All Forum Posts by: Michael G.

I did search and I didn't find anything. Probably bad search terms on my part. If anyone has a link to one of the other threads I would love to read some more on this.

So as an update, I did talk to our attorney today. His firm does real estate and SMB law (LLC's, LP's etc). I mentioned some of the posts on this thread and he said it didn't sound as complicated as all of that. *shrug*

I am skeptical but I want to hear what he has to say, he is going to get back to me after he researches for precedence etc.

As we were getting off the phone his thinking was that we would just set up a separate LLC for each property in rehab. Yes we would pay for the transfer into our long term buy and hold LLC but that would be worth it to us for various reasons. We would still be the managing members and the other folks would just have a stake in the LLC based on the amount they buy in for.

Because we are not advertising and we would have less than 10 members involved with any given property the lawyer didn't think we would have a huge problem figuring something out.

I guess we will see. If anyone has any other ideas please let me know. I am all ears because I want to go into this with as much info as I can.

Thanks

Thanks Jon

Out of the gate we are talking about 7 to 10 private investors with between $5k to $10k invested each. My feeling is we are talking about $90k to $100k worth of shares total.

I assume that would probably grow later as original investors reinvest and new investors come on board but we are not talking about a couple of hundred thousand dollars for some time if ever.

So you don't believe something like this can be set up by a typical real estate attorney then?

Oh and to add to the above, long term it would be possible to use this "Investor LLC" to fund other RE investor's projects with us adding markup.

Seems like a pretty good way to do things so either lots of investors are already doing something like this or it's illegal. I am wondering which is the case.

Thanks guys.

Jeff, just to be clear on my original post.

The thinking is that there would be 2 LLC's (possibly more depending).

One LLC is for the investors, the other LLC for the main company doing the actual work on the properties and making the profits on the rents etc.

The private investors are not getting a part of the rehab / real estate LLC. The idea is to have the investors fund the "Investors LLC" which the rehab LLC would use to fund activities until the property goes to traditional lending.

The reason to do this is that it saves anywhere from %3 to %5 interest on our projects over hard money lenders with no points.

We have 2 to 4 projects going at the same time consistently so that is 3% to 5% a year we could save.

It also let's us have a stable means of income so we can purchase / turn properties around quicker.

The investor route will let us get people involved who don't have a spare $60k to invest. We could let investors put $5k or $10k in, which is a lot more practical for most people. I know a lot of people who would be willing to invest $5k or so but I know very few who have the $50k or $60k we need for each project.

Yes, we are going to talk to our attorney but as Bryan pointed out it might be better to talk to a specialized lawyer for this. And if anyone here knows that this is illegal out of the gate it would save me the time (and possibly money) investigating it further.

Thanks again for the replies.

Hi all

My partner and I have a few properties under our belt at this point. Up to now we have been using hard money for the rehab phase, it costs a lot but it's a necessarily evil.

We have connections to some folks that would like to invest in our business (meaning we wouldn't be advertising for investors).

We are talking to our attorney about setting up an LLC and selling shares from that LLC to fund our rehabs. We would back up the investor LLC with the property we are working on, we would also pay out 12% per share at project completion.

I know there are a lot of considerations to look out for but is the above idea even legal?

Thanks

Things seem fine here in Pgh.

We have a lot of interest in our flips. Also, our RE agent said she is still closing lots of deals and getting lots of interest on properties, appraisers have been too busy to turn around appraisals, the title company we use said they are swamped....

Things are pretty positive but then again Pittsburgh never had a huge run up or drop off.

I know this is an old thread so maybe some folks have changed their tune a little but.....

It really seems like everyone on this thread is saying that it is impossible (or highly improbable) to make a living on REI only. I find that hard to believe.... but if it is true then I am pretty bummed out about that.

I have a feeling there are MANY people out there making a good living doing nothing but REI, I know a few of them in fact. Its not going to happen over night for anyone starting out but it can happen.

I think there is just a little too much doom and gloom in this thread (again, it could be a reflection of the time when the thread was started).

Just my 2 cents, that and a 5 dollar bill will get you a cup of joe.

Besides using something like Rent-O-Meter (which I don't really trust) and Craigslist postings, how do the folks around here figure out accurate monthly rental rates for new investing areas?

Thanks in advance.....

Thanks Brian. This is in Pittsburgh PA

Hi all

First post here but I have been hanging out for a bit. Love the site, thank you for all the information.

I have a tip on a GREAT building that is going into foreclosure but I don't know how to track down info on it. I believe the lender has taken it back from the owner but it is not listed for auction yet and no agent is listed.

I do have the owner's name but I don't believe he is involved with the property at this stage... but I could be wrong. And even though I have his name I am not sure I can really find him easily because time is critical here.

How would I go about tracking down the lender to make an offer? Any ideas how to proceed?

Thanks in advance.

Michael