All Forum Posts by: Kenny Kuramoto

I feel strongly relationship matters. For me I connected with a banker who was knowledgeable, willing to go to bat for me, and had products that will be beneficial to my business, plus was authentic and we communicated well. That matter more to me than which bank they were with. 

@Kenny Kuramoto

California is generally more cumbersome than other states when it comes to taxes and filings. Even if you create a non-CA LLC, if you are managing the business from California, you will likely be deemed to be "doing business" in California and therefore likely subject to CA taxes. California charges a minimum tax of $800 a year per LLC, and more if you have gross receipts in excess of $250k. So, if you create an LLC in another state, you will likely need to register it as a foreign LLC in California. Though, this process will be the same for the other state (if you created a CA LLC you may need to register it as a foreign LLC in the state in which you are doing business/holding property). This means that you will probably need to pay registration and filing fees in at least 2 states if you don't buy CA property as a CA resident.

Be sure to tell your accountant that you may now need to file non-resident income tax returns in each state where you own property as well. CA taxes residents on worldwide income but may provide a credit for taxes paid to other states.

Most likely the state where the property is located is where lawsuits would be brought if they are something for personal injury like a trip and fall or something of that nature because the “cause of action” arose in that state. So even if you pick a state with stronger protections like WY or NV, the cause of action arose in the state where the tenant fell, so likely that the court where the accident happened would have jurisdiction. Of course, with all things, the answers to all these matters will depend on the circumstances.

California tends to have more laws on the books and requirements and restrictions that it can be a good idea to form a CA LLC for out of state property so that you as a CA resident are covered, and to try to have your contracts fall under the purview of CA courts. It also is helpful to have a California LLC in case you ever sell that property and move into another state so that you do not need to form a new LLC altogether with new operating agreement, just re-register in the new state as a new foreign LLC. Also, the state of formation is likely where internal disputes would be brought among LLC members, so if you and a partner and/or spouse live in CA, you probably want to arbitrate in CA if the two of you had a disagreement. But, that is not always the right answer and you should speak with someone familiar with your personal situation to get advice specific to you.

*This post is informational only and is not to be relied upon. Readers are advised to seek professional advice. This post does not create an attorney-client or CPA-client relationship.

You should create an LLC for each property you purchase as an REI. It does not have to be in the same State - just make sure you keep the entities current and don't let them expire. I'd do it in a less expensive State than our home State!

I am hosting a webinar next month on asset preservation/protection. https://TrifectaAssetPreservation.eventbrite.com

@Kenny Kuramoto

When converting the garage into the bedroom make sure it has a closet and is air conditioned space. 

To show the bedroom on county records it would need to be permitted but I’m not sure how it would affect the sale price if you didn’t get that permitted, likely I’m thinking it would not matter.

Of course don’t forget to take into consideration the value a garage brings, if it’s not valuable for people to have in that market then go for it and take it out. 

Quote from @Kenny Kuramoto:

I wanted to see If i got this explanation right on this Hard Money Lender. I know people will have this question so here is a sample sheet I have. For context this my first BRRR so thats why the rates are probably high.

I was wondering a couple things

1. Estimated Cash due is what I have to put in? Is it my Down plus fees? 

2. How is my Down Calculated?  25% down of the Purchase Price?

3. They are only offering me 65% of ARV ?

Thanks everyone!

@Kenny: Re question #1: This is your down payment plus the origination fees of $4,241, which roughly equates to a 25% down payment (question #2). The loan amount is indeed 65% of ARV (question #3) and covers the $35,000 construction costs too. However, from the above it appears that the $35,000 construction piece will be funded in tranches as the project progresses, which is not uncommon. You would want to understand that lender's draw process and timing. From the information in the bottom right corner it appears there will be additional fees with each draw (which is not uncommon).