When buying a short sale, Brian Meara is the go-to expert. Today he talks about signing as a designated agent for the entity when purchasing a property
Learning first-hand, Brian tells us why he recommends signing as a designated agent for your entity.
Mike: Welcome back to the FlipNerd.com REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. Now, let’s meet today’s expert host.
Brian: Hey, guys, Brian Meara here today, today’s host for the REI Classroom. Today, we’re going to talk about using a designated agent appointment for you LLC for the purposes of buying real estate.
Mike: This show is sponsored by PassiveRental.com.
Brian: Okay, guys. Today’s topic is using a designated agent for your LLC when doing real estate, specifically when doing short sales. Why? What does that mean? How do I do it?
Okay, when you form an LLC, as we talked about in one of our last trainings for the protection of, let’s just say, to reduce liability of getting sued and also for your tax advantages, there’s another component you want to add to that. Now, basically what you’re doing is you’re setting yourself up in the bylaws as a designated agent for the sole purpose of buying and selling real estate. That’s literally the one sentence that you need to add in.
Why? Because when you are going to buy a short sale, you have to put your name down. Now, people say, “Well, I’m going to be buying in the name of my entity. Why don’t I just put my company name, and I’m a member, etc.?” You can do that, but what happens is this, specifically, guys, if we’re talking about short sales.
When a bank negotiator is looking at a short sale and they’re entertaining giving a discount, and they pass that onto the investor, for whatever strange reason, and we found this literally because of our experience with over thousands of deals nationwide, they always push back harder when they see it’s a company buying it. They always give you a little more push. They’re not as negotiable. They’re not as flexible.
When they see Johnny Flips Homes, LLC, or Blank Properties, LLC, or whatever the name of your entity is, I don’t know, they figure some greedy investor. I don’t know the whole mindset behind it, but I can tell you for a fact that the process is not going to go that smooth. So you can now sign your name as, for example, Brian Meara, Agent or Brian Meara, Designated Agent.
Now, really, “As Agent” is another one. You have options with that, and again, I would counsel you to speak to a qualified attorney or an accountant in your state on how they prefer you to do it. What I like to do is just Brian Meara, Agent.
What does that mean? Well, the reality is most of these negotiators are going to simply assume that you’re disclosing the fact that you’re a real estate agent. Well, that’s obviously not the case. Now, it may be, as in my case, I am a licensed agent, so I disclose that in another area of the contract, of course, because you have to. But they immediately, I’m talking probably, if I could say, 100% of the time because I don’t know that it’s ever been pushed back, where they just assume you’re an agent and they don’t question.
Now, we’re not hiding anything. Don’t get me wrong. But what we’re doing is we’re notifying them that you’re an agent of the corporation. So when you go to close, the way that you’re going to prepare your final settlement statement, your final HUD-1, if you’re still using them, depending on the nature of the transaction, is going to be Brian Meara, As Agent of Bormio Properties, LLC.
So working closely with your title company, having them keep in their possession a copy of your corporate documents, so they can see and know the legal structure of why you’re doing this, will make your life a lot easier. It’s a simple little trick, but one that we found, time and time again, that will help your negotiations with the bank go smoother. They assume you’re an individual.
Again, you’re not lying. You’re not trying to deceive anyone, but you’re simply putting all the cards in your favor to make this process as smooth as possible. Sometimes, with short sales, it’s not that easy.
So guys, I hope that helps. Until the next one, give it a shot, and we’ll talk to you soon.
Mike: PassiveRental.com is your source for turnkey, done-for-you rental properties. If you’d like to be an investor and not a landlord, please visit PassiveRental.com to learn how to purchase cash-flowing, professionally managed rental properties in the hottest rental markets across the country. We can also help connect you with financing for your next property. Invest the easy way today, and get started by visiting PassiveRental.com.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com, or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
Are you a member yet of FlipNerd.com, the hottest real estate investing social community online? If not, you can join for free in less than 30 seconds and get access to hundreds of off-market deals, vendors in your market to help you and your business, and you can start networking with thousands of other investors just like you. Get your free account now at FlipNerd.com.
Please check out the FlipNerd family of real estate investing shows, where you can access hundreds of expert interviews, quick tips, and lessons from leaders across the real estate investing industry. They’re available at FlipNerd.com/shows, or simply search for FlipNerd in the iTunes store.