All Forum Posts by: Wilson Lee

I had though ownership would flow like this (see below)  and thus remove the risk of someone reaching inside the C-corp and take position. 

My original concern was should a flip fail to sale and must be held as a rental, how should we move the property out of the C-corp owned LLC, to a flow through entity with out triggering a tax reassessment or tripping over any issues with my lender.

I am in the process of refinancing a rental on to a 30 year fixed loan. The lender advertised this loan to me as a loan to the LLC with my self as a contingent grantor.

I got the formal application documents today, All the application docs are in my name and I don't see the LLC, who has title, anywhere. Everything has my SSN and no EIN number.

Is that normal?  I am fine with a credit check.   I do not want a loan balance to be reported on my personal credit report.  How can i confirm this before proceeding?  

Here is what the loan officer told me.

"It is still a personally guaranteed loan so still need the personal info to pull credit etc. The loan will/can vest in the LLC so we will eventually need the LLC docs. Also, this would have to be set up in a separate LLC as the investor requires a single entity LLC to just hold the subject property. Of course that is no big deal at all."

The USA is a litigation happy country.  I do my best to limit my exposure to this wild west style lawsuit culture we have.

I am starting to flip properties but, for the last few years I have purchased rentals to hold. I am holding them in a few LLCs that are pass through entity for taxes. My property holding LLCs are groped up and owned by one LLC which my spouse and I own in-turn. (holding company)

I am setting up a C-corp to filp out of. I want a C-corp to keep my schedule E cleaned up to be attractive to lenders, I want that extra w-2 income form the C-corp. I am isolating each deal inside of it's own LLC owned by my C-corp. After the flip is successful, I am dissolving the LLC to stop a 3rd party form coming back after the sale with some crazy lawsuit.

The problem/question I have is. Should a flip project turn in to a flop!, I want to hold it as a rental. Call it a plan 'B' exit strategy. However I don't want to hold a rental in a C-corp. Passive income don't mix well with C-corps. What is the best method to get that property out of my c-corp and into a flow through LLC? I want to avoid changing Title. Title change triggers reassessment by the tax office. It makes chain of title messy for title insurance. Many lenders don't like Title changing hands rapidly.

I never had a C-corp before so I don't know, Can i simply assign interest in the property holding LLC out of my C-corp and to my main holding company. Or is there other things to consider?

How are you pricing your rents rate?   Is your rent based off comps from the same neighborhood? Do you 'need' the rent to be high to cover expenses?  Did you pay too much for the property and need the right to be high.  Did you over build for the area?  If so, you may want to exit the property and cut your losses than slowly let it bleed you every month.

If the above is not the case.  it is a management issue. 

 So, If I spend $5,000 on starting a quite title action and say, a lien holder steps up to redeem,  We are out of the $5,000

Tax deed properties earn 12% interest.  Should a interested party (past owner or mortgagor) seek to redeem the property with right of redemption. They must pay back what was paid to the county for the tax deed. the cost of necessary repairs. the cost of quite tile legal fees.  But what is the 12% interest applied too? Is it for all expenses on the property or just the amount paid to the county?

Redemption price = (12% * (tax deed cost + necessary repairs + legal)) + tax deed cost + necessary repairs + legal

or

Redemption price = (12% * tax deed cost) + tax deed cost + necessary repairs + legal

A friend of a friend is a tax deed investor. He has 2 houses for sale. 35K each, with ARV's of 100K. One has 2 years left, the other has 9 months left, before he can seek a quite title.

We are current buying with a local bank. I don't think they will want to fund this deal with out quite title. Is there any kind of bond I can buy that will help me get financed? Like forecloses where we can get a bond against right of redemption.

What is a solid source of information so I can go into this with my eyes open. I don't think the seller would rip me off, But I could not sleep at night if I did not understand the ins and outs of this.

A friend of a friend is a tax deed investor. He has 2 houses for sale. 35K each, with ARV's of 100K. One has 2 years left, the other has 9 months left, before he can seek a quite title.

We are current buying with a local bank.  I don't think they will want to fund this deal with out quite title.   Is there any kind of bond I can buy that will help me get financed?  Like  forecloses where we can get a bond against right of redemption.

What is a solid source of information so I can go into this with my eyes open.  I don't think the seller would rip me off, But I could not sleep at night if I did not understand the ins and outs of this. 

Update, 

Thank you all for advising.  

I did not do a good job of pointing out that I wished to work out a deal with her form the start. However,  She asked for more time to pay me back than I was willing risk the loss for further rent over.  So, I started the eviction process as a back stop.  And maybe pulled the trigger too quickly.  She also has a well qualified family member who can cosign/provide cash.

We have recovered all the lost rent and court cost, The Tenant agreed to a new lease at market rent (just $35/ month more)  co-signed by their family member.  She agreed to prepay rent for the last month of the lease and an increased deposit.  Both of which are forfeited in the event of a default. The late fee has increased as well.   We avoided, for the time, the cost to make the unit rent ready. 

Also,  During this whole process, she tried to find a different place. She was turned down over a number of times. She understands she not not likely to get approved for another rental home with the eviction now on her record. 

I feel this experience mounts the pressure to take care of her rent and shows her we are not push overs.

*Tenant  Spellcheck is a blessing

I have a 4 unit building full of tenants I inherited.  One Tenant is in her late 50s and often pays 15 day late.  But all ways paid.  

This September she slipped up and failed to pay. She promised to pay next month by the 14th.  I did not want to risk it so we filed for eviction and won the case.  On the 10th of this month I can file for writ of possession.  Recovering the lost rents is not likely.  Now she has all the unpaid rents due plus court cost.  

I do not like the Ideal of starting the eviction and the going back on it.  However keeping the rental income is Ideal.  After all, I am here to make money, not parent people. I though about offering her these terms.  And if she fails I will proceed with the writ.  Advice?

"The Landlord has elected, at his option, to not file for writ of possession if the following conditions are meet.

1)All moneys due are received before November 10th 2018 by 5:00 pm.

2)Payment of rent in the month of December is due on the 1st and must be received by December 5th 2018 by 5:00 pm.

MONIES REVIVED IN NO WAY IMPAIRS OR LIMITS ANY OF THE OTHER REMEDIES OR RIGHTS THAT THE LANDLORD MAY HAVE UNDER THE LEASE OR UNDER THE LAWS OF THE STATE OF ALABAMA"