All Forum Posts by: Nick Sabat

If you are new to Investing, I personally am not sure that long distance investment is a good idea - especially, if you are doing it on your own. 

Management of property, keeping an eye on contractors or tenants, etc. all are factors that must be considered - in my opinion. If you are going to invest long distance, I am not sure, a Realtor alone is worthy of trust. Not saying, brokers are bad people who should not be trusted - their sole interest is to make money.

Although they are held to disclosure laws, that doesn't always hold true with unscrupulous dealers. So, you may get lucky and get a good Real Estate Agent to work with you and you may not. There are however, National Market Analysts or even local Market Analysts who do nothing but Analyze current Real Estate Market conditions, in whatever area or nationally they are in.

Again, costs should be your major concern - at least to me personally it should be.

Falls under the Blue Sky - when you try to claim that you own the sky and people must pay you just to breathe, I think you are very shady. IMHO! Next, you open yourself up to a lot of litigation - I think most people would desire to avoid any litigation - anyone who would try to claim ownership to the Blue Sky, is nothing but a trouble maker, dramatists, coldhearted and greedy.

The other problem lies with those who decide to give credence to these submissions of ownership of names and phrases - the Trademark Office. They should be held to a higher standard of intelligence - the knowledge of knowing whether or not a phrase is a generally used phrase by people in a particular industry or not. Then, originality should also be considered or prior use.

As far as I can remember, people have used this phrase - back as far as the '80's. Use of this phrase is so prevalent in many markets - it should not be TradeMarked!

Sad!

Seems like a lot of work!

First, you have to convince several lenders or more, to join in on what you propose. Not saying that this cannot be done. But, as how you explained it, seems it would be better to go get a conventional loan of some sort and start that way.

Next, why even build a Trust to have people put their money into it, while you can borrow from each individual lender and pay them that way.

Seems you are trying to minimalism your own risk taking and placing it on the lenders. If I can see this, they certainly will. You have mentioned an REIT, why not just handle it that way and tell each individual investor, that they are taking the risk and if the trust fails, they loose money.

Your "Plan" is most important - in this scenario you have painted here, seems it will fail at the door. You are a software developer/student? Then, it seems you can read! My suggestion is you read on this site a little more. See if you can come up with something more viable and reliable.

As far as legal structuring of whatever entity you like - again, come up with a viable business plan first!

@Al Williamson - wow $850 for registration, taxes or both? And that's even if you aren't making any money? What about a Foreign LLC can they do business in CA? i.e., from AR, OR or NV?

Seems a little steep for a business. As I can see where the conversation has taken it's route to a cumbersome start. Paperwork, costs, etc.

And that pretty much sums up business in this country, especially for the small guy just starting out - to pile loads of crap on top of them as they start whatever venture they are interested in - two key points here - liability and taxation

@Jason Hardin I think the biggest reason, as your post started out, was "claims against you" and your limited liability, if ever a claim arose. As @Bill Gulley has pointed out "liability greater driving car" than owning RE. 

Laws are complex, (a lot of times Unconstitutional - but that is another subject, totally). In this complexity, you need to weed out the fine points. Hopefully, you will never find yourself liable for anything. But, LLC's are formed for many various reasons, Taxes, Liabilities, Ownership, etc.

The biggest reason - in my opinion, is protection against business debts. That is the debt liability is limited to the LLC and not the owner of the LLC. Much like a normal corporation. Now, if you are talking liability where someone gets hurt on your property, well, that's where insurance comes in.

Whether an LLC or personally held property encounters injury liability - insurance is a necessity. How much or how little is another thing. The whole point here, if it is protection against this sort of loss as a person owning a property - then insurance, serves it's purpose - I would imagine, without an LLC.

@Angelica Osusky I would assume a JV is a joint venture and something going South is maybe the partner pulls out, leaving you with the debt? Then, it appears an LLC is a good way to go for you. If a Limited Partnership won't do the trick. According to those rules, it limits your liability to the amount you have invested in the project - from what I know of this form of ownership. As someone else pointed out - consulting with an attorney is always a good route to go. But I think you CPA can help on this one, too.

As others pointed out here, Jason, financial planning is a must - that is, forming an LLC may be more of a hurdle you yourself set up in your way, than it is a benefit to you. This I would believe where due diligence comes in on the personal/financial side - do you homework. Will insurance cover you in the case of a claim being brought against you? If, while borrowing money, something goes South in the deal, can you cover those losses out of personal income? Etc., etc.

Good Luck!

Sorry that was the wrong unit right next door - my apologizes like I said don't like online estimators - always something up with them - 4 plex not 6 plex - at least it gives an idea of what the prop your looking @ is worth

Actually, I am not a big fan of online estimates, that report a properties value, but according to one most people use, the property is only valued @ $76.6k and it looks like the realtor is boosting that he/she was only asking $45k. Did this property just recently change hands? And if appraised will it appraise for more than $75K?

If you respell the name gaylen and spell galyen.com you get an atty! lol

You asked and basically here is a summation of what I am familiar with - most states have banking/finance/investment laws - some have Money Transmitter Licensing.

While from what I know, it used to be that any loan/mortgage 270 days or shorter is not considered commercial paper., longer mortgages are. Most Title Companies that deal with cash transactions, where more than $10,000 passes hands, they are required to fill out forms to turn into the Federal Government - this is to prevent money laundering.

Your best bet is to consult an attorney in your state or talk to the people who run your State Department for Banking, etc. With that kind of money, I am sure you will probably be doing a lot of lending, so be careful not to run afoul of the law.

Just saying! Good Luck!

@Davon Lowery - I got the part where all the copper is gone - replacement with Pex is a great idea - I personally was hesitant about using it originally - but about a year ago, I started to use it in my - dead space remodels - where there was an area in the house not being used and converted to a second bath.

The stuff worked great - very easy to use. Not being a plumber myself - I could never get the hang of soldering - my joints always leaked afterwards. So they came out with sharkbites to use with copper, plastic and pex. And little plastic fittings (with O-ring compression to seal) for pex. So now I swear by it and will use it in all future plumbing jobs.

I work for a few investors and I do not know one that does not have an hourly employee on hand, to do the little stuff - break out walls for access - paint - drill holes to run pipe or wire, etc., be on the job to meet a contractor - what ever the case may be. This saves them time and money, when they need to call me. And vice versa for me - on my properties, if there is something I can not do and need to get a contractor - electric, plumbing, HVAC I do what I can to save time and money, when hiring them.

I even have a bug man (exterminator), while he sprays for insects, I lay out the bait for rodents and other small animals, by saving this 20 to 30 minutes, I save a $100. So, again, the little stuff is easy and all the contractors I do use are repeats - that is they know with me, they are guaranteed more work, so that helps with price reduction and allows for a little more negotiation on the cost per job.

And vice versa with my Real Estate Investors - I get more jobs off them by cutting them a break - here and there. Good Luck in all Your Endeavors!

What exactly needs to be done? Is there existing plumbing? Is it sewer work, water lines, sinks, toliets, etc. Is there anything you can do yourself to cut costs - remove old water tank, deliver new one - take out old toliet, break out walls to give plumber access to pipe channels, etc., etc.?

I noticed you asked the plumber to bring in his costs to $6k and you are basically telling him he has a guarantee of steady work with you, if he does cut costs. How can you prove this to him - do you have other places already under contract or in your portfolio?

Can you obtain permits and handle inspection yourself? This I usually set up with my plumber. I use his paperwork fill out all the info, take a check to the Building Inspections Office and when the plumber is complete, I order the inspection and basically serve as the plumbers assistant when getting the job inspected. Depending on where you are @ this could save anywhere from $500 to $1500 on costs.

I basically do the same with the electrician, but because I am an electrician, unlicensed, I can do a lot of the work myself - he gets paid to pull the permit and do the inspection. So if you want a great rapport with your contractors - try asking less of them and more of yourself. But this isn't to say, you want more work put on you and you expect less quality - it is just saying where you can do little things to cut your costs do em.

And what is wrong with pex, anyhow? Just asking?