All Forum Posts by: Mallory W.

 Hi Dee Dee.

Thank you your response.  I don't think I want to involve attorneys.  I'm just shocked that it ended up coming to this.  I'm going to hang my license with a different broker and would prefer to use this as a learning experience.   I don't see what kind of legal action that could be taken anyway, or how it could better the situation, you know?

Happy Thanksgiving to you, too!  Thanks again! 

Well, the broker "let me go" because of this. Ridiculous. 

Thank you, both, for your advice. My main goal is to handle this ethically and diplomatically.  I live in a small town and my personality is naturally to resolve conflict and not create it. Any suggestions on how do that this situation?

Hi all.

Brief history:

I've been a Realtor for over a year with the same company, however I became interested by first being a real estate investor.  I was the first agent with this RE company and joined because the owner is a friend of the family and also an investor.  It was with understanding my goal was to park my license, network, work deals, learn the Realtor side of this business and market myself but with the end result of me getting my brokers license in two years and doing strictly investment deals on my own.  Then the company hired a new broker after 6 months, and everything changed. 

Current situation:

Through my networking, another Realtor told me and my husband about a trailer park listing she has with an investor.  We became very interested when we ran numbers and found it to be a good deal.  We met with our accountant, attorney, the listing broker and eventually the seller to ensure we were going to make a sound investment.  I disclosed I was a Realtor with a vested interest as my husband is a general contractor/home builder and basically knows how to find missing information whether through the city or county, and another family is funding the deal.  In short, a lot of research has been put into our first big deal.  

Before we started any of this I called our states real estate commission to see if I had to run the deal through my company.  They said "no."  And nowhere in my contract does it state that I have to run my families deals through the broker.  However, because the owner is a family friend and the company is still small, my husband asked him if he'd rather us purchase it as me being the buyers agent which would benefit the image of his company (minus the 40/60 commission split)  He said "no no. Don't go through the company, save the commission off the deal and buy through listing broker" which is what we were originally planning on doing (save from the top and taxes).  But, I wanted to make sure I was doing the right thing.

Well, owner told the company's managing broker who said I had no right to be doing this deal without running it through the company.  The broker said essentially I was dipping into the companies pocket and that the company will get its 40% commission whether I waive my 60% off the purchase price or not.  Broker said she will not support this transaction if it is not run through the company.  

Is that legal?  This is a family deal and we did all the research and my husband and his mom have been doing ALL the negotiating.  Nothing in my contract states that I have to go through the company. 

Advice?  Thoughts?  Suggestions? 

Thanks! 

Hi fellow biggerpockets team (especially realtors who are also investors)!

Here's the deal.

1. I started out as an investor. Bought 1 wholesale property, rehabbed it, rented it for 1 year, and sold it all for a profit of $25k. Great deal. Not a lot of headache because we did good repairs, screened the tenants, and hired a realtor to sell it.

2. I obtain my real estate license so I could have access to MLS, and basically build a foundation of commission by focusing on helping buyers and sellers complete transactions.Plus, if I were to buy foreclosures, fix them and sell them as a FSBO, I could cut out the 3-6% in commissions.(more on this snafoo later).

3. In the mean time, my father, who is a doctor and needs some major write-offs, liked the whole idea of investing and tax deductions (while I, of course, liked the idea of cashflow, and the ROI). So he was willing to fund the cash, while I found the deals (and with my real estate and investment knowledge it seemed like a great deal), so we formed an LLC.

4. We spoke with an accountant and, as I imagined, he explained that my business model of buying foreclosures to buy/hold/sell in a trending market was ideal for father to get tax breaks and for consistent cashflow. He would get a percentage of the ROI, but because I was finding the deals, hiring the contractor, and basically overseeing the project- my percentage of ROI would be greater.

5. Well, instead of funding cash on 2-4 foreclosures, he takes a mortgage out (in HIS name, not in the LLC) on a VERY nice, never rented before, no repairs needed to get it rent-ready, beach house.Initially, my parents wanted to hire a property management company to run everything to rent it out (which, as we investors know, would hurt the cash flow tremendously-would be lucky to break even, even if the renters didn't cause any damage).So, after speaking with other investors, renting the house VRBO seemed to be the best option, and father decided he wants me to run it.

**Here is where on real estate license snafoo comes into play.

** If I didn’t have my license, it would seem that I could help run the rentals for my parents by setting up the VRBO, using a restore-lock, hiring maid services, and basically making sure everything runs smoothly. But, because I have my license, I’m finding that there are certain legalities restraining my being able to help set this up and being compensated for it (my current broker does not do Property Management, and legally cannot call myself a property manager without my broker having the right credentials/license to do it (or so I have been told).

Question 1: Are there any Realtors out there who are also investors who help family members do VRBO without calling themselves a Property Manager?

Question 2: Are there any active Realtors out there who are also investors and owners of LLC who actively buy foreclosures, short sales, or any good deals for that matter, through their broker?Or if without their broker to buy/rent or flip them under their own LLC- how is this done legally being a licensed agent so that no liability falls into the lap of the broker?

(State is ALABAMA)

Thank you.

 I hope feel better Rodney!

Thank you, Bryan for the article on series LLC's in Alabama and the change in laws. That was extremely helpful!

Chris-- THANK YOU SO SO MUCH for your help!  Extremely informative and now I feel like I have a better grasp on taxes and what I need to ask my accountant and attorney.  

Thank you a million times over to everyone!  Everyone provided me great information that google could not.  I am so happy that I have found biggerpockets.com.  THANK YOU!

Jeff,

I agree and understand what you're saying.  Because I am sort of a "newbie" and feel insecure taking a loan from family as opposed to a bank, I'm trying to figure out a way to make this deal great and fair for all involved.  Securing the loan from my step dad will be to draw up a contract with our attorney and a real estate tax accountant.  We can do that.

What do you think a fair deal would be?  I've heard of 50/50 split, however, my husband provides the expertise in doing all the rehab work and I find the deals, I will be a property manager by advertising, screening, and selling.  I'm trepadatious because it isn't my money, it's my family's money... 

Any advice would be great!  I consider myelf a "newbie" because I've only done 1 property and because I have only had one niche- 3/2/2, 70% rule, 80 day rehab and tenants in before it's rented. 

Thanks!

Thank you, Lumi!

I was planning on forming an LLC. I have one in Texas and my husband has one here, in Alabama. I was taught that each foreclosed residential property should be purchased under individual LLC's. My question is... what is fair? I have read numerous articles stating that we can come up with how we think the partnership should go, but I'm not sure how to do that. I want what is fair for everyone involved. My step dad works crazy hours as a doctor and he wants a tax break, but at the same time I want to show him that he can retire investing in real estate and stop working as hard as he does. I also want to help my husband build up his company, and I want to basically manage every thing else. How will that help my step dad as far as a tax break is concerned?

Here's the scenario. I have some experience with real estate investing (1 foreclosed residential home purchased through a wholesaler in San Antonio, TX, full rehab, rented it for a year, sold it making a $26,000 cash profit). I've been a member of local REIA's, and took many courses in real estate investing ( I am familiar with creative financing, 1031 exchange, capital gains tax, 70% rule-of-thumb...how to find the good deals etc--- I'd like to learn as much as I can, unfortunately we do not have any active REIA's in mu area). Recently, I received my real estate license for a leg-up: access to MLS, Realtors Association and for networking purposes. My husband is a general contractor and can pretty much build a house from ground up with his crew. My step-dad is a doctor who has a pretty penny invested in stocks, mutual funds, IRA's etc. He pays A LOT of $ in taxes every year. He is more interested in being a passive RE investor and wants to use both mine and my husband's skills and expertise to start investing in Real Estate.

Questions I have:

1. I know how to find the deals, my husband can do the rehabs, and my step-dad funds the deals.  Any suggestions on how we can put these deals together so that it is a win-win for all involved?  I know that seeing a tax attorney and accountant is top-priority, but my concern is ensuring that my step-dad (who has little knowledge when it comes to real estate investing), understands what it means to be a passive investor and what he should expect as far as taxes go.  What can me and my husband expect for tax breaks?  If we're doing all the work

2. Any suggestions on what a fair deal would be?  Would him receiving interest on the deals be sufficient, or should he receive 50% of the profit, receive monthly cash flow?  I'm just so used to dealing with banks and hard money lenders (before I had my real estate license and before I was married to a licensed contractor) that I'm not sure what is fair.  I want to make Real Estate Investing my full-time career, and eventually want to get to a point where I don't need to use OPM, but also want to continue helping my step-dad with real estate investments.

3.  Any Advice?

Thanks!