LLC seller and buyer as members

Harold. And he/she can advise you.

This is an interesting idea to get around some of the regulatory limitations. I have not seen this done before. You will have to keep this thread going to let us know how it works out.

My preliminary research indicates that you will need to amend the Articles of Organization or Operating Agreement. The amendment would state the addition of the new member. Here is a website that breaks down the steps:

http://info.legalzoom.com/change-llc-operating-agreement-washington-stat...

I would recommend having the first amendment be drafted by an attorney to make sure that there is protection for both parties. This amendment can then be copied and used for other LLCs.

Thanks Simon. I will use an attorney for sure. It appears that I may the first to try this out. I will keep you informed as I move along. It may be a bit before I actually get one up and running.

Thanks,
Harold

Definitely. Feeling out the thought of this approach and seeing if anyone attempted this in the past. One thing that is absolutely important to me is making sure it is ethical and honest.

Thanks,
Harold

1. Always make sure that when you form your LLC that it is MEMBER managed, Not Manager managed.
This is within the Articles of Organization. The articles are a matter of public record
2. The Operating Agreement is where you state that one or more managing members can sign for the LLC. That new signing members can be added at the sole discretion of the current managing member.
The Operating Agreement is NOT a matter of public record
3. At closing or before closing you sell the ownership of the LLC for your fee. This seperate doc is notarized and your buyer can now sign the closing docs, the buyer owns the LLC and the property.

This strategy over comes any deed restrictions. It is a single closing. No need to assign or do double closing. Super clean.

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

I knew you could sell the LLC, but wasn't aware of the "Member" managed detail.

Appreciate all your knowledge that you share with us on this site!
Val

I really hope that my posts motivate and help people to start making offers!
The LLC transfer is a great way to wholesale REOs and short sales.

Michael

This does sound like a viable work around option for holding period deed restrictions. A wholesaler is going to want to count the cost on this type of transaction, however. It may not be a viable option for all transactions due to the cost of setting up the LLC and the time and effort required. Additionally, not all buyers will want their property to be in a LLC. Knowing this option is available can open doors to a lot more transactions.

im definitely going to try this method. I've also been trying things of the unusual such as marketing to overseas investors and posting wholesale deals on ebay. I do have a question though- if you have to sell your LLC every deal wouldn't you have to pay and buy a new one for EACH home you get under contract?

Yes, you need a new LLC each time. I actually request that my buyers return ownership of the LLC to me after they sell the property. You do not have to assign an EIN number through the IRS for each LLC. They are a sole purpose LLC created to hold property only. So the only expense is creating the LLC with the Secretary of State. Here in Colorado that costs $50. That is a lot cheaper than TF and double closing!

Michael