All Forum Posts by: Jerel Ehlert

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Laws on business organizations vary WILDLY from state to state.  So do laws on real property.  What CA does/doesn't do is not the same as TX, NY, or DE.  Chances are, if you Google any rando operating agreement for large company, it's based in DE law with a 1st runner up of NY.  Those operating agreements will not match 100% to CA or TX law.  If you forego an operating agreement, in TX you are using the default rules under Texas Business Organizations Code (specifically, Sec. 101).  

In TX, the SoS fee to register an LLC is $300 +/- rush fees, name search fees, and card processing.

I'm sure many agree that spending much time on setting up business entities is a waste of time (noise). Sometimes it does get overcomplicated. A single member LLC to manage a few rentals with a combined value low enough to be comfortable...probably not all *that* complicated. But involve ANYONE else, have employees, atypical operations....you better darn sure get a real lawyer involved.

btw, google searches = "full employment for lawyers and accountants"  It might be a good place to get a foundational understanding, but unless your goal is to become a lawyer, seek out a professional in your jurisdiction.  When seeking medical advice, I go to a medical professional.  Law isn't any different.

...um...sure.  

Also consider how OFTEN they do the work for which you are asking.  Drafting a deed? sure. Drafting an assignment of note/lien package? unlikely. Drafting anything securities related? *highly unlikely*.

Sometimes you really do get what you pay for.

Pretty much what @Ronald Rohde and @Rick Pozos said.  Find a lawyer in the state where the property is located because the statutes are state-specific.  Don't get just anything off the internet.  There's usually (in Texas) a contract for the purchase/sale of note/lien, the assignment of note/lien that's recorded, and the alonge (with or without recourse) to the note.  You must deliver the wet-ink note to the buyer along with copies of all the rest.

A property's lease rate is based on location and condition.

If you let your property run down after a tenant moves in, they will start looking for another place to move during the current lease period because they are not getting what they paid for at the start of the lease.  If you let your property run down after a tenant moves in, the property condition will decay more rapidly.

Take your loos floor tile for example.  Water, dirt, and other substances can now get in and under that tile because it became unfixed from the floor.  This can lead to OTHER tiles becoming unfixed.

If you show your tenants that you care about the condition of the property, they will too.  If you show them you DGAF about the property condition, neither will they.  Wear and tear come out of rent and not on the tenant.

Be a good landlord. Take care of your property.

I would let the current owner correct the situation.  Any evidence you will need to evict will be in the owner's hands and they might be less willing to cooperate post-closing.  And while you can probably prevail, it will be more difficult without help.

@Jeff S. Yes, different advice to two different clients in seemingly similar situations can seem confusing.  The difference in advice might pivot on a single fact that is different.

One thing to keep in mind is that probate/estate laws can be VASTLY different between states.  And not just probate.  Property law, I know for certain, is fundamentally different across the states.  I'm only licensed in Texas, but @George Skidis stated the threshold for "small estate" in IL is $100K.  In Texas, it is $75K but excludes the homestead.  Texas also has other requirements to qualify.

Another factor in estate planning is the client's tax situation.  Investment property is treated differently under the tax code than a 2nd residence.  There may be factors like stepped-up basis to consider.

So, while there are broad categories or guideposts, what works for you necessarily needs to match the specifics of your situation.

Local convention will tell you what is possible. Here in Texas, PMLs and HMLs will typically lend up to 70% of the ARV because their loans are based on the asset. Some will require the borrower to have some cash in the transaction to keep the borrower from walking.

You just need to talk to the lenders to find out their terms.

Private lenders should get all the same docs in a transaction as a conventional lender.  In Texas, that is a deed with vendor's lien in favor of the lender, note, deed of trust.  They should have instructions to the title company.  I recommend to my clients a personal guaranty if it is an entity-borrower or business purpose affidavit if a human-borrower.

If you wonder why estate planning is expensive for a complex estate, just re-read the comments posted here.

Allow me to clarify, in part (caveat: I'm only licensed in TX and I'm not your lawyer, seek competent legal advice from a person licensed in your jurisdiction.) -

• A will is not a supped up trust.
• Every state has statutes dealing with intestate succession (without a will).
• Every state has statutes dealing with trusts (that are different than probate statutes).
• Some assets pass by contract, outside probate (most bank accounts, insurance, most retirement accounts).
• If an asset does not pass outside probate, it follows the will or intestate statutes.

If you think the practice of law is just "filling out forms" you are probably not a good client for most lawyers.  Those "forms" affect legal rights.  Lawyers must exercise professional judgment to advise clients on which "forms" and what goes "in the blanks" to achieve (hopefully) your goals.  Done wrong, your heirs could look at 30-50% tax bill.  So from a liability POV, estate planning can be a long-delay bomb.

As a side-note, if you have lots of buying/selling of property, one way of dealing with that is to set up an LLC with the investor as the manager (1%) and the trust as the member (99%) with a buy-sell agreement upon death of the manager. The manager can buy, sell, manage all day long without having to update a trust or will. Definite tax implications, but that wasn't the issue addressed.

Some "REIs" will engineer transactions for failure for the tenant/buyer.  Don't be this person:

• "selling" for over market price.
• Selling a $100K for $10K down and note for $100K (market), then expecting buyer to refi in 2 years.
• Selling/renting a $100K house (in good condition) for $10K down and $90K note, but needs $20K in repairs.

This list of ways to sabotage goes on and on.

Courts see through this bull. Voters complain to legislators. Laws change to make legislators look good. Every REI is punished.

This is why I 100% will take these tenant/buyer cases and squeeze bad actors out of the industry. Every REI who hears about bad actors should put the word out.