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All Forum Posts by: Mariah Jeffery

Mariah Jeffery has started 42 posts and replied 183 times.

Post: Property Management From Out of State

Mariah Jeffery
Agent
Posted
  • Real Estate Agent
  • Cheyenne, WY
  • Posts 198
  • Votes 45

Do you have family in the area that could look over your properties and the management co. after you move?

My 28 rentals are in another state where I never lived, but my father in law lives in the area and is a general handy man. He does the maintenance for us. It has worked out, despite the advice not to do business with family.

Post: Advice on splitting private family C-corp

Mariah Jeffery
Agent
Posted
  • Real Estate Agent
  • Cheyenne, WY
  • Posts 198
  • Votes 45

I wish we knew the future. I wouldn't mind selling off some parcels and building our dream home there on best 20 or so remaining acres, but my husband prefers to keep it all in the family. Most likely, our daughter will end up selling it when we die. We had considered a business venture, such as a bed and breakfast. However, that would require a huge capital outlay and neither of us has any experience with a bed and breakfast, and my husband and I both have full-time jobs and live in another state.

This ranch happens to be in the general area where we have our 28 rentals, and we are tentatively planning to retire early (about 20 years from now) and build a home on this land. With time on our hands then, we may come up with a business venture involving this land, but I have no idea what it will be, only that it probably won't involve selling. Right now, the property taxes are low because it's ag land, and as soon as we change it to commercial purposes, both tax and insurance will quadruple, so we really better have a good plan to bring in cash flow with any business venture.

One thing I'm hoping, when I learn more about the rules involved, is that we can take advantage of having both an LLC and a C-corp.

Post: Daytona Beach and Orlando FL rentals help

Mariah Jeffery
Agent
Posted
  • Real Estate Agent
  • Cheyenne, WY
  • Posts 198
  • Votes 45

Unfortunately I can't be much help. I've really only looked at the east side of Orlando. My sister is about to become a landlord there because she bought a new home and will be renting out her previous home in Altamonte Springs. She paid $60K and will be renting it out for $850/month. That's not 2% rule material, but not bad considering she became a landlord by mistake!

In my case I would probably settle for something similar, just because of the additional write-off potential, but I haven't had time to get serious about it.

Post: Paying off rentals early

Mariah Jeffery
Agent
Posted
  • Real Estate Agent
  • Cheyenne, WY
  • Posts 198
  • Votes 45

You are very young and rates are very low. Both of those things point toward buying more rentals, but only you can determine your comfort level.

I started buying rentals at 26 and I paid only the bare minimum so I could use excess cash flow. This last year, my husband and I got to 28 units (we were 31, now 32). Now we are actually considering paying some of our highest rate mortgages down, simply because we don't think we want to buy more rentals any time soon. We have our hands full with the ones we have, full-time jobs, and our daughter. We're glad we haven't paid anything down before now, though, because we would not have been able to jump on the good deal we took advantage of without significant cash reserves.

Another thing to consider is liability. If your properties are not in an LLC and they are paid off, this makes them a prime target for a lawsuit.

Post: Daytona Beach and Orlando FL rentals help

Mariah Jeffery
Agent
Posted
  • Real Estate Agent
  • Cheyenne, WY
  • Posts 198
  • Votes 45

What are you looking to find out? I grew up in Orlando and have family there. I have briefly looked into buying a rental there (especially since I travel there 3-4 time per year and would love to write off my travel) but haven't pulled the trigger. All I can say is that cash flow seems to be decent in the area and the 2% rule is possible to achieve.

Post: Advice on splitting private family C-corp

Mariah Jeffery
Agent
Posted
  • Real Estate Agent
  • Cheyenne, WY
  • Posts 198
  • Votes 45

I've gotten a lot of great advice on my rental properties over the years and I have to thank the BP Community for that. Today I'm looking for advice on a different topic, but it's related to RE, corporations, and tax-minimization, so I'm hoping some of the gurus are here can help.

My husband is a minority shareholder in a family-owned C-corp. The corp. consists of approx. 600 acres of land, part of which is leased to a cattle rancher, another part of which is logged every 8-10 years. There is a house on the land. The corp. is not especially profitable; it generally brings in enough cash to pay the property taxes, insurance, maintain the house, and buy equipment (snow blowers, etc.) Occasionally the owners take a small distribution.

His mom and uncle each (along with their kids) own about 45% and 55%, respectively. They are not seeing eye-to-eye and want to split the corp., but the uncle (majority shareholder) will not agree to do the split unless my husband is a majority shareholder in the new, smaller corp. The reason is that MIL has a younger boyfriend, recently turned fiance, who no one (including MIL) wants to get the land that has been in the family for 150+ years.

We are exploring options to transfer enough shares into my husband's name so that he will become a majority shareholder ASAP. MIL is fine with this and wants my husband to be a majority shareholder so that she can be done dealing with her brother, and all she asks is for free rent (her brother charges her rent, which is paid to the corporation). She is willing and eager to do whatever is necessary to get the shares to my husband and expects no cash. However, our preliminary plan will involve buying some of the shares.

So far our plan is the following:
- Come up with a value for the shares that can be documented by something like "the average price per acre for land in County X time the # of acres, plus avg. cost per sq. ft. of the home, plus value of machinery. The value will purposely be biased low (but not ridiculously low to flag an audit), which MIL will be fully aware of, and we will all agree to it.
- MIL gifts shares to my husband, myself, and our daughter up to the max value of $13K each, this year and 2013. This will get our combined shares up to ~40%. The shares, for gift tax purposes, will be discounted 30% to reflect the fact that they are minority shares and not marketable.
- We enter into a contract with MIL to buy the additional shares needed at the discounted value on a 25 year note.
- We then split the big corporation into two smaller c-corps in January of 2013, after the gift shares have been transferred.

Does anyone see any holes in my plan?

Obviously we are involving an attorney and a CPA, but the first meeting we could get is over 2 weeks away and I wanted to see if anyone had any ideas in the mean time that I could use to do some research before the meeting or perhaps books I can read to educate myself on the topic. TIA!

Post: Cash out refy home purchased in LLC name w/ conventional

Mariah Jeffery
Agent
Posted
  • Real Estate Agent
  • Cheyenne, WY
  • Posts 198
  • Votes 45

I forgot to add, I have $425K borrowed through this credit union and they are charging me only $3K for the rate mod fee. No new title, appraisal, nothing. B/E is 6 months.

Post: Cash out refy home purchased in LLC name w/ conventional

Mariah Jeffery
Agent
Posted
  • Real Estate Agent
  • Cheyenne, WY
  • Posts 198
  • Votes 45

That's a great rate for a business loan! I ended up going back to the credit union that is the original lender and asking if there was anything the could do for me. They offered to do a rate mod with a variable rate of 5.25% fixed for 5 years, with the same 15-year amortization. I had about 12-13 years left on each of these and if I pay the same payment I was paying at the 6.75% interest rate, I'll be able to pay these off in about 10 years, so I'll only have to worry about one adjustment.

The really great part is that over half of my rentals will be paid off in 10 years, when I'll be 42. Early retirement maybe? :-)

Post: Question about Quit Claim Deed Date for Refi Purposes

Mariah Jeffery
Agent
Posted
  • Real Estate Agent
  • Cheyenne, WY
  • Posts 198
  • Votes 45
Originally posted by K. Marie Poe:
Mariah: In the future, consider going in to record when you are concerned about time. My county records every day up until 2:00 pm. If I mail it in, it sits on someone's desk for 3 or more weeks...every time. When recording in person, if they refuse the doc, they give you the feedback you need to change it.

That being said, it can often be a mistake to prepare and record your own docs. For your purposes, I would have let escrow and the refi lender prepare the docs they require to transfer title. I'm not sure I understand your seasoning concern.

That would definitely be the preferred method, but I like in Oregon and these properties are in South Dakota. :-)

Post: Question about Quit Claim Deed Date for Refi Purposes

Mariah Jeffery
Agent
Posted
  • Real Estate Agent
  • Cheyenne, WY
  • Posts 198
  • Votes 45
Originally posted by Dave T:
Mariah,

More often, the problem is with title insurance. Your LLC purchased the property with financing that probably required a title policy. If your LLC also purchased an owner's title policy, your LLC was the named insured.

When you used the QCD to transfer ownership from the LLC to you personally, you broke the warranty insurance chain. If you sell the property and sometime later a defect in the title is discovered that would be grounds for a claim against a title insurance policy, you essentially became self-insured.

Get specific details from your favorite real estate attorney or title company.

Would I have avoided this problem if I had used a special warranty deed?