All Forum Posts by: Sean Haberman

Most of the private lenders I have worked with were experienced real estate investors themselves with excess cash they wanted to put to work. For them, there was very low risk, because they knew how to gauge the after-repair value and set terms in their favor. Usually, their worst-case scenario is the loan gets paid back. If the borrower stops paying, they know they can take over the property and make more money by fixing it themselves.

On the other hand, if you don't know these things, it is very risky. Your best bet might be to find a private fund that aggregates money and lends it back out to real estate investors.

It is worth adding that this is not a tax-efficient way to get involved with real estate. You will pay ordinary income on the interest.

Thanks for the reply!
Do you know of any good private money funds? It seems that may be the best option for my situation.

thanks!

0 Votes

How does one start lending their own money to other RE investors?

I am curious how this process works, what rates/ terms are common? Is this a common practice? Risky?

Looking to learn more about this space

I appreciate the insight!

Thanks!

0 Votes

Quote from @Henry Clark:

Quote from @Sean Haberman:

Thanks for the reply! They are farmers so they intend to purchase more farmland. Farmland has proved to provide 10%+ returns. Also, I am pretty certain you are able to 1031 exchange land into alternate real estate investment’s.

Are you drumming up business or asking advice? My point is you can't do a 1031 on an Easement. Yes, you can do Land to a Laundromat. If they are farmers and want to keep the land, why are you asking if they can sell it? And why do they care if they have to pay taxes since it is an S corp, if they don't plan to sell it? Going through the same discussion on my wife's family farm.

I am asking advice. They are hoping to sell this land to purchase different land and would like to eliminate a taxable event. We have been told that it is not possible to do so since the property is held in an S-Corp. I am just looking for other opinions. Trying to look at all options.

0 Votes

Minneapolis, Minnesota

Quote from @Dave Foster:

@Sean Haberman, the easement implies a beneficial interest in the land. Since "perpetual" also crosses the 30 year period that the IRS likes for these kind of things. It is possible that they could do a 1031 exchange on the sale of the easement. They will need to get a legal opinion that the easement does create a beneficial interest. And that risk of loss of that interest has passed to the buyer.

Thank you for the info! Appreciate it.

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Minneapolis, Minnesota

2 Votes

Minneapolis, Minnesota

Hi Ahmad,

I am a farmer and land agent in the Midwest growing corn and soybeans. Land is a solid investment as an appreciation play. Historically, Ag land has produced 10%+ annual return. In the Midwest you can expect to find 2-3.5% cap rates, appreciation makes up for the rest. There is zero vacancy to worry about. Tax deductible improvements such as drainage tile, terracing, irrigation can significantly improve the productivity and the value of the land. Once you find the right tenant, it is a pretty hands off investment.

It is a great investment for someone who is not needing the cashflow, but is looking for a place to find steady appreciation with a modest dividend.

0 Votes

Orange County, California

Hello,

I am working with a client who has farmland held in an S-Corp (current tax basis is approx. 5% of market value), It seems there is not a way to sell this property without having to pay capital gains, since it is unfortunately held in an S-Corp.

There is an option to sell a perpetual conservation easement to the land while still maintaining ownership of the land. Would the proceeds from the perpetual easement be 1031 exchangeable? If so, would this still cause issue with the S-Corp tax rules?

Looking for any and all options!

Thanks,

Sean

0 Votes

Minneapolis, Minnesota

Does anyone on here invest in Agricultural Land?

1 Vote

Quote from @Hunter Reed:

Sean, this is a question everyone asks who is getting their feet wet in real estate investing. I highly recommend finding a mentor that can help guide you through these incepting questions. I can speak on this first hand as first started. I highly recommend you read "Out of state real estate investing" by David Greene. This book will walk you through the steps on how to build a rockstar team. This book helped me out tremendously and allowed me to find the right people for my team.

Thank you for the insight!

0 Votes

Quote from @Steve Vaughan:

Quote from @Sean Haberman:

What are some of your go to’s when trying to find QUALITY real estate professionals to assist you along your investing journey. For example: Agents, Lenders, Property Managers, Tax Pros, etc...

For me- agents, PM, tax pro, financial advisor, etc MUST own rentals effectively themselves.

My lenders are direct lenders at a local bank or CU I already do business with because they give back to my community. Sometimes they are also the seller and owner carry or let me assume.

Relationships to me are worth more than saving .25% interest. Often it is net less % because no origination fee.

Thank you for the insight!

1 Vote

All Forum Posts by: Sean Haberman

Sean Haberman has started 4 posts and replied 12 times.

Post: How do you start lending money to RE investors?

Post: How do you start lending money to RE investors?

Post: Farmland held in S-Corp- perpetual easement question.

Post: Farmland held in S-Corp- perpetual easement question.

Post: Farmland held in S-Corp- perpetual easement question.

Post: Land purchasing (agriculture)

Post: Farmland held in S-Corp- perpetual easement question.

Post: Investing in AG land

Post: Finding Quality RE PROS

Post: Finding Quality RE PROS