All Forum Posts by: John Morgan

@Julie Ferrier, was it pretty easy to qcd the properties back in your name? I had an attorney set up my LLC and do it all. If it's not a problem, I may just do it myself since having this LLC is kind of a hassle.

Hi @Jeremy Kross, I just formed an LLC and learned that the due on sale clause for quit claim deeds from loans to LLCs went away as of Oct of 2017 for properties purchased after 2016. I did four QCDs from my name to my LLC about 6 months ago and wasn't aware of DOS that some lenders had done on others. But apparently a DOS won't apply now. I own one property out of state so I assume I need to get a foreign equity permit each year for it which is $200/year in Missouri I think.

Not sure an LLC is worth all the hassle and extra costs vs just putting an umbrella policy on home owners insurance and keeping them in my name. I can't think of much of a benefit for putting all my properties into an LLC. If something happens, I assume my personal finances and assets are protected a little more? Also, I haven't heard of any LLCs getting sued and losing. I'm sure there's some holes in my LLC that attorneys could find, but I bet most people won't go after an LLC.

I’m definitely down with meeting anyone to share our experiences. Preferably for free to chat about ideas, loca real estate strategies, successes, failures etc. anywhere..nothing fancy. 

I’ll look into that meet up group on Thursday too Paul. Thanks. 

@Derrick Johnson

Hi Derrick, I live in the DFW area as well. Let me know if you find any of these groups. I would love to get together with anyone to gain more knowledge and network. I own five SFRs in the DFW area and one vacation nightly rental in Branson, MO.

Here’s how I look at it. We can talk numbers all day long as far as getting hit with an additional 10% early withdrawal on that old 401k etc. If you never take that risk of entering in the real estate game, you’ll probably be regretting it sitting on the sidelines while your old 401k earns very little. Or sure, you can roll it over to your new employer 401k plan and see a bigger combined balance. I would google a financial calculator on your combined 401ks with how many years you plan on retiring. Plan on maybe 7 or 8% return and 3% inflation. If that financial retirement number you’ll have when you retire is weak, then I’d roll the dice and cash that thing out and take a 10% early withdrawal penalty.

I personally got started in real estate by taking out 68k from my Roth IRA four years ago. I only took out the principle I had put in so I didn't have to pay any tax penalty which was nice. But it got me started. And the sky is the limit in real estate. So many options and so much control you will have. I've grown to 6 properties now, all cash flowing about $2,500/month. Not great, but not bad. And people are paying down my mortgages each month. And I have about 500k in equity in them now. Could my 68k I originally took out four years ago cash flow this much? No way. And would it be worth 500k in four years that my equity in these properties I've slowly acquired have grown to? Probably not. Sometimes you just need to take a little risk and try something new. 401ks are good, but they take several decades to give you financial freedom. Real estate will accelerate your wealth and it's more exciting that watching your mutual funds chug along at a slow pace. Good luck with whatever you do!

I formed an LLC recently in Texas for my five SFR rental properties in Texas and one nightly rental in Missouri. Do I need an annual foreign entity permit for my property in Missouri? Does rental property count as "transacting business?" If so, I assume I need to get a foreign entity license/permit every year. Just wanted to make sure.

Do I need to file for state taxes in Missouri if my LLC is formed in Texas where I live and work?

And last question. Do I pay an annual fee for my LLC in Texas to keep it current? If so, how? Thank you!

@Irina Belkofer

I'll have to research those topics posted here regarding due on sale clauses. This is all new to me. I'm still not sure what a DOS is and how I go about it. Thanks for the info. I was worried I violated something really bad with my lender for creating an LLC to put my properties in. Ok, I'll take a deep breath and move forward with this assuming what I did is legal and not a problem for my properties that have loans.

Thanks @Morgan Klein I'll get that book. I assume your properties are paid off when you went through the LLC process? My error was setting this LLC up with some properties that have loans on them. I might see if I can do a quitclaim and put them back in my name with the county so my banks don't find out and drop my loan. Then maybe do an umbrella policy under for the properties that aren't paid off. But keep the two properties that are paid off in this newly created partnership LLC I have with my wife. I wish my attorney who set my properties up with this LLC last summer let me know what I was doing was wrong.

@Greg Scott

Thanks Greg. Just read your other post about the property I have out of state. Yes I have 5 properties in Texas and my LLC is registered here in TX. I the rental property I own outright is in Missouri. Fortunately there is no loan on that one to deal with. However, you mentioned I need to register this property as a "foreign" entity. Why, how and what does this mean? And what is a registered agent?

I had no idea real estate investing would be this complicated. I just assumed everyone set up LLCs like it was no big deal. There’s way more to it! Thanks again for the advice Greg. I really appreciate it!

@Greg Scott

Thanks for the advice. Maybe I'll do what you did. So I can easily move them out of my LLC back to my name which was originally on the properties and loans? Maybe I'll have my attorney who set them all up in the first place move the properties that have loans back into my name. I'm just worried the banks will drop my loans if they see that I put them in an LLC. I'll keep my two paid off properties in the newly created partner LLC that I have with my wife. Then maybe put my properties that aren't paid off under an umbrella policy I could get from my personal home owners insurance? This strategy sounds like a good plan. Thanks for your ideas!