All Forum Posts by: Todd Campbell

Yes, anytime I loan money to my LLC, I do so with a promissory note.

@Tristan S. Others have mentioned to take a look at the condo association by laws. I would also get the minutes from the last three months association meetings. These will show the financial report for the association and include important information like the reserve fund, special assessment details, future plans, etc. In addition, you may want to contact a board member/attend a board meeting and ask about future plans, ask the last time the reserve fund has been evaluated by a third party (there are regulated ratios that must be maintained). Don't forget to ask when was the last time they raised the HOA fees, and why. (You may have to read between the lines on the answers you receive)

A large expense to a condo association is the master insurance policy. A well run board may have the same policy for decades. A poorly run board may use the insurance policy as a "maintenance" policy. When this happens, insurance costs increase and it is often difficult for a condo association to secure reasonable insurance rates. 

Good luck!

-todd

@Doug W. I have at least one that is taxed as an S-corp, others that are regular flow through LLC sole proprietorships. Which is why I suggest that people consult their professional support (attorney, accountant, etc). Just because somebody on the internet is doing something, it may not work for others.

Personally, I am a big believer in keeping records, and treating every transaction between myself and my LLCs as if I were an outsider. It works for me, and according to my lawyer keeps my risks lower.

-todd

not to be taken as legal or tax advice.

Keep in mind, your liability in your LLC increases if you simply put your money into the LLC. I prefer to loan my money to my LLCs so that I can take money out without it being taxed as a distribution. Talk to your tax attorney.

My gut is telling me to run away from the deal that I have been working on.  What is your take? 

I have a signed PA for a property in North Topsail Beach, NC. Due to a complication on my end, I asked for an extension and it was granted. Our original close date was this past Wednesday. As you might have heard, the combination of the super moon influencing the tide, and Joaquin passing by, the area has been in a state of emergency.  Looking at the news posts, it seems the area just north of the condo I am in contract with has been hit really hard. Roads and parking lots destroyed.  

There is some question if the beach of the barrier island will ever recover. This paired with the losses the town is facing, I am thinking I am better off leaving my earnest money on the table and walking away. 

I do have some more time before the next closing date, so I should be able to better determine damages. But it will be difficult to determine if the town will be able to continue to afford beach erosion mitigation after being hit this hard.

Is this risk rising up and telling me to get out, or am I afraid to make money?

As others have suggested, it comes down to where you want to go, and how much risk would you like to take. Personally, I've never had 1,000,000.00 to invest, so my first steps would be seeking out others who HAVE invested that amount of money.  Also, it might depend on how I came to acquiring this money. Maybe I would need to consult a tax attorney and an accountant who have advised people in similar circumstances, so that I can avoid some future pitfalls. 

What would I do?  I would diversify, and not because I don't have expertise in an area, but because I want to maximize my profits and mitigate my losses. How would I diversify? 

I wouldn't start a chicken shack, or something I know nothing about. I would diversity in the areas I know,  Options trading, Software startup companies, and real estate.

In each of these areas though, I would build some teams. People who can disagree with me, people who have different areas of expertise. I know you said you didn't trust anybody to become a partner, I get that.   Have you considered employees with creative pay structures? People who win when you win.

Like I said before, if I had come into the money I would ask these questions:

  - Who has been in my shoes?

  - Who can help me protect my money?

  - How much do I feel comfortable reinvesting? (Do I need to put more away for retirement? Do I need some for my son's college fund?)

  - How much needs to be reserved for my "rebuild my world" fund?

  - Who can help me grow my money in accordance to my comfort and risk profile?

  - How can I maximize the good (Do I give money to a charity? Do I setup a scholarship? Do I pledge a portion of net profits for an investment sector? )

  - How much can I afford to "treat" myself? (I'll be honest, might buy a newer car instead of having my transmission fixed)

These days, especially in California, $1,000,000.00 goes fast. Good luck with your problem, I hope you are happy with your results.

-todd

There are a lot of good comments here. I'll echo a couple of things here. I agree with saving your money for your investments. Also, find yourself a REI meetup group.

There are many ways to win and many ways to lose in real estate. Be certain you have multiple ways to win and multiple ways to exit.

There are a lot of people out there ready to separate you from your money. 

Use your head and Good luck,

-todd

 That's interesting. I have used home warranties on a number of my properties and have not once had the experience that you describe above. Further, my prices were cheaper about $200 - 300 for AHS. They have replaced water heaters, furnaces, and refrigerators regardless of brand or age.  As for self insuring, that works fine until you lose 20 furnaces in a single winter.  Unfortunately, this is what happened to a good landlord friend of mine. 

In the end, you need to perform your own risk assessment and decide what is going to work for your model. 

Good luck!

-todd

I choose satin for my student rentals. 

Let's pump the breaks if we could. 

@Trina C. I would have to agree with @Nnabuenyi Anigbogu, please do not confuse directness with rudeness. A lot of good information has come from this thread. Sometimes, however, it is hard to hear what you don't want to hear. 

I started reading this thread because I want better options for two deals that I have upcoming. I had everything planned out, I was going to do a cash deal using some stock options I have. The problem is, last night I heard from my broker that his investor is only looking for one tenth what he originally thought. At first I was angry, but what it forced me to do was to look at other options. Last night I applied for private lending, crowdfunding, and have contacted some old contacts who might be looking to get a return for the money they have shoved into their mattress. 

When I read @Account Closed's responses, it lit a fire inside of me. Get out there, nobody else is going to make this happen. 

The cold reality is that I might have to drop one or both of my deals. 

Trina, here are some of the places I have looked for money: 

prosper.com, lendingclub.com, cityfunders.com, realtyshares.com, realtymogul.com, meetearnest.com, fundrise.com, thedominiongroup.com bridgewellcapital.com

Consider too another option, become a lead generator for another investor. Take a fee for bringing the deal in, and start building your capital that way. 

Find a partner, even if they reap most of the rewards. This will help you get more successful deals completed.

Good luck!

-todd