All Forum Posts by: Pierre Clark

Update: I found a funder who will give a seven-figure 12 month line of credit to do purchase rehab deals. I am getting my LLC qualified now. You have to put up funding for each deal which is done separately for the first deals but once you get approved for the line you can just do your deals and you don't have to requalify or go through another process again. This is the type of lending deal I have been looking for for several years.

Awesome and inspiring. I've been on Bigger Pockets a few years and have graduated from reading about deals to putting together large development deals to now wholesaling and rehabbing full time, so I congratulate you on your successful journey! Keep on and stay strong and I'll come by when I am in Indianapolis and look at your building and get inspiration. By the end of next year I plan to have my own just like it.

This is a great post! Very informative. I am wholesaling/rehabbing in Atlanta, Georgia, Chicago, Illinois and New Orleans, Louisiana and I have a very good legal team in Atlanta and New Orleans and am looking to build the same team in my hometown. This article encourages me to look for knowledgeable team members here as well. Thanks again.

In some states you can create a series LLC, which is an LLC that allows the formation of multiple equal sub-LLCs under it; the partners in whose names the properties are held would have to agree to quit-claim each property to the new entity or entities. You can quit claim one property to each sub-LLC of the series LLC. You or a corporation you form or LLC you form can be the Managing Member of one or all the LLCs. (Check and see if transferring a property this way would trigger a due-on-sale clause in any mortgages on the current properties). You can set up the operating agreement so the incomes from the properties all flow to the LLCs; you could leverage or pledge one or more of the LLCs as collateral or a guarantor for additional mortgages. Now you can do this in states which don't allow series LLCs; you would just set up one master LLC which would be the managing member of the other LLCs you create. This way is more expensive because you have to set up and pay for each LLC separately, whereas with the series LLC, you pay one fee and then register as many sub-LLCs with the same name but a different number (I, II, III, IV, V, and so on) in the series. Hope this helps.

If a property is owned in the name of an LLC, that is not the same as a property being owned by an individual member of the LLC. The member of the LLC owns an interest in the LLCs shares, not an individual property owned by the LLC. You can designate specific income and expense items from the property owned in an LLC to an individual member, but that designation does not mean that the individual member "owns" an interest in that specific property.

The problem with an "S" or "C" corporation owning a property is that when it comes time to sell, the selling of that property counts for income tax purposes against the corporation as a whole, there is no segmenting of the income and expenses of an asset as is allowed within an LLC structure. Even if an individual has a sole-member LLC that owns a property, the ownership would be vested in the LLC. not the individual. The income and expenses pass through to the individual who is the owner of the LLC, but not the ownership of the property itself, and no liabilities would pass through either unless the LLC owner signs a personal guarantee, which would somewhat defeat the purpose of putting the property in the LLC in the first place.

So an individual could be the majority owner of the interests in 100 LLCs, each of which own one or more properties, and from a legal standpoint, he would not own any of those properties, but the member interest in the LLCs that own those properties. In case of a lawsuit, a suit could only be brought against the LLC, not the individual. I can show you a number of examples of this.

I had a client who quit claimed a property on which she owed a debt to another individual so he could get a mortgage on that property. He put the property in an LLC and stopped paying the mortgage. She was able to get the property back in her name by proving an illegal conveyance and because the mortgage note was in the name of the LLC, which had been allowed to dissolve involuntarily, there was nothing the bank could do to encumber her property again, since she was not the legal mortgage holder, the LLC was.

Similarly, states like Illinois allow the formation of series LLCs, which is a group of LLCs which all share the same name and are designated by Roman numeral, I, II, etc. Each of these series LLC is considered a separate LLC and there is no liability shared between them. Hope this helps.

Here are two sites that might be helpful:

http://www.foreclosures.com

http://www.emailforeclosures.com

I have used information from both of these sites with good results. - Pierre Clark

I like this design a lot; I am working on building pre-fab housing factories where we can do these kinds of houses in a modular format. I will be interested in following along with this. - Pierre Clark

Just funders in general - development funds, bankers, hard money lenders. I spoke with several here who won't do so-called blanket loans. Right now, I am working with credit lines which are fixed and can't be adjusted for different deals. And I am working on creating my own development fund which will let me do deals more quickly. I am open to suggestions.

Someone once told me an old adage in real estate is: you make your profit on a deal when you buy it, not sell it. I have always believed that statement to be true, and mainly because no matter how much due diligence you do on a deal, I have found there's always something that pops up on a property that you didn't expect that costs you money, and if you have paid too much, those unexpected expenses don't give you room to recover.

That said, I learned that when you buy properties in bulk (5 or more) especially if you buy from one owner, you usually get a better discount and price on each property than if you buy them separately. The problem for me is, many funders won't do so-called "blanket" financing - they do a separate financing application, appraisal, etc. for each deal, which for me slows down the process and costs money. I have bulk pricing with all the people I work with - appraisers, title search, contractors - because I save money in the long run and the people I work with know they will get all my business. I am looking for a funder if any of you know one with whom I can work in the same manner. Thanks for any insights.

Congratulations on thinking on your feet and pivoting when you saw Plan A wasnt going to work out. That is the essence of a great dealmaker - knowing when to change strategies to make sure you reach the endzone goal - making a profit.