All Forum Posts by: Josue Guerrero

@Steven Hamilton II Thank you very much Steven, that makes a ton of sense! So just to make sure I understand, I'd form an LLC as a partnership with her, follow the situation that I mentioned above, split the profits 50/50 with her and then pay her, her interest beyond the 50% paid with a 1099-INT? So she'd also technically be an independent contractor on top of being a partner?

One other thing I am a bit confused on, is what you meant by the no guaranteed payments on rentals? 

@Steven Hamilton II Thank you for the input Steven. So from what I'm reading, going the S-Corporation route for Real Estate is a no no. I should probably also mention that my mother would be the partner and she'd be serving the role of investor. My plan would have been to obtain a loan under the LLC, and have the both of us personally guarantee the loan. Currently, I wouldn't be able to qualify on my own as I have no income to speak of due to being a business owner and not paying myself a salary. I plan on paying myself, but I'd still need 2 years of having a W-2 in order to be considered for financing, from what I've been told. In exchange for her obtaining the financing, I would be in charge of handling all of the work and guaranteeing her an ROI. What would be your suggestion for this situation? Are there any important things I'm not considering?

If I were to form an LLC with a partner, what would be the best route to take as far as tax benefits are concerned. Let's assume our strategy is to focus on the purchasing of distressed properties, fixing them up, and then renting them out, with the occasional flip every so often. Should we be elected to taxed as a partnership or as an S-corp, and why?

Interesting. From a sellers perspective the only thing that comes to mind is this: most owner occupants aren't educated real estate investors and thus don't meticulously analyze properties to see if it's worth making an offer. So where a house flipper might be interested in a 100,000 dollar property, they might only be willing to offer $60,000 for it, whereas someone who wants to live in the property might offer full market value, or even get into a bidding war with another potential buyer and actually buy it over what it's worth at say, 115,000! 

That being said, it's not legally required for you to disclose why you want to purchase the property from the seller (Unless I would assume they are the ones financing it for you). As far as they know you're totally going to be living in the property for many years to come :)

Tom, that's definitely something that's better to be discussed with an attorney. From the current sound of it though, things don't exactly look like they're going to end well between you and the landlord, unfortunately. 

It's always a good idea to make the tenant sign a lease if they are going to be living in the property, regardless for how long the duration of their stay would be. Unfortunately, something all my mentors have told me is to never rent to family or friends. It causes plenty of headaches when things go bad, and can cause the relationship to go sour. 

That being said, if you're still willing to rent to your relative, it would probably be a good idea to make sure they sign a month to month leasing agreement. It'd probably also be a good idea to speak with your real estate attorney about that and see what they say!

Best of luck to you, Bonnie!

Cody, as far as I'm aware, you can lease an office space for pretty much whatever reason you like. A real estate broker shouldn't prevent you from doing so, but I'm not 100% sure of that, I suppose it would depend on the broker. That being said, if you're forming your own real estate team, and plan on funding your own real estate investments, (rather than just simply doing the work of an agent and collecting commissions on properties that aren't in your name) then you should be free to do whatever you like as far as offices go.

Is there a specific reason you would prefer an office space, versus saving that expense to fund your investments and working from home?

@Vishal Gadhia Alright, thank you, Vishal! I'll browse around some of my local banks and see what are the best rates and terms that they could offer me. I appreciate the advice!

@Brie Schmidt Got ya, good to know! I guess I'll have to go shopping around for some commercial lenders and see what they might offer me, and I'll use the terms you mentioned as a guideline. So the seasoning requirements on costs would still be your typical 6 months?

@John Horner Great, thank you John for all the help. I suppose I'd have to find out with the lender if they could also finance the interest and loan points for the HML, as that would technically be a cost of acquiring the property, at least that's what I would assume!