30, but the buyer couldn't close.  Now we're in this pandemic and I'm not confident I'll get what I could have gotten for it.  So I'm considering renovating it, renting it, and holding.

If I choose that path, I will need financing. I'm not sure of the best path for me to pursue financing, since the property is presently owned by my LLC (single-member) and I've read here and other places that people have difficulty getting the Banks to lend to an LLC. So do I try to call some of the banks? Do I try the Hard Money route? I don't even know what kind of loan product I should be looking for - would I be seeking a line of credit? A cash-out refinance? A regular refinance?

What would you do?  What's the path of least resistance?  What's the best/most efficient path to get cash in this case?

Thank you all in advance!

@Paul Timmins

Paul, thank you for your help. Can my LLC get a business line of credit with no prior business transactions? In other words, just based on my personal credit?

I took your advice and looked into REI clubs in my a immediate area, but the phone numbers seem to be out of service :/ hoping email works.

@Wade Sikkink

Wade, thank you for your help as well. In your example, would the $4k be taxed at a special rate? (Or maybe this question is for a future discussion)

Hello all, I've read many articles and posts on biggerpockets about why one should/should not enter into a partnership, advantages/disadvantages, horrors, etc. Well, as a newbie with a thirst for investing, good credit, but no capital, partnering sounds good to me. I've been fortunate to find someone with experience and access to hard money who could be a good partner, but I have concerns. However, I'm not sure I want to establish a "longstanding partnership"... I'd like to take it a deal at a time, but how might one go about doing that? And is it a reasonable approach? If I begin speaking to attorneys, what sort of questions should I be asking? Finally, I'm concerned with how taxes may impact my earning potential. For example, if my partner and I purchase a house, rent it for a few months and sell it with a 60/40 profit split, and I stand to make $15k, 1) how much will my $15k be taxed and 2) at what profit would the deal be "worth it?" I appreciate your time and look forward to your responses. Thank you!

*not sure if this is the right forum for this question*

Hello all,

I am looking for some guidance on how to talk to/approach a contractor in a manner that would avoid being taken advantage of.

I am not a flipper; I am a newbie trying to buy his first "buy and hold" property. But, one property I am considering would need a gut rehab, and before I count it out, I want a few contractors to tell me what it would cost for such a renovation.

I'm concerned that if I tell a contractor, "hey, I'm brand new at this and have no idea what costs should/would/could be," the contractor would see an opportunity to give me an astronomical price. But on the other hand, if I try to act like a seasoned investor, my project may have the wrong outcome.

Do you have any advice for me? How should I solicit contractor bids/estimates in a way that ensures the best price and outcome? Is it ok to say "I need to know if this project can be done for $XX,000 per floor?"

Hello all,

Newbie here, been reading the forums/articles for a while, looking for some guidance. I am trying to buy my first property as an owner occupant. Considering a buy and hold strategy for a multifamily property.

I'm hoping to get your opinions on 1) how would you evaluate the 3 properties I've listed below, 2) which property, if any, would you choose among them and why, and 3) if I have failed to provide enough information (which is likely), what suggestions might you have for filling in the missing pieces?

The following properties would be financed and intended to be rented to Section 8 tenants, as they represent the primary rental population in the area.

Property 1:

2-Family

Price: $140k

Needs no work

FHA Financing 3.5% down

Gross monthly income from 1 unit: $1,100

Property 2:

3-Family

Price: $125k

Being renovated; ~75% complete

Seller financing available

Gross monthly income from 2 units: $2,200

Property 3:

4-Family

Price: $160k

Requires full renovation, potentially $60k-100k

FHA 203k financing

Gross monthly income from 3 units: $3,600

Again, please help me understand:

1) how would you evaluate the 3 properties I've listed below

2) which property, if any, would you choose among them and why, and

3) if I have failed to provide enough information (which is likely), what suggestions might you have for filling in the missing pieces?

Thank you in advance!