All Forum Posts by: Harry Williams

My wife has a close friend with 3.5 years of residential experience in the area. She's aggressive, hard working, and has proven herself to be a good agent in this relatively short period of time. While I do think she is a good agent, I also know another agent (who is not a close friend) who is one of the best in terms of annual sales and finding awesome pocket listings for her clients. She has 10 years of experience. 

While I have strong confidence in my wife's friend, I also don't want to sell myself short in regards to finding a great home and think the 2nd agent has a stronger overall network. Would it be okay for me to use both agents and let them know that I am consulting with multiple or should I choose one or the other from the get go? While I am trying to keep emotions out of this as much as possible, I also do not want this approach to potentially negatively impact the relationship between my wife and her agent friend.

Any advice or best practices appreciated. 

This is exactly what I was implying. Sorry for not being more clear. 

Originally posted by @Jaysen Medhurst:

separate bank accounts are a best practice.

 Thanks.

A business partner and I plan to own multiple multi-family properties. We will start with one in 2019 and, hopefully, add 1 property each year for the foreseeable future. Each property will be owned by separate independent LLC's. These LLC's will make annual distributions to each member on an annual basis and will pay individual taxes, as well.

With this in mind, do we need to create separate bank accounts/checks/cards for each property? 

Outside of the individual property LLC's is a separate LLC that will serve as our "brand" LLC and one that will make "pursuit expenses" like pre-operating legal expenses, web hosting, email, and travel expenses etc. that are not related to an individual property. This bank account already exists and is active.

So, do we need to create separate bank accounts/checks/cards for each property?

Thanks @Bill F. one more follow up question here. 

We have a parent company that will sit above the portfolio of properties. This company will receive all distributions made from the properties and then further distributed to each partner based on ownership. Over time, this ownership will fluctuate as we each put in different %'s per deal. 

Given that the parent LLC will be the LLC filing tax returns, will we run into trouble or difficulty when making distributions or filing taxes as the portfolio grows?

This is actually how the operating agreement currently reads. If I put in more equity per property, let's say 70/30, does this scale well as we purchase more and more properties?

@Greg Scott Thanks for your relpy and concerns. To give a bit more context: I plan to do this as preferred equity and not a loan, which looks better to banks from my understanding. Under this structure, the preferred dividend is paid before any distributions are to be taken. 

More details on this example:

- Property Basis $2,000,000.00

- Bank Debt $1,600,000.00

- Preferred Equity $340,000.00

- Members Equity $60,000.00

- Bank Debt Interest Rate 4.25%

- Preferred Equity Div. Rate 7.25%

- Property Cap Rate 6.50%

- Net Operating Income $130,000.00

- Bank Interest $68,000.00

- Preferred Dividend $24,650.00

- Available for Distribution $37,350.00

I am considering a partnership with a real estate investor to buy and hold multi-family real estate deals. We will call it "XXX Company" for example. The partnership is 50/50 (as defined by our operating agreement), and the distribution for each deal is determined by how much equity each investor contributes towards downpayment. To keep things simple, we both plan to put in the same amount of capital to yield 50/50 equity stake in each property moving forward. 

There is one catch: I have the ability to contribute significantly more than my partner towards downpayments but in order keep equity contributions and interests 50/50, I plan to contribute less than I am able to instead of contributing 70/30 or 80/20, for example.

With this in mind, I am also considering acting as the bank for the rest of the debt, loaning the remainder of the downpayment to XXX Company and collecting interest. 

An example would be:

- $2M property

- $400k down payment (20%)

- $30k equity contribution (each investor, $60k total)

- $340k remaining, loaned by me to XXX Company

Is this is a common structure? Are there any significant cons to doing this?

Thanks @Paul Choi. Do you have a card of recommendation? Also, in your case, how are points used with partners etc?

@Russell Brazil why do you use this over Dropbox? Or do you only have experience with Drive?

I am just starting out with a partner, and we plan to purchase a ~20 unit apartment building. We have a business checking account set up with checks and debit cards, but do not currently have much monthly expense outside of email provider and legal fees (one-time fee). I am hesitant to open a credit card as there is an annual membership fee. 

At what point do those with experience recommend opening a business credit card in addition to checks and debit cards?