All Forum Posts by: Michelle Mapp

Okay - I found a great article on Bigger Pockets that explains exactly what I want to do and why.  Sadly, it also highlights that what I want to do doesn't actually help me in PA with regard to transfer taxes and since the two properties I want to do this with are in PA - well now I know.  :)  

https://www.biggerpockets.com/renewsblog/2010/09/30/land-trust-traps-for-the-unwary-investor-2/

@Chris K. Hi. My husband and I have properties that are currently titled to us as individuals and we want them out of our personal names. We would prefer to have these and all future properties owned by our LLC instead of us as individuals.

In order to transfer title seamlessly, (i.e. no due on sale enforcement or transfer taxes) based on the research I have done, the simplest way is to create a Land Trust and make the LLC the beneficiary. I have heard this from several investors and also read quite a few articles on it. But it apparently is not very common and I am having a hard time finding someone who can help me change the title on these properties easily.

My next step will be to contact people in PA but our LLC is CA and we plan on purchasing in other parts of the country as well.

Michelle 

So , I don't know if I have ever heard so many different stories as I have regarding Due on Sale Clauses, changing title to an LLC or Land Trusts.

I can not believe how many people I have spoken to and how many articles I have read that all give me different stories.  What I am looking for seems pretty simple to me.  I would like to find someone in CA (where I live) who can do a Land Trust.  We want to transfer two properties in PA into the name of our LLC but would like to avoid any risk of Due on Sale clauses.  Seems like a simple thing right.  Well, apparently we don't use them much in CA and I have talked to 4 different people/firms and none of them do Land Trusts.  

Some advice I have been given: 

1) just transfer your property from your personal name (my husband an I) to the LLC - no one enforces those clauses

2) if the current title is 50/50 for husband/wife and the LLC is 50/50 for husband/wife then there is no issue - its basically the same

3) We don't do land trusts in CA

I do not want to take the risk of the Due on Sale clause, particularly with one lender who I would expect would actually enforce it.  

So - advice?  Recommendations for a Land Trust attorney?  

That would definitely depend on your team and what they can do, how much you trust them, etc.  I have shied away from large rehab projects because I have not built a good contracting/rehab team in Pittsburgh.  If you have that then you have more options.  

Amen,  

Hi. Congrats on making the move into REI! Pittsburgh is a great city. I personally have not flipped in Pittsburgh, as I do buy and holds there. My only advice would be to be really aware of where you are flipping and the nature/desires/expectations of the buyers. As I read your post the first thing that came to mind is that a flip in Lawrenceville is going to be completely different than a flip in Bellevue. Or Edgewood and its immediate borders vs deeper into Wilkinsburg or Swissvale. I mean obviously that is a common challenge anywhere, but since you are remote, it might be more of a challenge to understand the nuances of the neighborhoods and buyers - tech crown vs. more traditional working crowd etc.

So, hopefully since you have good boots on the ground you will be in good shape.  You might want to chat with your family and really research neighborhoods first and try to pick certain areas as key targets first.   

Good luck!  

Matt R.   That may be the case but to assume that everyone can invest in Pasadena or Southern California is a bit extreme or to assume that they can take the negative cash flow while waiting on the appreciation.  I don't disagree with you that if your game is appreciation and you have the capital on hand to buy in Southern California then some of the smaller markets would not make sense.  But luckily there is room for everyone in real estate and there is no one way to accomplish your goals!  

Robert,  

Hi.  I invest out of state and live in Southern CA.  I have two duplex's in the Pittsburgh PA area and will buy more out of state over the next few years.   I think that buying out of sate is a completely viable way to invest in real estate especially if you are unable to unwilling to work with CA numbers.  Sure, it has different challenges and the potential for different mistakes but that doesn't mean its not realistic or viable.  

The number one thing that can help you avoid the mistakes is the analysis and evaluation.  For example, in order to choose my property management company, I called and interviewed 10 different companies.  I had a set of criteria that were critical to me for a management company.

I also make sure to run my numbers carefully and then revise as I learn and adapt.  For example, I was using a conservative % for expenses but after my first year realized that my estimate was off a bit.  I revised and now will evaluate my next property in that market differently.   In this case I underestimated the PA school taxes.  It wasn't a deal breaker but definitely made things tighter.  

That learning process would have happened no matter where I invested.  I am willing to take the risk that comes with out of state investing as it will allow me to build my portfolio faster, diversify across markets (mitigating risk) and also will provide more insulation or stability if you will as markets change.  I chose a market that is way less volatile than Southern California on purpose.  

I think your individual evaluation of risk tolerance will very much depend on your personal perspective, your age, the level of capital you have access to, etc.  Out of state investing works for a lot of people.   You just have to look at it very carefully and decide if it could work for you.  

Hi.  Yes, we are starting with a payment that is slightly below what would be standard on a 30 year fixed based on the potential purchase price, then we are pre planning scheduled increases in payment, and scheduled lump sum payments.    Another way to say this is that regardless of what the final settled interest rate and total price - the first few years have to be at a certain payment in order to make this work.

That is good advice about the servicing company, I had not factored that in but will look into it.   

@Patti Robertson thanks but those both don't allow for the variability I want and to specify the payment.  They both work from a perspective of calculating the payment based on the total price and interest.  I wanted top back into it the other way based on what I wanted to pay each month.  I was able to find the following:  http://www.mdmproofing.com/iym/products/loan-amort...  

This allowed me to specify payments (i.e. only x amount the first 10 years), adjust payments over time (up payments in x number of years, add in some lump sum payments, etc.  This one gave me the flexibility I needed to be able to present my proposal.  

I am working on a seller financing deal and I am looking for some resources on the math/formula part of it.   I need to create a detailed spreadsheet with the full amortization schedule that allows for quite a bit of flexibility - such as increasing the payments every 5 to 10 years, making extra lump sum payments at different times, etc.  

I am trying to start from a specific monthly payment and then work around the numbers to get to a point where everyone is happy.  

Does this make sense?