All Forum Posts by: Steven Stokes

• Welcome to BP and definitely continue to use this website to gain information it really does help! 
• ADUs are still pretty new and kind of tricky to get right. I love in San Francisco and we've been talking about creating some ADU property here too. The problem we have been running into is the bureaucracy hasn't caught up to the law and local regulations may still not be fully on board. It seems to be getting easier to discuss now but it's not as straightforward as just build it and rent it. At least not in San Francisco.
• To be honest, I think it would be easier to look outside of California but that also comes with it's own set of challenges. 
• But good luck and keep at it. 

I live in San Francisco and have invested in TN before. Our attorney still set us up as a Delaware LLC because it's still the most corporation friendly state because the state of Delaware requires very little information in order to file an LLC; in fact, it does not require the personal names and addresses of the members/managers. I believe Tennessee still does require the names and address of the directors.
All Delaware requires is that the LLC's Registered Agent possesses the name and address of a Communications Contact, who can be a member/manager of the LLC or merely a representative, such as the company's attorney. 
This may or may not be something you're interested in but I prefer it for my own privacy.

Like someone said, employers will not verify salary, nor will they tell you if an employee is in good standing. You can ask if they are employed there and their job title and google "job title salary." (this will give you an approximation of what they may be getting). 

Also, the property they come from might not have anything to do with what they are moving into. They may have tolerated living somewhere less because it didn't bother them or maybe they were saving money or many reasons. 

I think you need to look in a different market(s) that would more closely support your investment goals. Your numbers might be correct but you may be priced out of the market you're researching. This is especially true in hot or high value markets. 

I hope this helps. Good luck

@Bob Floss II I completely agree if he forms a partnership he would have to give his friend voting power. But I'm sure his attorney would explain this to him. I only was suggesting that an LLC would be an option.

@Jerel Ehlert I'm assuming (I could be totally wrong) @Jacob Huston, a new investor, is asking about a small real estate property as a first time investment.
Security offerings, creating a syndication, and SEC filings seems like an expensive and overly complicated route just to buy a small property and it seemed like the answers were drifting in that direction.
This is why I suggested talking to his attorney about doing an LLC because it seems pretty straight forward. Although, the details could totally change that. This is why I suggested he talk to his attorney to get advice specifically related to this deal. In general, I would lean toward this being an LLC.

I agree with what most people have said on here but I wanted to add, please do not be discouraged or feel that it's impossible right now. Many people have been where you are and have become really successful because they did not give up or give in to the negative talk. 

Whatever you have to do to get your first investment property do it. There are a lot of experienced people here who can help you with a lot of great advice every step of the way. 

If you do have any collections on your credit report and you're thinking about paying them off make sure to negotiate that they take the collection off of your credit reports and get it in writing. Your credit score doesn't change much with a paid off collection but lenders like to see them paid off. But it's even better if they're not there at all. 

Other than that, good luck and I look forward to hearing about your success.

I live in San Francisco so I know it's harder to invest here and make a decent profit. 

If you're looking to invest in CA because you want to invest somewhere close to home I would suggest look for areas that are gentrifying. It's sad that it's happening but it a good way for an investor to get in on the trend up in the market area. The average priced home is still a million dollars but the market is still strong in areas that are being gentrified.   

Before I answer these questions I would suggest more that you talk to an experience real estate attorney who does these types of transactions to take care of your properties now and in the future. 

1. How do you transfer ownership of a paid-off property from a person to a business, and is this smart to do?

To transfer ownership for a fully paid off property is mostly changing title of the property from you to the LLC. You will need an attorney though the laws are not the same everywhere.

2. I previously had a bank that would not lend to my LLC and required that an individual be the lendee. Is there a reason for this and manner of getting around it?

Like someone mentioned before buying a property with an LLC is a commercial loan and a residential lender will not be able to let you purchase as an LLC but I have purchased properties and then after the purchase put them under an LLC. But you will still be personally liable.

3. What are the biggest reasons to title under an LLC?

In 2010, I was threaten to be sued by a worker who was working on one of my properties and fell. The property insurance wouldn't cover it because they said it was a lack of maintenance but the house was a rehab. Because that property was in a separate LLC the only thing he could do was sue that property but since I keep every property in a different LLC none of those properties could be touched. The attorney called and offered a measly settlement because there was nothing to go after. If I would have had all of my properties in one LLC I'm sure he would have went for much much more. Also if you have partners, you want an LLC because partners fall into disagreements all the time.

4. What are the biggest reasons to title under your name?

There is no reason to have a property in my name. It's just asking for trouble. 

5. What are your personal thoughts and experiences that could help me and others that are still new to this?

I know a lot of people might think having an LLC is unnecessary and overly complicated (it's not once you understand it) when buying real estate but it's really like insurance. You don't think you need it until you need it, and if you need it and don't have it, it's too late.

Just imagine building up 5, 10, 15 properties just to have it all taken away by a greedy lawyer who wants to build an extra room in their house with your hard earned work that took you years to build. It happens everyday. Lawyers offices are full with clients who never thought they would be there.  

I know the syndication talk has been huge on this site lately (I'm not totally sure why) but I've been buying real estate for 20 years with partners and I have never once created a syndicate. While I have been catching up on the talk about syndication on here the overwhelming amount of investor properties are bought by through regular partnerships and friends and family as it has been for years. Don't let anyone make it more complicated than it has to be for you. 

My advice would be to talk to a real estate attorney in your area and ask him what's the best way for you and your friend to buy a property. I'll bet money he says, LLC. But let me know what he says. I hope this helps. Good luck.

If the person is a "friend" you don't need to spend 10k creating a syndication. Friends have been buying properties together since properties have been for sale. Make sure to contract the property through a LLC and go from there to buy the property.

If this person is not a friend then it is a solicitation and should be legally treated as such.