Ask Mike

Got a question you’d like me to answer ? Then fire away below! I’ll post a response and may also talk about it on a future podcast or blog article..

If you have something of more personal nature to ask me (not too personal I hope -;) then please use the Contact form instead.

  • Solutions Kid

    Michael,

    Hope all is well. I have a question for you which may lead to several answers. We have a 26 unit apartment complex we’ve owned in the Cincinnati are for five years. Current loans total $427 and value of
    buildings are $850k+. Now, the buildings are great, cash flow great, have a cap rate around 14% and there is no particular reason we need to sell them BUT we have been thinking. For one, we are wanting to refi the propertiesinto one loan, pull out equity for capital improvements and to use for future deals AND we have toyed with the idea of selling them due to the crazy good market right now. Our financial goal is not unit based but passive income based per year so we are needing some help on two fronts.

    Appreciate any perspective,

    Christian
    Villefranche Properties, Inc

  • Bryan Fullen

    That’s simple John…. Simple yellow letter with , We are brokers script is about your only method since you need to disclose that you have a license, if you’re interested in purchasing their property and not listing it then you can go ahead and use the simple two line, I would like to buy your property @123 main st here is my contact information xxx xxx xxxx I am a serious investor i will not waist your time. Honestly Calling is better, meeting with the property managers. You’re in at a different angle than Micheal Teaches.

  • Bryan Fullen

    Why would it be a disregarded entity unless you didn’t file your structure correctly? Single member LLCs that neglect to make a selection will default to the taxing structure of a sole proprietorship.simply file a schedule C with your personal 1040 tax form. No EIN is needed; your Social Security number will function as the tax ID for your LLC. In essence, as far as the IRS is concerned, your LLC does not exist and you are the one making all of the money. The IRS refers
    to this as a “DisRegarded Entity” (DRE).

  • Bryan Fullen

    I like your response, but its very simple really…. lets consider this, Let’s assume that you own two apartment buildings. One apartment building is held in an LLC taxed as a partnership (sole proprietorship if you are the only member) and the second apartment building is held in an S corporation In either case, if a tenant slips and falls, the tenant will have to sue the entity that owns the building. The attack is coming from the front (company) side of the shield. Assuming the corporate/ LLC shield holds, the most the tenant can get is the assets of the entity that owns the building. Your other assets, including your ownership of the entity that owns the other apartment building, will be safe.
    What happens if the attack comes from the back (personal) side of the shield? Let’s assume you are the sole owner of the corporation and the sole owner of the LLC. Let’s also assume the attack is successful. The spoils of the suit will include your stock in the corporation that owns one apartment building, and your membership interest in the LLC that owns the other apartment building. When the lawsuit winner (creditor) takes over your assets, he gets your stock in the S corporation. The creditor will also get your membership interests(When the creditor gets a membership interest in an LLC or a limited partnership interest in a limited partnership, including a family limited partnership (FLP), the creditor has to get what is called a “charging order” to come against the entity). The charging order limits the creditor to only being able to receive the financial benefit of the owner’s interest in the LLC or limited partnership.
    When the creditor gets a membership interest, he can’t just take over the LLC. Once he wins the lawsuit, he has to then ask the court for a charging order to come against your interests in the LLC. Under the charging order laws, a charging order does not give the creditor any voting or management rights.
    This is very different from being able to seize the stock in a corporation and have all the voting rights and management rights. If the LLC document is written properly, the management of the LLC is intact and free from the creditor’s influence. In fact, the managers of the LLC can basically make life miserable for the new member. having a top notch operating agreement can assure this.
    The bottom line is, you are still in control of your LLC. You can continue to pay yourself and other people wages for working in the LLC. The creditor gets any profit that is distributed out of the LLC which would have gone to the member (you). In some cases, the LLC can shift tax burdens to the creditor without ever giving the creditor any money.
    Basically, you still have the apartment building held in the LLC as an asset.

  • Bryan Fullen

    I can help, Simply ask her what her plans are for the building. What does she want for it? What is the cost to repair? What is the After Repairs Value if you fixed it then you have something you can start working with….who cares about attorneys until you come to an agreement before hand? let them know that you only deal with them through attorney anyways so its all legal and correct but you do not need one to talk to her about buying a condemned property.

  • Bryan Fullen

    My first foundation book was “what every investor should know about cash flow” Everything else can be found in a Rockwell Real estate book for brokers exam focus on the definitions and law for your state. and then I would pick David Lindhals “A Complete Guide to Making Money in Real Estate in Your Home Town” But Honestly Micheal Blank has made it soo simple in his book you dont need anything else except implementation. My opinion..

  • Bryan Fullen

    Learn about Emerging market trends, Possibly go ask a CCIM in your area and ask them about demographic and economic movements in your area and see if it makes sense for you to invest in your backyard. There is always a deal even in a tight market.

  • Bryan Fullen

    Greetings I hope you are doing well, In some ways you are hurting yourself in thinking “No Money Down” It can be done but its harder to get sellers to accept to terms if they are not in a distressed situation. Some things to consider. One could ask for seller financing for a portion of the down payment called seller carry back. Or one could consider Master lease option strategy where you would wholesale or flip to an investor. Just some thoughts.

  • Bryan Fullen

    Find a property thats several million that has good cash flow, syndicate the deal and place only a small fraction of the money you need into the deal to make it better. save your wealth use other peoples money.

  • Julien Emmanuel Plouffe

    Solid advice Bryan.

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