All Forum Posts by: Stewart Miller

@Anthony Warren @Jim Kennedy is very good. He's a CPA/investor. Very knowledgeable in the REI arena.

@Nick Pandya- Google James Kennedy in Cherry Hill, NJ. Investor/CPA. Very knowledgeable in this industry.

@Liz C. Sure, the local atty. I hired was Gary Elkind of Elkind and DiMento in Cherry Hill, NJ. You can google him to find his contact info. Very professional and knows his *hit. I've heard from a lot of ppl (including a judge) that he's good. He's a laid back, jeans and t-shirt type of lawyer. When I mentioned I've never seen him in a suit and tie, he laughed and said, "You don't want to. The only time I wear a suit and tie is when I'm in court. If you have to see me in court, that means I haven't done my job because my job is to keep you out of court." Also, I will mention this. He's not a bill you for everything type of guy. When I first went to him, he said, "I can take your money, but I'm telling you that you're not ready. Go work on this issue, that issue, and that issue and come back when you have those things figured out." I really appreciated that and that's what bonded me to him. Good luck in your search.

@Account Closed -here's my experience w/ Anderson. Overall, I thought they were extremely competent. I agreed that Anderson would handle my corporate structure and any tax issues. After setting up the first corp, I was told to contact a local attorney to handle all state-specific issues: leases, insurances, etc. After I hired the local attorney, he questioned the structure Anderson had me believing I needed. He listed several issues with it almost instantly. Not being an attorney, I thought it would be better to let Anderson speak for the structure they created. I contacted them and asked if they would conference with the local attorney. I was told I would have to join their Platinum Membership for $2500 in order to facilitate this. I thought that was outrageous and offered to pay a typical consultation fee (in NJ, normally $200-300). They wouldn't do it. I've been working with this local attorney ever since and he's created a structure similar, but less complicated than Anderson.

After gaining some knowledge and experience, my opinion of Anderson is that they are qualified, but are more of an entity mill than they are really concerned about what you, the client, REALLY need. They make money by selling entities, so that's what they do whether you need them or not. The estate attorney I hired attended some of their seminars and said they did the same to him: offered to set up several (in his opinion too many) entities, most of which he didn't need. You can accomplish what Anderson accomplishes with a local attorney EXPERIENCED in what you're doing. My corporate attorney has been doing this for over 30 years and when I compared his by-laws to Andersons, they were VERY similar. And I didn't pay him an arm and a leg. Overall, I now think that what Anderson sells can be accomplished with any attorney experienced in corporate law. The biggest difference is that the local attorney did have to wait for my accountant to give his opinion on what the tax consequences were on his structure. But, he changed nothing after talking with my accountant.

Anderson is good, but not what they're cracked up to be (IMO). They are nothing more than corporate attorneys who are great at marketing, selling, pitching. I don't think they are for the average investor. They're more for established investors (again, IMO). 

IMO, you're complicating it by having the main LLC pay all of the expenses of the rental LLCs. There's something called co-mingling you have to worry about. As far a business credit, each LLC should be able to establish its own credit. So I'm still not sure why you're trying to run everything through the main entity. If the main LLC will pay the expenses of the rental LLCs, put a revolving line of credit agreement between the "parent" LLC and the rental LLCs. Under this agreement, you condense all of the expenses to one LLC, but you still have to do the bookkeeping to reimburse the parent from each subsidiary. I don't see an advantage to this. Why not just establish credit at each LLC and use that?

In regards to you reply about #4, LLCs are pass-through entities. I don't think (check with a pro) it makes a difference. The rental income will always be considered passive. The only "active" income is the management fee paid to the "parent". Your mgmt. fee has to the fair market value. If other PMs in your area is charging 10% of rent, you should be in that same neighborhood.

If you take my advice and have the "parent" LLC own the rental LLCs, the distributions (profits) the rental LLCs make to the "parent" is not considered active income. You also have the advantage of one tax return. Even if you owned 100 individual properties, if they're all owned by the one "parent" LLC, you condense all of those returns down to the "parent's" return. So that would be 100 properties plus the "parent" LLC= 101 returns all condensed down to one tax filing!

I'm not a lawyer or CPA, but I'll take a shot:

Why is the management llc buying lawn equipment? Is it to mow the lawns of the rental properties? If so, the mgmt. LLC should have an management services agreement between it and all of the rental LLCs. In addition, I would have the manangement LLC own the rental LLCs.

#1- if the lumber you're buying is to make repairs to one of the properties, why not buy the lumber straight out of that LLCs account?

#2- those expenses shouldn't be divvied up. They should be written off as expenses of the mgmt. company.

#3- income(rent) would come in to the individual LLCs accounts. Each LLC would have expenses to pay (taxes, mgmt. fee, etc.). I was taught to not leave too much money in the rental LLCs. If a lawsuit hits, you don't want a lot of money in the account.

#4- yes, read #3. The income coming into the rental properties will not convert to active income. The main/parent LLCs income will be considered active.

#5- I have no idea.

#6- if I were you, I'd take a salary from the mgmt/parent LLC. Your salary could be the mgmt. fee or the rental LLCs could make distributions to its owner (mgmt/parent LLC) and you could withdraw that as a salary (which is what I do fairly regularly).

Kennedy and Associates in Cherry Hill, NJ. Really knowledgeable as he is an investor himself.

Gary Elkind in Cherry Hill. He's good and very responsive to clients.