All Forum Posts by: Warren Ginn

Hello Folks,

Just an update: We're still working on this with my attorney and the tenant. Because of the constantly changing situation regarding how (or if) the local and federal government might offer financial assistance to small businesses, we are pushing to offer a simple rent deferral at this point. The amendment to the lease will have a provision to negotiate how that deferred rent will be repaid (some, all, none, with or without interest, etc.) once this crisis is over. This would give immediate relief to the tenant without waiving my rights to find an equitable solution later down the line.

I'll keep you posted.

w

@Evan Polaski My plan is to have a deferral agreement drawn up by my attorney that will exactly spell out those terms. Thanks.

@Joe Splitrock Yes, that's what we're moving towards. I can afford to defer (not forgive) those rent payments for a few months with arrangements for them to repay those deferrals over a several months thereafter once things get back to normal.

I think the solution is to give them some relief now since that's their immediate concern and then negotiate how they can repay some or all of that rent over time once they're back in business.

Thanks, everyone.

w

This is a locally-owned establishment, but with multiple locations locally and around the country. So they are growing, but by no means a big corporation.

How do you handle requests for rent abatement from restaurant tenants due to the Coronavirus? Obviously, if they are forced to shut down, I am sympathetic to their situation and want to keep them as a tenant. But an abatement is just forgiving the rent (e.g., lost income that can't be recovered). I would rather defer that rent and have the tenant pay it back over a series of months once they re-open for business. Any thoughts on this?

In my research on the subject, I've run across a couple of strategies for real estate investing. I have read that it's important that your LLC be set up in a state that charging orders are the only remedy to be used by creditors to get at a member/debtor's LLC ownership interest and they not permit an LLC owner's personal creditors to foreclose on the owner's LLC ownership interest or get a court to order the LLC dissolved and its assets sold. The most common states for this are Delaware, Nevada, and Wyoming, but other states (like my state, North Carolina) offer similar protections, although it's not always clear what its position is on single member LLCs in terms of them receiving the same protections.

Also, I see discussions of "nested" entities where a primary LLC is established in a state that provides the above-listed protections and then that LLC is the sole manager of a separate entity created in the state where the asset resides. Theoretically, you could create a new LLC for each property you owned, but I would think that could become cumbersome at some point.

For notes, since they are considered personal property, I have heard that some investors have used personal property trusts to further isolate them from the investor's personal assets. I have also heard that a personal property trust can be funded by a self-directed IRA to buy real estate.

Of course, you need to talk to your accountant and attorney about this, but I would be interested to hear what other investors have done.

Thanks,

Warren

 By "licensed", do you mean a real estate license? Is it necessary to get a real estate license before starting in real estate investing, or can you simply work with a broker?

@Chris Martin So if you connect with a homeowner that is looking to sell their property and has already contracted with a broker, do you typically stray away from those deals because they might resist these more "creative" approaches? One of the keys to understanding true "win-win" situations that makes the most sense to me is understanding how all parties get paid. So if your number take into account paying the brokers their 6% commission and the numbers still make sense, what do they care? They're getting paid, the buyer and seller are happy (each getting what they want) and you get paid my assembling the deal, right?

Or are you seeking properties where brokers have yet to enter the mix?

Wow @Brian Gibbons . I feel like I just wandered into a training seminar... I just saved this thread down as a PDF (into a "Brian Gibbons" folder) in case you suddenly come to your senses and decide that you're giving away too much for free... Great stuff. I really like reading your "scripts" along with your thinking behind what you're doing and why.

One question I have as a "newbie" is trying to figure out if this seller-financed approached is directly in conflict with the community of realtors and brokers out there. From what I've read, some encourage investors to go ahead and get their real estate license while other claim that doing so can "muddy the waters" between what your responsibilities are as a realtor vs as an investor. How do you square this? Here in NC, I've heard about investors receiving "nastygrams" from the NC Assoc of Realtors telling them that doing these deals means the investor is acting as a broker and thus they are breaking the law. But I have also heard this can just be a scare tactic from a threatened community just defending their turf.

I'd like to hear what you think. Thanks again for all the great info!