Member # 11323

Icon 1 posted 17-08-2006 03:27 AM Profile for Berrell Author's Homepage Email Berrell Send New Private Message Edit/Delete Post Reply With Quote I'm a broker in Virginia and my business partner and I have an LLP. Currently we own 2 properties, one of which houses our real estate office, and the other is a rental in Myrtle Beach, SC. Our loan on the office will be paid off in 07 which will free up about 1500/mo in payments. We wish to purchase a Craftsman bungalow (in mint condition and not in need of rehabbing) and the empty lot next door. The bungalow can rent for $750/mo. for 12-18 months to the current owner. Our plan is to keep that in place and build 2-3 units on the empty lot next door. Also, this area has just been placed on the Virginia and National Historic Landmarks Register, so we intend to use original plans from the 1920's for our new bungalows. How can we finance most effectively and maximize tax writeoffs? This is like trying to operate on your own child, so I cannot seem to be objective enough. All advice is greatly appreciated.

First, I would generally never recommend allowing a previous owner to remain in any rental property... just asking for problems including potentially reversal of sale... 12 to 18 months later in your case. Just a bad idea.

You appear to have several options, I would check on a new commercial loan for the property and compare with several other lenders including the one that now has your current office building loan.

I would also look at doing a ref on the office or taking a 2nd if it would cover the purchase. Often you can get very good rates on 2nd if you have a good payment history with the same lender.

See which option fits better.

One factor you didn't make clear is if your LLC "owns" the two properties you presently have. AND How your LLC is set up... such as is if set up as a Flow Through or not. How you are set up will make the difference between double taxes and single level taxing.

If you were not in Virginia, I would recommend setting each property as a Land Trust but Va has poorer Land Trust Statutes than several other states and it would probably not be worth the effort.