All Forum Posts by: Matt A.

@Greg Rose, you mention "we" several times, and "I" once... so, as far as the LLC is concerned - is this you (a single member LLC) or you & partners (a multi-member LLC)? THis will make a difference to your tax treatment, meaning single member wont necessarily trigger "ordinary income" as a multi-member would - Im NOT an accountant, but did just last week setup a couple more entities and made some changes to an existing one.

One other suggestion - PA has a 2% transfer tax (1% to buyer, 1% to seller) that you want to keep in mind). IF you later decide to chage more than 90% ownership of the LLC it will trigger real-estate transfer tax, talk with your accountant & or attorney on this one. In other words, have your entity ownership worked out BEFORE you put a property into it or it may become more costly later on.

You might also want to have a Nevada LLC hold the PA LLC as the laws were just changed in PA significantly weakening a single member LLC as far as charging orders are concerned. This one is for an attorney to answer, however in my case another "holding" entity was formed to hold multiple LLC's under that umbrella. We formed and changed managers to the holding company BEFORE putting any value into the entity, otherwise you have the transfer tax issue to contend with.

Best advice - seek competent PA council that knows this stuff cold. I can give you my attorneys name, but I will forewarn you, he ain't cheap (but also known as the best in the valley - where I live)

@Daniel Y. @Saran Mandhadapu - This is a local lender, newish to the area that I invest in (actually a new institution as far as banks go) that currently only lends in Northampton & Lehigh counties. THe loan isnt costing me any points for the rate or terms, and the property that Im acquiring has extremely strong cash flow. The quoted rate initially was 4.75 but after sitting down with the branch manager with an overview (good written presentation) of the project he offered 4.6... who am I to say no? :)

What I found was the application was simple - meaning NONE! It was literally a 30 minute discussion about what Im doing, what Im acquiring, leaving a copy of the sales agreement and my financial statement... Ive filled out nothing, literally no paperwork! Within day I had an informal commitment letter, then the formal one within 7-8 days. Darn easiest thing Ive done in awhile.

Im doing a commercial now with 30 yr amortization and 15 year fixed term (best deal Ive found) @ 4.6% 20% down. Closing in 8 days.

I personally couldn't sleep well with 5 year terms for your scenario as described. I gues the short answer is pray that everything doesnt move against you at once wiht that type of loan. 15 years allows me to exit as planned in 7-10 years, maybe a tad longer if things are still going great.

Off market - came across an "accidental flip" that I made an embarrassingly, ridiculously low offer... and it was accepted! Held it for 7 weeks and made more than what I paid for the unit. Very nice condo, but condos and fees dont work for me. THe investor that bought it is cash-flowing well also.

@Doug Maye, My wife and I are sitting with another accountant Tuesday to discuss this exact topic.... from the business/taxation side. We are then chatting with a couple attorneys in the next week or two as well to "tighten up" our entities and get our PA located properties appropriately aligned. We have a couple now, unfortunately with PA transfer tax (also the most regressive in the nation so Im told) at 2% Im going to have to put out a little bit to do this correctly. Im closing on another triplex on the 9th, so time is of the essence.

If you'd like to chat about what were learning feel free to ping me off-line. Leave me your number and we can chat further. Im one exit north of you!

Doug - Id honestly start with asking these questions of a knowledgeable real-estate attorney. Im re-structuring some of our holdings now (a mixed bag of personally held and entity held properties), but do be aware that PA will get their hooks into you for transfer tax AGAIN if you move things around - hence best to get this one right in advance as 2% or more get expensive really quickly.

Ive been reading a LOT of Garret Sutton lately and he has some pretty decent ideas on how to do exactly this. You also want to be aware of how PA just passed new legislation that significantly weakens a single member LLC from creditor attacks, hence why were making some changes to the overall ownership structure of our entities. If you come across a good attorney in the area please reach back out. I have a couple names that one of our property managers have given us that Im happy to share off-line, although I havent spoken (yet) with them. Im sure you can surmise my new years plans

Had a similar issue years back, the RCT-101is an 'informational' return that I hadn't filed as we had no idea it was required. We have since cleaned up the entity and files this religiously the last 7 years now... But Ill second the motion, get your accountant involved ASAP to clear it up.

Every other week.... My @$$, how about immediately after the animal fouled the yard! I take my dogs out a couple times daily (kids also take them out as well), we carry extra grocery bags, the plastic ones, in out pockets and immediately remove the offense soon as its dropped from the animals exaust. Takes about 20 seconds to bend over with you hand INSIDE a bag, grab the offending residue, pick it up and remove you hand while wrapping the contents safely inside the bag... heck, its recycling too!

Im not a fan of allowing tenants to have animals but will consider on a case-case basis. Ive found that folks with extremely high credit scores are also more responsible about cleaning up after themselves too (I have several 750+ score tenants)... the ones that barely squeak in appear to be marginal, but the reluctantly have done whats expected. At this point Ill only consider ONE small (under 25 lb's) dog with a non-refundable $300 pet fee - AND a monthly rent bump, usually $20-25. My pet addendum also states in bold italics that if you fail to clean up after the animal we will file to have you removed... so far it seems to work.

Seriously, that's the heads-up to get that unit listed immediately. If they are offering you anything for a buyout, negotiate as much as you can, and as others have pointed out - showings, cleanliness, etc. I terminated a month-month in October and have a new tenant moving in in a week. While that sounds horrible having a vacancy for 2 moths, its really a great thing sofar as Im concerned. The previous tenant was way under market (section 8 too), and a complete slob. THat cave me time to remodel and get an additional 400 for the unit - a huge win. from the new increase (even after expenses to remodel) a two month vacancy is nothing, Im still coming out ahead... could have done it another month without financial loss as well).

Dont sweat it, just continue to screen and keep your standards high. It will get filled... (then again, this is Danville :) )