All Forum Posts by: James Paine

@Craig H.Thank you for the welcome! I'm trying to wrap my head around the Macon market since I wasn't really planning on entering it but fate intervened and presented me with a SFR there and ain't she a beauty?

I'd love some local market knowledge - I'll connect with you on DM. In any case, I'm excited to be in the market and take on my first major rehab and owner finance.

That looks like $5k in tree work alone, not to mention the foundation issues those things probably caused. Good luck. Also, I'd make sure that isn't a red tag on the house. (Red tags usually mean stop work on construction or that this house is unsafe to enter and maybe demoed.)

1 Vote

Originally posted by @Bill Exeter:

Originally posted by @James Paine:

@Alex Sanfilippo If you are buying 1-4 unit residential assets and ever plan on doing a 1031 exchange out of them I wouldn't put my assets into an LLC. The reason is that when you go to get a loan on your new properties it will be a lot more difficult with an LLC.

Hi James,

This depends on a number of factors.

The vast majority of investors will use a single member limited liability company (SMLLC). SMLLCs are considered to be disregarded entities for tax purposes because they have only one (1) member. You can sell relinquished property out of a SMLLC and then if you have to for lender reasons you can acquire your replacement property under your individual name with no complications as long as you were the sole member of the SMLLC.

Those investors that use multiple member limited liability companies have a completely different scenario since the LLC will most likely be treated and taxed as a partnership for tax purposes unless taxation like a corporation is elected. This makes it more complicated because partnerships are NOT disregarded entities and therefore the partnership must sell the relinquished property and then buy the replacement property as a partnership entity.

There are lenders that will lend to SMLLCs or multiple member LLCs. You should discuss your specific scenario with numerous lenders to see what would work best for you.

Thanks Bill. Lenders for residential 1-4 units lending to multiple member LLCs charge much higher rates 200bps more than a normal loan. Also, all the members must personally quilify for the loan.

All I'm saying is that it is a cluster if you want to exchange out of a multi-member LLC. The starting posting was talking about using investor money so that is why I advised against it.

2 Votes

@Ryder Meehan

Good luck man. I can see you really love real estate. I've done deals in 26 states and have seen some of everything.

Your advice is sound, get good tenants. I think that one thing I've done a little differently is to partner with people when I am breaking into a new market. I wish you luck in your endeavors.

BTW I bought a huge deal in Dallas in 2009, the thing didn't really bring much cash in ever but thank God for that fast rising Dallas market. Amazing exit in 2014.

1 Vote

@Adam Stiles

1. Sell it and invest elsewhere is what I would do but only because you get that huge tax savings.

2. If you decide to keep it that would be my second option. If you have a large and diverse portfolio then I'll look at a sale and reallocation but if this is your largest investment I'd say keep the thing.

0 Votes

@Matt R.Health and Wellness. I make surfers stronger so they can paddle out at the bay, grab 2 waves before being beaten to death and drive back to SD alive. ;)

Good luck on the vacation rental play. I am personally testing a similar model with 3 properties in coastal SD.

1 Vote

Bubble, Bubble, Bubble.

0 Votes

No LLC.

If you ever want to 1031 out of a multi-member LLC into 1-4 unit residential assests good luck!

1 Vote

How many deals have you done?

0 Votes

All Forum Posts by: James Paine

James Paine has started 15 posts and replied 133 times.

Post: Mortgage Paid- Off Rental Properties-- Good strategy?

Post: 1031 Exchange Workshop in San Diego, CA

Post: Buying & Managing Rental PropertiesOut-of-State like a Land Baron

Post: LLC?

Post: Buying & Managing Rental PropertiesOut-of-State like a Land Baron

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Post: LLC or Nah?

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