All Forum Posts by: Jeremy Frantz

Hey all, I currently have a new home being built that I would like to keep in my personal portfolio. A partner and I created a new LLC (51/49) in which two other LLC's have interest in. We did this because initially we were just going to build/sell, but I would rather hold on to it. My question is: How do I properly take the interest that my LLC has put into the new LLC and give it to my person for the purposes of getting a loan from the bank through a refinance. The loan will be used to payoff the 49% partner and allow me to take some cash out. Here is an example with some figures:

My LLC total investment = $204,000
Partner LLC total investment = $196,000
Value of project when complete = $500,000
Each LLC value afterwards = $255,000 / $249,000

The plan was for me personally to go get the refinance loan because the terms are so much stronger than if I went portfolio with the LLC.

Loan total = $300,000 (keeping at 60% or under of value for best terms from the bank)
Partner LLC payout = $249,000
My LLC payout = $51,000

In this scenario, I am struggling to see how to get the remaining equity in the project into my personal name? 

Does the bank just realize since I own the LLC that has a 51% interest in the new LLC that it naturally flows down to me?

How does this look from a tax perspective. My LLC in this project is set up as an S-corp.

Thank you for listening and any color would be greatly appreciated. 

Jeremy, from Maine #207

Hey all, I got this seller who is willing to seller finance 92% of a deal for me for 5 years at 5%. Mortgage and interest comes to just under $2,500/month. This is a 5 unit office building (office isn’t dead in Maine…yet lol) and they are smaller units so the rents are lower due to the small sized offices. Perfect for insurance broker, mediation specialist, etc.  We have just over $2,800 coming in with a vacant unit ready for rent for $600/month. That would bring us to $3,400/month. After all expenses are accounted for the cash flow is $100-$200/month if I’m lucky. I wouldn’t go much further past the numbers on this one, but the zoning this property sits in is killer right now. Mixed use, business, residential, condos, no setback requirements, allowed to go up 40 feet (Maine is typically 30/35). Very light lot size per dwelling requirements. It’s just a “Juicy zone” as we call it. Anyways, just had the sewer line inspected and it’s pretty banged up. It’s got orange burg piping and it’s at the end of its 50 year term. It’s flowing, and the current owner has never had an issue with it (of course). I am hesitant to move forward due to this finding but am motivated to investigate further to discover the true costs of replacing that. Of course, if I was adding units I would have had to replace that anyway, alongside the water line, but was hoping to run the property at break even / small profit per month for the next 3-4 years while I put some funds away towards those large replacements. The rest of the building is solid and well maintained. Normal landlord stuff/updates to worry about. End questions are: (1) in this interesting financing time for commercial, would you value the seller financing package enough to move forward and hope the sewer line performs the way it has for years and fix the problem 3-4 years down the line or (2) try and negotiate the repair in now, and if so, any ideas for that to work with seller? I.e leveraging down payment and loan terms. Or (3) terminate and not try to figure it out (not my style)