All Forum Posts by: Steve Shaffer

Hello fellow nerds! I'm trading up into a 15-unit and selling a single family and a 4-plex to help fund the purchase. I'm using a 1031 and all three properties are held in different entities with separate EIN's. I am 100% owner on everything and am using the single tax payer exclusion to pull of the 1031.

My question is how soon/what is the mechanism for selling equity in the 15-unit after I close. I have taken in private money in the past as debt, but have never sold equity. The plan is to sell 30% of the LLC that will own the 15-unit to a fellow investor, but I'm concerned about this somehow poisoning the single taxpayer exclusion thing. Anyone know anything about it? If there's an interval I need to wait etc? Thanks in advance!

Hello fellow nerds!  I'm trading up into a 15-unit and selling a single family and a 4-plex to help fund the purchase.  I'm using a 1031 and all three properties are held in different entities with separate EIN's.  I am 100% owner on everything and am using the single tax payer exclusion to pull of the 1031.  

My question is how soon/what is the mechanism for selling equity in the 15-unit after I close. I have taken in private money in the past as debt, but have never sold equity. The plan is to sell 30% of the LLC that will own the 15-unit to a fellow investor, but I'm concerned about this somehow poisoning the single taxpayer exclusion thing. Anyone know anything about it? If there's an interval I need to wait etc? Thanks in advance!

@Account Closed I empathize with your situation.  I will tell you how to get your first multi with your current situation.

1) Go to your county courthouse, meet people in the assessors office, bring treats.  

2) Ask for a list of all the multifamily properties in your county with the owner's name if available. (This doesn't work everywhere. Worst case scenario, buy a list from a provider like list source, etc.) If the owner is an entity, do a business record search and put the registered agent's name (and usually phone number) in your spreadsheet. Mail to the registered agent not the LLC.

3) Whatever list you get, crunch it by your criteria (area, build year, whatever you want) and save this new list.

4) Go to Walmart and buy a 3-pack of legal pads (white or yellow) for $2.50, odd color pens (blue, green, red) $5, and business envelopes $10 for 250.  Hit the postoffice and buy a roll of forever stamps $50-$55/100

5) Hand write 5 letters every night to the property owners saying who you are.  (A local plumber trying to get his first property, hard worker, hungry) and you "know everyone is at a different point in their investing journey, but I'd love to talk to you about buying your property if you're at all inclined to sell".  Mention you are willing to buy properties in any condition, properties with tenant issues and that you have strategies to minimize the capital gains hit when they sell (owner financing)

6) People will call you.  Call them back promptly and don't act like a big shot (something that you do not seem in danger of.  I know people get uppity, but I appreciate the genuineness of your original post)

7) When you find someone who is motivated to sell to you for whatever reason (the last two I picked up were tenants stopped paying and owner just moved out of area), start discussing my price/your terms, your price/my terms.  Negotiate a fair price (don't overpay) and owner financing at a low rate.  Make the sale easy for them.  Don't nitpick over inspection items that don't matter.  After you successfully close, shake hands, thank them, and ask if they have anything else they'd like to sell or know anyone who does.

If you are faithful with writing the letters it will get you a property in your county for under $100 in marketing cost.  Congratulations on taking action and I wish you the best of luck!  Feel free to reach out any time.

Hello All!  I wanted to invite you to the inaugural Red River Valley Multifamily Meetup. We will be trying to keep it to about an hour out of respect for your time and the topic will be investing in opportunity zones/shielding capital gains as many of us are selling some pieces at the top of this market. Looking forward to seeing you there!

@Austin Gleave Congratulations on taking action so early!  I think the answer to your question depends on your goals, what other debt you have, etc.  I'm an investor in Fargo so feel free to hit me up any time.  

Hey Ian!  Congratulations on your progress!  I'm an investor in Fargo. The CPA I use is on the MN side, but I have a recommendation in Fargo. 

I use a third-party property manager in Fargo who is generous with their time, I'm sure would talk to you. I don't know how accurate it is in Minot, but I use rentometer to at least give an idea of market rent. Don't be shy about calling local rentals in your area, explaining your situation, and asking for a showing so you can compare what the competition is offering at their particular location for their price. 

In conclusion, I'm a bit of a Bookworm with all this real estate stuff. It's hard ot do better in a more concise package than Brandon and Heather Turner's books on rental property investing and managing rental properties. For additional strategies, my top recommendation is "How to Make Big Money in Small Apartments". If you sneak down to Fargo sometime, I'd love to meet up. Good luck! 

Totally agree with @Dan Bryskin. You can buy up to a 4-unit place with your VA loan. It's not an excuse to do a bad deal and with no money down, it may not cash flow, but you'll learn a ton and have your housing paid for by your residents while you're going to school.

Congratulations!

Hello all! I'm an investor in Fargo, ND and would love to make a survey trip to Sioux Falls but want ot maximize my time there. Is there a REIA there or a meetup any of you go to. Looking for multifamily players, but always happy to make new friends/geek out about all thingsreal estate. Thanks!

Hello all.  I closed on my first six-unit in March.  Before than I had several single families and four-unit multi's and had used my trusty insurance provider for everything.  I feel their rates/discounts are relatively tough to beat.  

Not long before closing on the six-unit I called to get insurance and found out they do not insure properties with greater than four units.  Further, I called around and none of the providers I referred to could get a commercial policy in place before closing.  I cold called several name-brand insurance offices and found a local agent who could get it done.  I have closed on two additional 6-unit buildings since then and gave him the business since he bailed me out.

The six-unit buildings are in a pod and identical, but the premiums have gone up on each policy by more than 10%.  There was also a snafu with one policy not getting escrowed in properly.  Long story short, I am wondering if there are any blanket recommendations for commercial insurance carriers as my goal is to establish a relationship, 1031 into larger properties in the coming years, and I'm open to transferring all my other business to them if they are competitive with my current provider.  I'd love to write one check.  I just feel that with additional policies on identical buildings the premium continuing to go up is strange.  Also, for context, I have no claims and am in North Dakota with some additional property in Minnesota.