All Forum Posts by: Dustin Lyle

Well, what this comes down to is... Who owns the properties' liabilities? Are you protecting yourself and holding the property in an LLC which you are the sole owner? OR do you own the property without that "corporate veil"?

~If you own the property personally, you have already been paid for your labor in the form of equity. Due to you working on the property, you have made the property increase in value, and the market as a whole will dictate the value of your labor. You will realize the payment for your labor when you rent/sell the property. In this light, the taxes you pay on the gain will also be deferred til sale.

~If your property is owned by an LLC, Then you would simply cut yourself a check from the LLC for skilled labor rates. Also, you would keep records of all other expenses related to the property.


The big thing about this is, no matter what way you decide to go about handling this accounting measure, the money is still the same. Wether you pay yourself now or later, your ledger balance will remain neutral. Most people can't wrap their brains arround the fact that perceived income isnt neccesarily actual income. Due to the time value of money, your best option is to go with the LLC, pay yourself now, and defer the capital gains tax to as late as possible. ie Years.

:superman:
Dustin


Generally, Skilled labor rates run between $17.50/hr well through $90.00.

RCW 59.18.270
Moneys paid as deposit or security for performance by tenant — Deposit by landlord in trust account — Receipt — Claims.

All moneys paid to the landlord by the tenant as a deposit as security for performance of the tenant's obligations in a lease or rental agreement shall promptly be deposited by the landlord in a trust account, maintained by the landlord for the purpose of holding such security deposits for tenants of the landlord----

I personally know of only one landlord that holds his deposits in an escrow account.. Not saying its an ethical angle, but it is the law, If you never received a deposit slip regarding the safekeeping of your deposit, you can demand that deposit due.....

Secondly,

"No deposit may be collected by a landlord unless the rental agreement is in writing and a written checklist or statement specifically describing the condition and cleanliness of or existing damages to the premises and furnishings, including, but not limited to, walls, floors, countertops, carpets, drapes, furniture, and appliances, is provided by the landlord to the tenant at the commencement of the tenancy."

No checklist=No claim against the deposit.

And last but not least, (if you go to court)
RCW 59.18.280

"The court may in its discretion award up to two times the amount of the deposit for the intentional refusal of the landlord to give the statement or refund due. In any action brought by the tenant to recover the deposit, the prevailing party shall additionally be entitled to the cost of suit or arbitration including a reasonable attorney's fee."

These are just some exerps from Chapter 59.18 RCW
Residential landlord-tenant act of Washington State. That said, C'mon guys, You cant reasonably expect the tenant of 7 years to replace the carpet due to 3sq/ft of stain. If the tenant was "living tike a pig" for seven years, why in the heck wouldn't you have gotten rid of them a little earlier, you reap what you sew.
The federal government claims that residential carpet has a "reasonably expected useful life" of 7-years... Also, Carpet should be depreciated in 20% blocks, or, 5 years.
After 7 years of tenancy, the landlord has no reasonable claim to the carpet being in excess of "reasonable wear from normal use".

But TACT is a whole different issue... For good measure, Should you have the carpet cleaned? Yes
Does the landlord have a foot to stand on? No

Has anyone here had any personal experiences with private equity or debt offerings exempt from SEC registration?
I've been reading on it about ten hours a day for the last three days! Just wondering if anyone had some personal experience(s) in which they could share.
:superman:

Dustin

With oil breaking 80 with no reason for a reversal, and inflation looming due to the fed's printing press, it's a pretty safe assumption that interest rates are going to rise, dramatically as the fed attempts to offset the false growth period of inflation. I would expect that in between 6 and 18 months, the private debt market will be flooded with asset-backed notes. A second round of forclosures in mid-late 2011 once the money becomes more restricted.... Then stabilazation! :) Now, im not an economics professor, and I can't really spell too well... This is just how I see things going.

As far as my personal investment strategy? I intend to leveredge as much as possible, on as many cashflowing properties as possible, with fixed interest low cost debt. I hope to ride the inflationary "value" spike... And sell the lot somewhere before the second round of forclosures.

If all that fails.... I'll be satisfied with cash-flow positive properties, and low-cost fixed rate debt.

Real estate has always been the investment vehicle of choice, and will reasonably so continue to be. The internal need or instinct to be in control of your domocile is not only human nature, but living nature... This unavoidable demand for security and exclusivity will always perpetuate the market foreward.
Population projections are always a good way to feel good about investing in real estate also... It is a fact that during tough economic times, people have more children. In America, we are projected to experience exponential population growth. That makes me feel a little safer in my real estate investing for retirement porposes.

This is just my mid-night rambling, I'll probably wake in the morning to read this and see that I had mae no reasonable sense. :)

dustin

smitnlit,

As j. Scott said, it's as simple as a partnership agreement. I would however, in your situation, give respect to the fact that you have more to lose than your future partner... insure yourself. There are some pretty angled insurance policies that cover partnership agreements, errors and ommissions, fidelity etc... Should your partnership "run amuck", you want to be sure that your personal life/credit is not detrimentally affected, and if it is, you are able to recoup the financial costs of recovery. That said, insurance is not a business plan. Strong fundamentals, management, and a stellar concept should have you and your partner on your way. I wish you the best of luck!

Dustin

smitnlit,

As j. Scott said, it's as simple as a partnership agreement. I would however, in your situation, give respect to the fact that you have more to lose than your future partner... insure yourself. There are some pretty angled insurance policies that cover partnership agreements, errors and ommissions, fidelity etc... Should your partnership "run amuck", you want to be sure that your personal life/credit is not detrimentally affected, and if it is, you are able to recoup the financial costs of recovery. That said, insurance is not a business plan. Strong fundamentals, management, and a stellar concept should have you and your partner on your way. I wish you the best of luck!

Dustin

Thats fantastic Bill! You should publish this article! In all seriousness, this is probably THE best summery on economic factors that effect the value of a private note. Cheers!

Great advice from Ted as always. I concur. If at all possible, owner financing is your best bet; Just be sure to keep copies of your payments and expenses made in order to secure a conventional re-financing down the road.

Hey guys! Well, Let me get into this..
In the past month (december), Two units in the same development were sold @59k and 48k. These are all identical s/f units. Rehab costs are in the neighborhood of 2-5k all cosmetic... My exit strategy is to live there! :) lol It would be way cheaper than renting and it would allow me full access to the central Florida market. All the while, I could put it up "FSBO, will finance" and just live in it until i get a buyer.. Hold the note, sell the note. I could refi later down the road. Or if I do owner finance it to someone and im holding the note, borrow against it.

Is it unreasonable for me to put in an offer 40% of the ask with the givin market conditions though?