All Forum Posts by: Melody T.

 She is getting a 1.46 multiple over 4 years , so 1.46 X to the Y 0.25 equals 10% compounded annual return, which should be totally covered by depreciation so that's an effective yield of 16% if in top bracket. Which she then may have opportunity to 1031 to avoid the 20% cap gain and 25% depreciation recapture, So overall its a pretty good investment if it pans out?  The SP500 has returned "long term" 8.4% nominal and 6.9% real, per Dr Jeremy Seigels 1801-2023 data set and would be fully taxable at sale.  As she personally knows the syndicator she may be able to garner far more info in conversations with them about this and other investments, which can give her an informational asymmetrical advantage over 99% of retail investors as well. 

Jemma.............I have a lead specialist directly from the Cleveland City Website that has passed several of my units. Many of them work for PMs, but I found that if you reach out directly to them they will do it a little more reasonably then oing through the PM because they often hire the same folks, but then put their markup in as well.

Hey, I know it’s not really answering your question directly, but I’ll give you my take.  I’m also in the middle of my first fix and flip in Cleveland (remotely, I live in Rhode Island).  Since it is remote, it is the first time I’ve ever used a GC. Before this, I’ve done six fix and rents in Providence acting as my own GC.

I can’t imagine doing my project without a GC, unless I was paying a handyman or a real estate agent every time to go meet a vendor there.   I have also really really lucked out with this GC, he started on the project a day or two after the close, and has been working on it since. Having no contacts in the area, I relied on my agent, who is investor friendly, he gave me a couple of contacts that he trusted.  I called all of them, only one of them picked up when I called, which is very important to me.  His price was reasonable, and he said he had the capacity to do it, and he came recommended, which was all I really needed to pull the trigger.

Long story short, after this experience, I would probably only do it with a general contractor, but I think the key is finding the right general contractor.  If you have a good agent, they should be able to help you with that.  

Journey Toole from Keller Williams is my agent and Darryl from World Builders And Contractors is my contractor.

Good luck

@Melody T.

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.

@Melody T.

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.

One thing to take into consideration is.. if you buy the property with an LLC your interest rates will be higher.