All Forum Posts by: Steve Gordon

Perhaps someone else will chime in but in my state the absence of a lease defaults to a month-by-month lease.  The implication is that your friend can decide to not renew, give the tenant a 30 day notice of non-renewal, and end the lease.

Not positive this works in all states so perhaps someone from Florida can chime in.

Hi Bob - why not obtain a normal mortgage and use your funds for the rehab?  After you have updated the property you can refinance and pull out whatever additional equity you have to use for the next purchase.  By using the leverage of a mortgage you can more quickly add additional properties to your portfolio.  Additionally any cash flow you make is at a higher cash-on-cash return.

Good luck and let us know how you proceed, reading member results is always enjoyable!

If you are planning on renting out the house, do you know the current rental market rate for similar properties in the area?

If you are looking to flip it, do you know what condition the building is in and what amount of update/rehab will be needed to get it market ready?

Do you know the current price/sq ft of the comps?  The condition they are in, the school district they are in, etc?

First step is to get a deeper understanding of the marketplace that the home resides to validate it's a good deal and what you will do with the home once you receive it.  Always have an exit strategy known prior to purchase.

Second is to figure out how you will finance it and the holding entity you will use [personal name, llc, trust, etc.]

Lastly making the offer is a start of the process, not the end.  Don't be afraid to offer something that works at your numbers and see how the owner responds.

These were my initial ideas, I'm sure you will get other good ideas from everyone else.

Good luck.

A few questions immediately came to mind when reading your message.  

1) What changed that no longer qualified them to purchase and complete the job?  Did they get in over their head, decide it would be too small of a deal to complete, is the margin too small to carry the short term debt until they can complete the deal?

2) How familiar are you with the process of rehabbing, renting, and marketing the property for sale? Are you able to evaluate a general contractor as this would be most of their job...estimation, management, and execution of the project.

3) Are you familiar with this person and are you familiar with their rehab history and prior success/failures?  Do they have a portfolio of prior work that you can validate?

4) Are you familiar with how they estimated the repairs to be made?  Can you obtain a detailed estimate including number of sheets of drywall, crew size and rate, cost allocated for permits, number of weeks/days from beginning to completion, etc.

Share a little more information regarding #1 above so that we can better understand what happened to get into this situation.

Good luck!

@Dave - thanks for the quick response! So to validate my understanding, after the two buildings are purchased and the 1031 exchange completed we can dissolve the LLC and quit claim each of the buildings to either another llc or ourselves individually. The dissolve of the LLC and the quit claim WILL NOT trigger a tax event [e.g. unrealized gains to be taxed]?

Obviously we will check with our attorney and accountant before any action but did I get the above correct?

thank you again for the information and the quick response!

I read the below posting regarding 1031 but have a twist on the question of which I'm hoping someone has an idea.  NOTE: I will be asking my attorney and accountant but was hoping for additional information here.

https://www.biggerpockets.com/forums/311/topics/27...

I am a member of a LLC that has owned an apartment building for ~ 8 years, when our balloon payment comes due [in 2 years] we plan on selling and 1031 into another building(s).

My question is how do we purchase 2 buildings [1 for each member] and ultimately transfer title into separate LLCs and disolve our existing LLC? We are interested in separating ways and I'm looking for solutions to prevent taxation on our gains and to allow us to move forward separately [if possible].

Any suggestions or ideas?  Appreciate any information you share.