All Forum Posts by: Sam Schrimsher

Great info. to have, thanks again @Greg Scharlemann!

Got it, thanks for the clarification on that @Greg Scharlemann!

Thank you @Greg Scharlemann and @Greg Dickerson, very useful information!

Greg Scharlemann, when you say they offer 50+ year leases to buy the rights to the cell tower leases/cashflow. What are the mechanics of that? Does the company offering the 50+ year leases agree to pay the current building owner a certain rent amount for 50 years for the rights indefinitely? If so, I assume that 6-6.5 cap they offer to the building owner is significantly less than the rent the cell phone company was paying them so they can make a profit on the difference and mitigate their risk. Do I have that right?

If the land owner and I are able to agree on a price how do we lock up the deal? I'm assuming a real estate agent doesn't come into play and we would simply need an attorney who does contracts. Any advice on that?

Hello BP,

For folks who have any experience in cell tower leases. I have an opportunity to purchase significant acerage with several cell towers on it. The rents on the cell towers are below market and locked up that way until 2030, at which point I'll try and get them up to market and I believe I've got a good chance at success as the towers have already been built, and they are already on the highest piece of land in the area. I was initially going to purchase the acerage because it had  some lots on it I could have sold off to try and pull my investment back out, then just collecting rent from the towers without any money tied up in the deal. 

I've recently discovered that several key lots I was counting on are actually in a designated wetland and basically worthless (the remainder of the property is very steep and could really only be used for recreation, maybe a couple hill side homes but nothing substantial. So rather than purchase a bunch of unusable land and paying property taxes on that I would like to see if the owner will sell just the cell tower leases to me. 

1) Can I own those leases and not the land? 

2) If I do that are the cell companies likely to want to continue on with us after the lease expires?

3) Is there a formula for calculating the value of a cell tower lease based on the rental income of the towers? I'm thinking it probably has to be a higher return to mitigate the risk as there is no guarantee against cell company mergers or the cell company moving to another location. Thoughts on this?

Thank you for your input Oren. We've had quotes in the low to mid thousands just to figure out how we should set up our partnership. Then it'd of course be more money to execute it, and more fees after that to maintain it. If we had information indicating there would be an advantage to setting it up a special way ahead of time then we'd gladly pay those cpa fees to figure it out. But we're not sure that's the case. Wouldn't want to layout all that money then find out there's little advantage to be gained by setting up a corporate structure for our situation. This is based on the research that we've been able to do on our own thus far.

I'm continuing to research this. Sounds like you have information that contradicts our assumptions. If you have any specific references or figures, please feel free to share.

I've continued to look into this. You are right that the reporting/filing requirements are burdensome. The firms we've contacted that have expertise in both countries want a lot of money just to advise us on the correct way to set it up, then there's of course going to be additional expense setting it up, then naturally ongoing expenses to maintain the corporation. 

I have learned that investing though a corporation in Canada does not offer the same benefits as it does here in the states.

We're leaning towards simply purchasing the properties under our names. Looks like net rental income will be taxed at 25%  in that case. I have not found any information that suggest a corporation would have less tax liability than 25% of net. I think capital gains are not that much all though I'm still a bit confused on how the potential capital gains would work. I have not read anywhere that corporations have any less capital gains liability than an individual.

If anybody has any insight on the above, feel free to chime in :)

That's great Ryan, congrats on landing your first investment, sounds like it's ideal for your situation!

I was thinking set up an entity in US, then purchase the Canadian property with it.

Do you have a particular recommendation for me in regards to what would be a good structure under which to purchase the described property? 

How to you go about purchasing your Canadian properties in regards to structure?

Hello BP,

Wanting to get some opinions here from folks in the know.

My brother and I are in contract on some acreage in Nova Scotia Canada. After we purchase it we plan on selling some individual lots, perhaps developing a few homes to sell. And may have a couple long term rentals on property (less likely). He has dual citizenship. I have just US citizenship but could easily obtain dual citizenship as well. We're considering setting up the corporation in the states if we go that route.

My brother doesn't want to complicate his taxes and take on the additional associated expenses so he just wants to put it in our names as a partnership rather than an LLC. My thought was that we should form an LLC. He said that our liability insurance policy would protect us and he doesn't see any tax advantages. He currently has a 1m liability policy on his other properties.

Anybody know which would be better tax wise for both rental income and future capital gains?  I know the Corporate tax rate is quite low now with the new Trump tax laws.

Are we fine with just the liability policy or do we need more protection? I'd think if we develop any homes we'd want the additional protection of the LLC. Any thoughts on that?

I guess there's just a lot we don't know. This is our first land deal. Then it's further complicated by it being a cross boarder deal.

We might do this just one deal, or maybe more in the future. My thought was set up this specific LLC for this and any potential future deals. But if it's just this one deal, does that make it better to just go with a partnership so that we don't take on additional complication and expense for just one deal?

Thanks in advance, Sam

Alex, it's a Johnny's Irish Pub. 1382 Culver Rd. Rochester.

http://www.johnnyslivemusic.com/contact-us/

I'm planning on attending Rebecca, thanks for the heads up!