All Forum Posts by: Jerel Ehlert

lol, no.  Assuming the property is in Texas and the owner (O) died in Texas, that is.  Also assuming no spouse to deal with.

Equitable title vests upon death of owner; probate is about settling debts and passing legal title.  Son and Daughter are the heirs to O's estate.  

Brother (B) doesn't have claims to the estate, but may be entitled to reimbursement for taxes.  Adverse possession is going to be hard to nail, and in any event not without a lawsuit to take title, probably in probate court.  If you can't get the kids to sign over their interest, Brother has to come out of pocket to press claim.  If kids will disclaim interest, affidavits of heirship and their disclaimer can probably work for title companies.

Last bit, you have to make sure there are no debts owed.  If there are, you need probate to settle all claims, even if they are paid out of the sell of the house.  Otherwise the creditors have claims against all of you for fraud.

Texas makes an exception to Unlawful Practice of Law for CPAs that covers entity formation, but there are lots of considerations besides tax that they get wrong.

With Zoom, most are going with remote representation. My firm's site has information.

Put it away and don't tell anyone you have it.  Join local clubs, groups, etc. and talk to other local investors.  When we start doing in-person, meet them in the flesh.  Figure out your own goals, pick the RE tool that will get you there (or non-RE if that's the case).  

Take $2-3K and sample a few training sessions (1-3 day seminars).  Despite the sales pitch, you don't need to drop $10-20K on "mentoring" from a "guru".  Each seminar will pitch a next, more expensive, program.  This is called a sales funnel. Jokingly or not, 80% of these programs can be found for free on youtube, podcasts, or <$200 from Half-Priced Books.

When you figured you out, find a local person doing what you want to do and see if you can "jv" on one of their deals with some of your money.

Local laws apply, so what works might change on where you are doing this.

Flipping is taxed as a dealer, as stated above, but is ultimately irrelevant. 

Payment to the GC is an expense, like paying commission to a RE Agent for sale of the property, so has no effect on the LLC's "profit". You should properly define "net profit" to get all expenses of "buying", "holding", and "selling" deducted from the contract price.

The real danger is papering the agreement between the LLC and the GC. What happens if the GC fails to perform? Runs out of money? Hides defects that the future buyer sues on later? Your construction contract w/ the GC needs to be comprehensive because ambiguity favors the GC.

@Steven Stokes If the money investor is strictly passive, it is still a security. Not really that different than selling stock in a corporation. A slightly less volatile approach, depending on the state the property is in, would be to do a JV (joint venture). A JV is similar to a GP with an agreement to split debt. Each JV owes fiduciary duties to every other JV, so it is also dangerous in the extreme for novices.  

Easiest thing would be do a note/lien at a good rate you both can agree upon and build a relationship from there.

Each county can pursue delinquent taxes its own way, within the statutes and caselaw.  In Texas, we do tax suits, so check the public records in the district court(s) covering your county.  This sounds like a low population county, so small-town politics might be the issue.

So which properties get sued? All tax suits invoke the takings clause under the US and TX Constitutions, so it gets touchy.  Taxing authorities can't go after just the ones with the biggest bill, or most valuable property, or most number of years delinquent.  These absolutely have discriminatory impact (even when there's no discriminatory intent).  Older people, minority communities, women head-of-household are all statistically more likely to owe back taxes for any number of reasons.  Larger counties will use a "lottery" system to pick random accounts from the entire county that owe back taxes.

If your county is not trying to sue for back taxes, go to the taxing authority and find out which firm represents them and ask about their tax suits. County will usually collect on behalf of smaller tax jurisdictions (hospital district, college system, port, etc.). School district will be the next biggest. Then it is usually MUD/PUD. Lienberger, blah, blah, blah, and blah represents counties in most of Texas.

What the preferred return and IRR is based off of also depends on how the offering documents define those terms. Don't assume a meaning because the offering docs can manipulate the components.

Based on what you describe alone, the classic attorney response "it depends" applies.

Setting up a securities offering should run $25-50K, so for small deals that doesn't make economic sense.  

A note/lien makes more sense but you still have to overcome the presumption of an investment contract (among other issues) if you do an equity kicker.  That answer has to match the facts of your deal.

If you work a probate list, understand how probate works in your state.  Before law school, I worked the probate list and did well with it, but the deals can take much longer to become viable.

Until you get to about 40 loans, even the cheapest professional loan servicing program won't pay for itself.  You can check out some of these:

• LendingWise
• The Mortgage Office
• Loan Servicing Soft
• Lending Pro Software
• Loan Ledger
• Nortridge Software
• LoanPro Software
• Mortgage+Care