Commercial Real Estate Investing From A-Z

What is happening in the office space in large cities like San Francisco? What has happened in the last year? What is happening right now? Will we ever see any deals? Reuben Torenberg, vice president at CBRE, will share his insights.You can read this interview here: https://bit.ly/2MgPK8TI've been dying to speak with someone in the office space that is focused in large cities like San Francisco, to see what has happened with office over the last year, do you mind sharing with us what is going on in your world?It has definitely been a change from anything we've experienced in our career. The market has been placed completely on pause since March of last year due to the pandemic. As soon as it happened, as in many other large Metro cities, there was a mandate from the city that stated no one can occupy office space. Since then, all the technology companies locally have at first tried to defer their rent or get free rent with landlords. And unfortunately, they were not very successful because these landlords also have bills to pay, they have mortgages to pay, they have to keep up the operation of their building.Since then, just over 8.5 million square feet of sublease space has been placed on the market. As the months went by, rates dropped from the mid to high 80s to mid to high 70s. Then a couple more months passed and rates dropped to the low 70s, then a few more months passed and rates have dropped into the 60s. Now, for subleases, we are seeing rates at 30% lower than what they were back in March 2020.I assume that there aren't too many defaults yet, is that correct?That is correct. There hasn't been too many defaults, what some companies have tried to do is cut their losses and seek a termination. Although landlords had been very hesitant to do so because of all the uncertainty going forward, if you were to terminate, and landlords had other tenants waiting in the wings, that's one thing. And you can agree to a termination with a penalty of a couple months rent and feel confident that you'll get the space leased again. But without any end in sight, it's certainly much harder to have those conversations. At least 80% of these technology companies still have their space in the sublease market, or are hoping to come to an agreement with a growing technology company who can use the space once shelter in place is lifted, and rid themselves of remaining obligation without suffering too much pain.Is it safe to assume that landlords are not hurting right now? And nobody's trying to sell their office building?Yes, I would say they aren't hurting as much as they likely will be if this continues in another year, just because the market has been so hot over the last five years that they've been able to get deals at the rates that they want for long term to lock in security for the building. And those who are going to sell their buildings right now are looking at a pretty difficult selling market. So what we're really seeing mostly is landlords trying to hold on, and get past the uncertainty of the virus and see how efficacious the vaccine is before going back into into the market to sell their buildings.And what is the sentiment regarding office in general in your world?I certainly think that they will eventually bounce back. But the trend right now is leaning towards satellite offices in secondary metros like Austin, Salt Lake City, Denver, and even Miami. These companies want to retain their talent and give them a place to work besides their homes.Reuben Torenbergreuben.torenberg@cbre.comhttps://www.linkedin.com/in/reuben-torenberg-b985b646/Subscribe to our newsletter here: montecarlorei.com--- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

What are the major issues that can arise on a title commitment? We talk with Mindi McLain, attorney and co-owner of Wright Law.You can read this entire interview here: https://bit.ly/3rPVNjTTell us some of the biggest issues that you have found in a title report before.I have had some big messes, I don't even know how to describe how messed up a property can be. Deals that are too good to be true are typically not true. I've had a few deals where, especially if you're buying something from a family that has been in a family for a long time, and then somebody down the road decides they want to sell it, most of the problems that you see are with people that have died in the chain of title ad nothing's been done. There hasn't been a probate of their state, there hasn't been an affidavit of heirship. You're trying to build a family tree, and it has 80 branches, and they had 12 kids. I've had a lot of them, especially small deals, but we had to just go and find all these heirs that were lost. I look for the lost heirs and say, Hey, did you know that you have a 1/64th interest in this property? And would you mind signing this deed? So those can be wrecks, but it can usually be worked out.Another issue is a family, and several people have died. And we find that one of the heirs is a minor, meaning they're under the age of 18. But they've come into title on a property. In Texas, you can get around that, but you have to get a court order allowing a parent to sell that property on behalf of the minor. And then the proceeds from the sale have to go into the court registry, and then it sits there until they turn 18. And then they can go and cash out their inheritance. That happens if someone dies and their heir just happens to be seven or eight years old, or 14 years old. They still are an owner of that property, but legally, they don't have capacity to own property or to sell property. And so you have to involve a parent or a guardian.Some of the worst things I’ve seen are people buying property and not fully reviewing everything that’s in Schedule B and then finding out that there’s a restriction on their property that they didn’t know about. The title company is not going to necessarily tell you hey, you can’t use this property that looks like a retail store, you can’t use it for retail. They’re just going to note in their commitment that there’s no restriction, or a deed, or subject to whatever it was in this document. If you go back and read it, and you bought a property and you wanted to use it for a funeral home, and then you later found out that there’s actually a restriction on that property that says it can’t be a funeral home, or whatever you wanted it to be, then you have a problem because the purpose that you wanted that property for you cannot do it legally because there’s a restriction. And that wouldn’t be a covered claim, if that restriction was an exception to your policy.Also leases, some people will see that there’s a memorandum of a lease recorded, and they won’t really dig into what the lease actually says and ask the seller, Can I see that lease ahead of time? And maybe the tenant either had an option to purchase a property or a right of first refusal or something like that. And they come back later and say, actually, you didn’t have a right to buy this, I had a right to buy it. So they try to undo the sale.People are getting savvy to all the ways that you can generate income from rural properties. And so that includes not just oil and gas leases, and mineral production, but also solar farms, wind farms, all types of alternative energies.Mindi McLainwww.wrightlawtx.commindi@wrightlawtx.comSubscribe to our newsletter here: www.montecarlorei.com--- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

What is a title commitment? What is a survey? What should you watch out for in a title commitment? We talk with Mindi McLain, attorney and co-owner of Wright Law.You can read this entire interview here: https://bit.ly/3jdLsLzWhat is a title report? What is a survey? And what does it do for you when you're purchasing a property?Title work means you're looking back in the records, so that when you buy a piece of property, you know that you have good title to, that you'll become the owner and you know exactly what is going to affect that property. There are lots of different things you can order from a title insurance company. Some people will call it a title report, some people will call it a title run. Most often what you want from them is what's called a title commitment. A title report is usually just a short one or two page document, it says title is vested in this person or entity. Here's the legal description and there might be a lien against it. A title commitment is the most comprehensive title instrument that you might want if you're going to look at buying a property and most contracts are going to reference a title commitment. The title insurance company that you choose will take your contract, open title on it, and they'll look at who the owner is, what sort of easements, encumbrances, liens, problems are out there, and what needs to be done or fixed before closing, so that if you're the buyer, when you close, you have good title to the property. And when that commitment then closes, it becomes what's known as title insurance.Surveys go hand in hand with the title commitment, but that's actually sending a licensed surveyor out to their property to look at what's on the ground. The title commitment doesn't do that, the title examiner does not visit your property and actually take a look at it. They're just looking at records, whatever is publicly available, but the surveyor is actually going to go out and visit your property, he's going to measure whatever you ask him to, the boundaries, or the improvements that are there.What are some of the things that people should really watch out for in the title report and the survey?I spend most of my time reviewing Schedule B, those are the exceptions to the policy, followed by Schedule C, the requirements. The first mistake that people make is getting the commitment, and not even really reviewing it or never getting past Schedule A. The second thing that they do is they review Schedule B, but they don't really dig into what it says. So it's going to say, these are things that are excluded from your policy, it's not going to give you the whole summary and analysis of what those things are. If you don't ask, what is that document recorded you'll never know what that document said. There could be an easement recorded, a lease recorded, or a deed recorded. But you'll want to ask the title company for copies of those documents.This is where the survey can come in handy. If you get a title commitment, and it has 18 easements listed, or it has a right of way deed or something like that, your surveyor can take that Schedule B and those documents and he can locate those easements or those roadways on the ground, and then show you where they are on your survey. The same with the survey, if you get it back and you have questions, you want to make sure your title commitment and your survey go hand in hand and that your surveyor has actually reviewed your title commitment and that he or she has included those documents that need to be included on the survey. That way you know where it's at, and your survey can actually be part of your title insurance.Mindi McLainwww.wrightlawtx.commindi@wrightlawtx.com--- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

Closing on a property the same day that the president declares a national emergency? Our friend Loe Hornbuckle checked that off on his real estate investing career last year. How did him and his team solve the problem that was about to arise?You can read this entire interview here: https://bit.ly/2Mx2xUwYou closed on a property when COVID hit. This can be something that can happen at any point in time in different types of versions. It can be the economy or anything else. How did you guys overcome this problem?I don’t think I’ll ever forget this, because how many people can claim that they closed a major real estate transaction on the day the President of the United States put the United States in a state of national emergency? Literally, the day we are closing on the deal, the President’s on TV saying we’re entering a state of national emergency and, like a lot of people, you’re in California, you have earthquakes, you have fires, there are all kinds of city and state emergencies, but I’ve never seen a national emergency before. So I didn’t know what that meant, or what was going on. All I know, is that I closed a very large real estate transaction, by some standard, $18 million is pretty large, on the day that the president is on TV, basically saying the sky is falling. because our construction was being done in phasing, we went ahead and figured out what our three targets were, what we needed at a minimum to close the deal in terms of investor equity. Then the second question was, what do we need to do phases one and two? And the next question was, what do we need to do all three phases? So we broke the project up into a few different metrics When you're doing a raise, people always focus on the ceiling, how much money you're going to raise. The question that we asked ourselves was, what's the minimum amount of money that we can raise in order to not have the project be delayed? And so we came up with those three numbers.Are there any other tips that you can give our listeners on how to deal with unplanned situations like this one?If you were to think about all the things that it takes to write a business plan, I think the first thing you have to be is you have to be realistic. When you're realistic, and you're writing a business plan, one of the questions you should ask yourself is, how could this go wrong? What are the problems this deal could have, and then try to be creative and pre plan. So much about people that write business plans, it's all optimism. For example, if we just assumed, that we were going to raise this money, no problem, we hadn't set the floor, then we potentially could have had to rewrite the operating agreement, and that could have caused other investors to be spooked. Instead, we just said, Hey, this is the minimum amount we're going to raise, this is the maximum amount we're going to raise.Always go through your business plan and just think through things that that could happen, maybe you won't raise all the money, maybe you'll have some price increases. You're going to need to have a healthy contingency, and things like that. A lot of what made us successful on this project, or come to a successful conclusion, really dealt with going in being realistic. And then also asking, Where can we have problems? And if we do have these problems, what's our plan in case we face them? Because having that in your back pocket, and when something does happen, you've already kind of planned for it. It helps a lot in the moment because you don't feel like you're being blindsided by something you couldn't see coming.Loe Hornbuckleloe@goodhorncapital.comwww.goodhorncapital.comSubscribe to our newsletter here: www.montecarlorei.com--- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

In this episode I talk about setting goals for your investing this year. I think 2021 will be a great year for a lot of investors, and you guys have been taking the time to learn as much as you can. 2021 will be a great year to put all of that to work.You can read this entire episode here: https://bit.ly/3b93z3hFirst we need to look back at our 2020 goals, and what got accomplished and what didn't. I accomplished about 50% of my goals, and looking back, the biggest issue I see in not accomplishing the rest of my goals (guess what, it was not Covid!) is that my official accountability buddy and I did not follow up on our calls. And that was both of us, we did not hold each other accountable with our calls and our goals. Another serious part of this is that I did not block part of my day to really look at what is the most important thing that I can do that day, to help me get closer to my goals and take a couple of hours to just do that before getting into emails, before everything else. When we're having this one or two hours for ourselves in the morning, I think it's really important to always include the thought of how can I increase this by 100 times? Some people say 10 times. And I think 100 is even more powerful, it gets you thinking outside of your box, for instance who is my wealthiest friend who would be super interested in investing in real estate? Or what is the property that is going to give me the most return for my time? Not carwashes, I can tell you that!Let's talk about one of the most popular forms of goal setting. And that is called SMART methodology, having Specific, Measurable, Attainable, Relevant and Time-Bound goals. So let me give you one example of one of my goals for this year:Specific: I want to partner up with a friend who is an architect and has a lot of experience in not only remodeling things, but also adding things to spaces, and not only in the single family space, but also in other commercial and multifamily space. So we want to start small, and we want to build this relationship and grow from there. So that is the goal to get into the real value add through development and improvement of a property business.Measurable: What is a measurable number for that? I want to buy and exit 12 properties, or 12 units with this friend in the Bay Area, which is where we live this year, we're going to be buying homes, or multi unit properties. At some point, she will take care of the renovations and the additions. I'll take care of the rest. And then we're going to exit.Attainable: Are 12 units attainable? Yes. She said that she will be comfortable managing even 10 projects at a time. So 12 projects in one year, I think is very doable.Relevant: Is it relevant? Yes. Homes right now are selling like hotcakes. And this is also a great way for us to not only make sure that we work well together, and also for us to be able to see and learn what other areas we can grow exponentially.Time-Bound: The last part of the smart format of goal setting is for your goal to be time bound. So we are already in January. I think it's realistic that we start with one property by February, we'll start to reach out to lenders and real estate agents to help us with the properties, and then fundraise whatever we need for the project and start working with the contractors.2021 will be incredible for real estate investing!Subscribe to our Goal Accountability Group here:www.paypal.me/regoals- Send $20 for Jan OR- Send $200 for the whole year (2 months off)Calls will be on Thursdays 2-3pm PST, 5-6pm EST, depending on how many people join, we may have an alternative time as well.--- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

This is our December 2020 Mastermind call. Our guests were Todd Sulzinger (mobile home parks), Victor Menasce (development, various asset classes) and Adriana Finnie (single family investing).You can read this entire interview here: https://bit.ly/3mFeOCsSteffany Boldrini (Self Storage, Car Washes)I have been dealing with a new asset class that I invested in, and that is carwash. I was put through the wringer right away, within nine days of closing, one of the roofs caved due to snow, money has been already been stolen, and within 20 days of closing, and my maintenance guy quit without giving any notice. Thankfully, I was able to hire someone within a day. I'll be doing a couple of episodes on why car washes, what did we do to them within this last month, and how we are managing it from far away. What I can tell right now, is that it's a very hands on asset class with a lot of moving parts.Todd Sulzinger (Mobile Home Parks)One of the biggest things that is still impacting us is our inability to process evictions. I have properties in Georgia and Tennessee that are landlord friendly states, and in Georgia in particular, we had the courts closed in March, they opened back up at the end of July. And we had to start the eviction process on several people. We had several people that after a couple months process before we got a court date, they moved out just before their eviction was filed. Other people were still going through the process, we've got a couple of tenants now that have been in the park for almost a year that haven't paid rent. And we really have our hands tied.Victor Menasce (Development, Various)We've been busy with a number of new projects. And as you probably know, we also get a fair number of requests to consult on new development. For example we're doing a 150 unit apartment building up in Spokane, Washington for our client, we're doing a 60 unit townhouse subdivision just outside of Boise, Idaho, we are doing a boat and RV storage facility up in Austin, Texas. So we decided to formalize the consulting division and officially make it a core part of the business. And that's going to allow us to train the future leadership in the company. We're not going to accept every client by any means, but only those that we would say are intentionally congruent with that which we're already doing.Adriana Finnie (Single Family Homes)We're in single family homes in California, Ohio, Michigan, and Alabama. We started in California, but in the last three years, we decided that the rules are getting a little too dumb and that it's time to get out. So we've done it in a very leisurely way. We keep waiting for somebody to move, and then we put the house on the market. It has worked nicely until this year when nobody wanted to move for any particular reason. The biggest challenge is evictions.Join our facebook group here: www.facebook.com/groups/montecarloreiTodd Sulzinger: www.blueelminvestments.comVictor Menasce: www.victorjm.comAdriana Finnie: www.linkedin.com/in/adriana-finnie-4578ab12/--- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

In this part I will cover getting the loan for the portfolio of properties, the LLC formation, hiring, as well as dealing with challenges.You can read this entire episode here: https://bit.ly/341nXipLoanThe first lender that gave us a loan approval initially gave us a loan approval with an extremely unreasonable request, which was to basically tie up cash until we pay out the loan, this gave us no reason to get a loan. What I did when I got that news was that I asked to set up a call right away with the loan agent. We got on a call, I explained everything, not only from the property side, but also from my experience side and how, we have a ton of mentors, how I have access to hundreds of people, and all of that. You really need to show them that you are resourceful, that you are a professional and also a lot of times that you were successful in your previous career. It was a quick call, it was I think, a 15 minute call. After that, the loan officer scheduled a call with the president of the bank, and I told him the exact same thing. I asked them if they had any questions, etc. Shortly after that, we got the approval, that was probably the next day or two.LLCFirst I decided to break it down into two LLC's, one for the car washes and one for the Self Storage. This is purely for liability reasons. And with this decision, we had to change our closing date by about seven to 10 days. Because the lender had to rewrite all of the loan documents, the title company had to rewrite everything and divide into two entities. So that took a little bit longer. Ideally, in the future, you need to make that decision in the beginning, because we also had to sign another offer, breaking it down into two entities, even though when I signed the offer, it was under our name and/or assignee, which means we can assign this to anybody.HiringWe had someone in mind, but that person didn't even return my call when I left him a message, and the real estate agent had to remind him to call me back. So that was the very first red flag for me. And then after that, he showed up late for our very first meeting on site. And that was my second and last red flag. Some of you may know this, but there is a saying that says "hire slow, fire fast". You should take your time in finding the right person for the job, and do a really good job with the interview. And there are great resources out there. One of the books that I love is called "Hired", highlight everything that you can in that book, it is super helpful for hiring. And then on the firing fast side, people do not change. And I have seen that over and over again. And because this guy wasn't returning my very first call after we had agreed on him managing the property, and he was also late for our very first meeting, those were huge red flags for me. I decided not to work with that person.ChallengesNine days after closing on the properties, the roof in one of the car washes caved because of snow. Honestly, I was not scared when he told me that. I said, Okay, this is part of the game. Nine days, whoo. I'm thrown in the wringer. I made a claim with the insurance company right away. And I cannot talk much yet about the insurance because the project has not being completed. But all I can say is that I am very pleased with Nationwide, they really are by your side. This company has been phenomenal with the claim that we made literally nine days after closing. About 20 days later, the main maintenance guy quit. I started searching for staffing agencies in the city, posted an ad on Craigslist, and hired someone the next day. It was a blessing in disguise.Subscribe to our newsletter here: www.montecarlorei.com--- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

I will be talking about a project that I have been working on for a year and that closed about a month ago.You can read this entire episode here: www.bit.ly/3g9laZdThis property came into my inbox because I have been getting alerts for self storage properties for sale. It was a portfolio of one Self Storage property and three self serve car washes. It took 84 back and forth email messages, plus some phone calls to get all the information that we needed to analyze the property, to agree on a price, and also one year from my first communication with them to the closing.Things to ask for:- Profit and loss statement- Tax returns for the last 2 yrs- Detailed explanations on expenses- What does it entail to manage and operate car washes- Price for rental units on self storage- Phase I report- A list of multiple questions regarding the property, age of roofs, type of floor (asphalt, concrete), type of building, age of buildings, etcDue Diligence period:- Ongoing list of questions and follow up questions- Recommendations for local lenders and credit unions- Recommendations for local real estate attorney to review title and surveys- How much would it cost to add credit card machines to the car washes- Information for all the service providers that they currently use- Finding a local property manager for both sets of propertiesExample of things that you always must follow up on, until it gets 100% completed:- I had to get quotes for putting internet in all of the car washes for not only the credit cards, but also for the cameras that I was going to be installing. And it turned out that for all of the car washes I had to get a different internet provider because not a single one of them could provide service in more than one car wash, they just did not have service in the other properties areas. That probably took three full days worth of work to find the best internet provider for every single location. - I searched for the best provider for the Self Storage Facility that was 1. affordable 2. could take online rentals 3. could take credit card/bank payments. The previous owner did not have a website, and they were sending out paper invoices to all of their renters. So I had to get someone to create a website for us, and also to be able to accept rent, accept credit cards and also have people be able to lease things online. I found this very young startup that fit every single need for the property. And because they were so young, I really had to beg for them to take me as a customer. And that took a lot of following up, I said, Guys, I'm with you, I know it's not going to be perfect, but I really think we can be a very good first few customers. So let's get this going. And we got them to agree to that. - I had to follow up with the guy that agreed to be a property manager and was not even responding to my phone calls.- I had to follow up with the insurance company, I wanted to continue working with the same insurance that was the provider for the previous owner, because it was a good price, plus that insurance provider already had all of the information for the car washes. After three weeks of not getting a quote and also following up with the agent, she tells me whoops, the underwriter thought this was a renewal and send it to the wrong person in the office. And this was one week before closing. So I started Googling for highly rated insurance providers in that whole area and got quotes from everybody that I could get my hands on, We also had to make sure that this provider was real and reliable (there are horror stories about insurance companies being outside of the country and never paying things out), make sure the insurance provider is rated A++.Subscribe to our newsletter at the top of the page here: www.montecarlorei.com--- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

How should you fundraise? What are the best practices? Ben Kogut, partner at HJH Investments will share his extensive experience with fundraising for syndications. You can read this entire interview here: https://montecarlorei.com/getting-started-with-real-estate-syndication/ Walk us through your first syndication raise. What did you do? How long did it take for you to raise the funds? What were the results? Lessons learned? It all starts with the deal, making sure that the deal itself is solid. And for me, a good deal looks like predictable cash flow. Generally speaking, that means that we have a high credit tenant with a long term lease, or multiple long term leases, something to that extent. And so making sure that all the numbers, the debt, that we structure our deals where we have a high net worth individual sign on the debt, and that the assets are in an area that we think are going to appreciate. On my first deal that started with my relationships. People that I've known throughout my involvement in real estate for the past 15 plus years, plus people that I know throughout my involvement in the community, I basically just started there by talking to people, Hey, here's the deal. Here's what I like about the deal. Here's what I don't like about the deal. And here's what you may expect by potentially investing in a deal like this. But the best advice I could say if anybody's thinking, Okay, I want to raise money or I'm thinking about one day raising money. Then now is the time to start telling people within your sphere of influence. The people that already know that you're a smart, capable individual, and that you're working on a deal, or you have a deal, Hey, would you be somebody that would be interested in investing with me once I get a deal, and I think a deal will look like this, whatever that is. If you're in triple net properties the way I am, or if you're in multifamily, or all the other different asset classes, which there are many. Now that you're raising all of your funds in less than a month, what are some of the best practices for fundraising for a syndication? 1. Putting together a clear and concise investment deck, to make sure that people understand what it is that that we're trying to accomplish. 2. This is a new addition to my practice, I've been putting together a short video where I just stand in front of the property, and I talk about it. What are we seeing here. Some people really care about what the property looks like. Some people could care less. They don't care where it is. They want to know what are the leases, who are the tenants, what are the terms? What kind of debt do we have? If I am going to put this much money in, how much am I going to get out and when. I'm trying to provide that type of data to a broad range of people. 3. Communicating with with your investors. Right now we have upwards of 180, or close to 200 existing investors amongst our portfolio, that's always the best place to start. 4. Another piece of advice I could give people, that I struggled with at the beginning, but is really good advice that someone gave to me is to be indifferent. To be indifferent to whether or not somebody invests in that deal or on you. Completely indifferent. I really do not care if you invest in this deal or not. It really set me free, it really takes the pressure off. I don't want anybody feel pressured to come into a deal. Ben Kogut www.linkedin.com/in/benkogut www.hjhinvestments.com Subscribe to our newsletter here: https://montecarlorei.com/ --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support

What are the legal aspects of forming your LLC when investing in commercial real estate? We are talking with Garrett Sutton, a corporate attorney, asset protection expert and best selling author who has sold more than 900,000 books to guide entrepreneurs and investors. You can read this entire interview here: https://montecarlorei.com/llc-strategies-to-protect-your-real-estate-assets/ How should a real estate investor organize their LLC’s for best protection? We like having an LLC set up in the state where the property is located. If you buy a property in Oregon, we set up an Oregon LLC to be on title to the Oregon property. And in all 50 states if a tenant sues, or the law where the property is located is going to apply, if we have a number of LLC’s and we want to protect against the outside attack, that tenant suing is the inside attack, they have a claim directly against the LLC that holds the real estate, the outside attack is you get in a car wreck. It has nothing to do with the real estate but your insurance doesn’t cover the claim. And in that case, we like Wyoming and Nevada to own the Oregon LLC. If you have a property in Utah, we’d have an Utah LLC. Let’s dive into all of the documentation that you guys will be sending us after an LLC is formed. We submit the Articles of Organization to the state. It’s a very short form because this one document is a matter of public record. Anybody can look it up and see what’s on it. We don’t want to put too much information on that. Then behind that public document, you’re going to have the Operating Agreement, which is the roadmap for how you’re going to operate the LLC. Who are the members of the LLC? What percentages do they own? When are we going to have meetings? Can we have telephonic meetings? The Certificate of Formation comes back from the state saying, Yes, you’re formed, and the filing. The EIN stands for Employer Identification Number. That’s like a social security number for your business. We also have minutes of the first meeting. The membership certificate is like a stock certificate. How does an investor pays himself with an LLC? If you have real estate, and you’re just holding and receiving income from real estate, and we consider it passive, then the money would flow from the LLC to you as a distribution and you’re going to owe tax on that as well. You’d write a check from the LLC, to you personally and then you would cash that check and put it into your personal bank account. So we’d have money coming into the LLC from rents, let’s say you own a duplex, the rents come into the LLC, you pay all the expenses at the LLC level, and then you make a distribution from the LLC to yourself.  What else is important for our audience to know? 1. Every year you have to pay a fee to the state, like we mentioned, Wyoming is $50 a year. 2. You have to have a Registered Agent in the state where you’ve set up the LLC and a state where you’ve qualified to do business, like a Wyoming LLC qualified in California, you’d have to have a Registered Agent in Wyoming and California in that case. 3. You need to have the separate bank account, as we mentioned, you can’t co-mingle funds. 4. You need to do the minutes every year. 5. You need to make sure that on all documentation, you’re using XYZ LLC and you’re signing as manager, not as a personal owner of the property. Garrett Sutton (800) 600-1760 www.corporatedirect.com Join our newsletter here: www.montecarlorei.com --- Support this podcast: https://podcasters.spotify.com/pod/show/best-commercial-retail-real-estate-investing-advice-ever/support