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All Forum Posts by: Wes Thompson

Wes Thompson has started 1 posts and replied 10 times.

There is some great information in this thread. I've got 7 investment properties in my name, and have had an LLC for about two years and want to transition them -- but I have insurance on each and an Umbrella policy -- sounds like I'm in an ok spot?

Everyone talks about how simply Loans can be moved to LLCs, but that's not what I am finding.  For 4 of my properties, the 2 lenders all want to force me to Refinance.  I've got several with significant equity -- which I would like to pull out and use.  They threaten that "Due On Sale" clause.  They are all Fannie Mae (I believe).

Anyway, thanks for all the posts. If anyone has ideas on tapping the Equity -- or handling the LLC issue -- pls let me know. I can PM from here. Sorry to go a little off track on this thread...

So folks, I am going through this attempt to transfer from personal ownership to an LLC now. I have 7 investment properties in my name, and I've called two banks (Fifth Third and Arvest that collectively hold 4 of them. They are both telling me that I have to refinance in order to actually do a successful move to an LLC.

They are both telling me that "per the terms of the note", if title is transferred it is reported and they can require the loan to be "paid in full", and that they WILL require that, thus forcing me to Refinance.

Here's where the BP community could really help. Since I have significant debt tied to these properties, how high is this "refinance risk"? I don't get the LLC protection I need if the properties continue to be held in my name -- but I also incur significant "other" risk if I have to Refinance at a much higher rate.

It seems like I'm "damned if I do, and damned if I don't" -- I either pay an IMMEDIATE cost of higher interest rates on each property via a set of Non-recourse loans -- OR I don't move my homes to an LLC structure and then I risk Negating ANY value from the LLC structure itself.

My impression is that the number of individual investors that truly maintain the LLC structure and format correctly must be small -- because the number of hurdles to correctly maintain the Corporate Veil across bookkeeping, asset ownership, and legal structure are high...

Post: Banks willing to open accounts for a cell in a Series LLC?

Wes ThompsonPosted
  • Investor
  • Libertyville, IL
  • Posts 11
  • Votes 5

PNC Bank also allows Series LLCs. $1500 min per acct to avoid fees, $12/mo otherwise. I'm IL based, and setting up now -- for tax I'm told all Series LLCs "cells" are indeed issued K-1s and flow into Master LLC, which files return.

Post: Grouping Passive Activities

Wes ThompsonPosted
  • Investor
  • Libertyville, IL
  • Posts 11
  • Votes 5

Guys, great posts. I've got some related questions.

1) Due to income from my full time job, I am not eligible to claim any of the passive losses from my three rental properties. Is there any way I can structure an entity that will allow me to do that? (It has been suggested that an LLC taxed as a partnership might work, I don't know how to do that).

2) I'm eager to legitimately secure ironclad Real Estate Professional status -- likely via my wife (former realtor) who can devote (part-time) work to these various activities. Can her participation, coupled with effective entity structuring, allow us to reduce our tax liabilities and/or claim our passive losses?

Any assistance in these matters is sincerely appreciated. I'm seeking professional advice from those with this specific expertise...

Post: New Member

Wes ThompsonPosted
  • Investor
  • Libertyville, IL
  • Posts 11
  • Votes 5

Thanks again! Glad to be a part of BP. Zack, I'll definitely take your advice -- and checking out the RE groups now...

Post: New Member

Wes ThompsonPosted
  • Investor
  • Libertyville, IL
  • Posts 11
  • Votes 5

Guys, thanks for the posts! I'll take all the suggestions and get going!

Post: New Member

Wes ThompsonPosted
  • Investor
  • Libertyville, IL
  • Posts 11
  • Votes 5

Hi everyone! I'm formally posting now that I've been using the site a while -- I've received some great information -- the podcasts have been an awesome introduction and special thanks to those I've spoken with as a result.

I'm based outside of Chicago, IL (Libertyville), and I currently own two single-family rentals. I've been reading Dave Lindahl and Frank Gallinelli (based on podcast speaker recommendations) -- and I'm hoping to purchase my first multi-family property this year.

Any suggestions on investor groups in metro-Chicago, solid commercial brokers servicing that area, or any other RE investment advice appreciated. Thanks to all of you that contribute your time and expertise to BP, it's appreciated!

Wes (www.linkedin.com/in/westhompson)

Post: Invest in Real Estate (RE) via Self-Directed IRA

Wes ThompsonPosted
  • Investor
  • Libertyville, IL
  • Posts 11
  • Votes 5

Sorry group. New to the forum and the posting process...

Jeff/Matt -- I've already set up my Self-directed IRA LLC, but I couldn't secure non-recourse loan on the property I had selected...

If I go the Notes route, how do I start there? Can you guide this group to another portion of the site for that Notes Primer?

Thanks in advance!
Wes

Post: Invest in Real Estate (RE) via Self-Directed IRA

Wes ThompsonPosted
  • Investor
  • Libertyville, IL
  • Posts 11
  • Votes 5
Originally posted by Jeff Brown:
Hey Eric — Matt's got it right. In my experience, investing in RE via your IRA/401k is better than nothing or the stock market. But I almost always try to talk people outa doing it. Notes are a far better play for many reasons. Here are just three. WAY less time involved, always buying at a sweet discount, significantly low LTV for safety.

Also, buying RE requires either all cash, or a 40-50% down payment inside your plan. The ammo time is shorter, and the interest rate is higher, not to mention most loans aren't fixed for any real length of time, with rare exception.

With notes, especially over time, your portfolio grows nicely every time one of your notes pays off. You then buy a bigger note(s) which in turn increase the monthly payments coming into your plan. If you're now around 40 and will retire at say, 60, you can generate tax free income using a Solo 401k that might astound you. This is made much more likely if you're able to max out on the annual contributions. Both husband and wife can contribute up to $17,500 apiece, after tax, 'til they're 50. Then it goes up to $23,000 apiece. It won't be uncommon for folks to end up with $100-500K/year in tax free income if they do this for a couple decades. It becomes even more predictable when they're able to begin with a significant 'rollover' stash of cash from another qualified plan.

Hope this helps.

Post: Financing

Wes ThompsonPosted
  • Investor
  • Libertyville, IL
  • Posts 11
  • Votes 5

Ok, thanks. Similar but related topic. I own 3 single-family properties (1 owner-occupied and two rental). I am about to buy a second home (fourth property), but within a year I plan on moving from my primary residence to buy another (fifth property) and move into that one.

I'm being told that I will have difficulty buying this fifth property as owner-occupied given my ownership of the previous 4. Any guidance here?

I will have enough for about 5% down on the fifth home, but no more. I will also have under two years of ownership on two of the rental properties, but my credit and income are very good and can be verified...