All Forum Posts by: Richard Nguyen

Jay,
Thanks for the thoughts. 3 investors who have all lent in the past for various projects with other operators.

My understanding is that if we own the land/dirt then it would be in an LLC. Not sure about the liability for us if someone falls and hurts themselves on the land. I think a problem if we own it is how the builder would get the construction loan since it is my understanding that in these type of deals, the builder would leverage the paid off land for construction.

We would want to be passive. I think the main thing would be access to the books to make sure of the expenses. I guess we could maybe have the builder agree to the cost of the build and if we sell for more or less then the profits would go up and down based upon the selling price. If we are passive I believe that we could still be limited partners in either an LLC and obviously a PPM.

It sounds like you ran the project and were on the opposite side of the transaction. Has that project closed? I'd be interested in talking to either you or one of the investors to make sure we are doing all the due diligence needed for this. Thanks

Hi all,

I wanted to get some comments and thoughts about a proposed deal. I was approached to help buy land that has been zoned for 34 townhomes at $2.7M (would be me and a couple of investors). The land is in a good location surrounded by homes valued around 750k and up. Also close to shopping and entertainment. The builder would then build the townhomes and split the profits with the investors as the homes were sold off. Builder has been building in our area for 15 years and I've gotten good reviews from banks, prior investors and sub contractors. Based off the proforma, we would get approximately a 25% IRR. Full turn around on the project is 4 years. Is this worth pursuing and how would you structure this? Via LLC or through a syndication of some sort? Thanks

Thanks for the quick replies. This is helpful and I'll need to do more research into a couple more firms to reduce the costs.

Hi all,

I'm looking to learn about your experience using a self directed IRA if you would be willing to share. I am looking at an investment opportunity and have found a self directed IRA custodian in my area. Their fees are giving me a little pause since they charge a percentage of the amount in the account and additional fees for each transaction. I didn't know if it was easy to close a SDIRA and roll it back over to a traditional or not if my investment pipeline runs dry.

Thanks

I am in the process of selling a rental SFH property in LLC "A". I have a second LLC "B" that I was going to start putting new rental properties into. I want to do a 1031 exchange if possible. If I buy a new duplex utilizing the 1031 and meet all the criteria, my understanding is that I have to title or put it in LLC "A". Later on, can I move the duplex out of LLC "A" into LLC "B" without incurring a tax penalty? I am a member of both LLCs but the additional members are slightly different.

I think that someone on BP, Serge had the Due on sale clause invoked recently. It has never happened to me but I will let others know if I do since the company Flagstar which did it recently is who has my loan now and I recently converted from my name to an LLC.

@Jonathan Dunn

I didn't think that real estate could be used to decrease your tax burden if you had another full time job/career. If I'm incorrect, I'd like to pick your brain on how you're doing this. I would try to talk to small community banks to see if they will work with you. I found one where I live who is giving me pretty good financing options since I've banked with them for 5-6 years and opened up several loans for investment purchases originally through my personal name but now I am doing them through the LLC.

Matt,

Thanks for the clarification.

@Sukhwant Kaur

You sound like me and my wife. We had properties in our personal names for awhile then eventually put them in an LLC. My personal experience, the bank would not give us a business checking account til the LLC was registered so we did that first. We haven't thought about getting a credit card or developing credit history for the LLC. I'm not sure of the benefits and would like to learn more if anyone is willing to share. What Matt said about lenders out there that will finance for an LLC ring true for us as well. We work with a community bank for lending needs and do it all through the LLC without much difficulty (in WA state). My understanding is that they keep the loan in house so don't need to conform to fed requirements (my terminology may be inaccurate here).

@Matt Wallman

I had a quick question. My wife and I are both members of our LLC. When we set it up, both our lawyer and CPA said that it would be viewed as a disregarded entity. Your reply suggests otherwise. Is this something I need to review before the upcoming tax season? Thanks.

Thanks for the replies. It sounds like what I found out is correct and shouldn't be too much of a burden.

@Andy D. you're correct, I just have 1 LLC and will put all my properties in there. I understand that there is some risk to that. I had never heard of the "foreign business entity" regarding out of state and wanted to verify that.

My lawyer said the quitclaim should not be an issue since they do it for other clients in my situation. Going to have to trust them on that one. I'll probably start off slow and in state to see if any lenders call the loan.

I have finally gotten around to setting up an LLC. I have properties in several states now and am looking to move them into a single LLC. I was told that in FL, I would need to register with the state to do business but it would not impact my tax situation. Can anyone verify this? My LLC is registered in WA where I live and have the bulk of my real estate. Looking for the asset protection and this will allow me to get a commercial line of credit to do a couple more purchases down in FL.