This property can be purchased by one investor in a traditional ownership strategy: one owner, cash or mortgaged. Read more here
Property Details & Analysis
|Property Tax Rate (Approx.)|
|Property Management Fee||$425||$5,100|
|Total Fixed Expenses||$505||$6,057|
|Total Expenses (Fixed + Mortgage)||$505||$6,057|
What is Co-Ownership
- Multiple owners
- Cash purchase
- Operation manager handles the day-to-day activities
- Less hassle -> more passive
- Long term hold
- Organized as an LLC
- Lower cash requirement
- “Out-sourced” main activities to a professional
- Higher cash flow
Costs vary from one property to another and are also impacted by the number of members (shares) involved w the deal.
|Per Share||Whole Group|
|# of shares||5.0|
|SDI service fee||7%|
The Operation Manager
SDI has collaborated with a knowledgeable individual in real estate investment within the local area to manage all the ongoing matters concerning the rental property.
The use of OM eliminates the owner’s responsibility of overseeing the daily management and maintenance of the property, as well as making decisions related to it.
Although the OM is responsible for supervising and managing the daily operations, there are certain tasks that the OM is not authorized to handle or approve, and requires seeking majority owners’ approval:
- Sale the property
- Obtain a mortgage or refinance
- Approve an expense over 12,500
- Terminate or replace property management co.
- Majority owners may elect to terminate the OM
WHAT IF I WANT TO SELL MY OWNERSHIP IN THE PROPERTY?
Once you have owned a share (membership) for three years, you have the option to sell it to either another member or a third party. It will be your responsibility to locate a buyer for your share.
Can the co-owners replace the OM?
Yes. If the co-owners have a majority, they can decide to terminate the OM (operations manager)
CAN I FINANCE MY PROPERTY PURCHASE?
Not at the moment. Currently, the co-ownership program is open to cash only purchases.
DO I REALLY HAVE OWNERSHIP IN THE PROPERTY?
Yes. Owning is true real estate ownership. You purchase a share in a property-specific LLC. The PROPERTY is fully managed and designed specifically for co-ownership.
DOES THIS WORK LIKE A REGULAR REAL ESTATE TRANSACTION?
Yes. The legal forms and closing process are similar to a standard home purchase. We partner with local real estate agents, property managers, title & escrow, inspection, and an operation manager.
IS LLC CO-OWNERSHIP NEW TO REAL ESTATE?
Owning real estate with others in an LLC is not a new practice. However, “DIY” LLC co-ownership is a headache to set up and a hassle to manage, especially when personal relationships are involved. This is a fully managed LLC co-ownership solution that removes the interpersonal stress and operational hassle of going at it alone.
WHAT MONTHLY COSTS WILL I HAVE TO PAY AS AN OWNER?
Home operating costs, such as property management, maintenance, taxes and repairs, are passed along directly to owners transparently with no markup. Costs are shared pro rata. Owners pay an additional monthly fee which covers LLC oversight and ongoing owner support.
DOES MY SHARE INCREASE IN VALUE IF THE HOME APPRECIATES IN VALUE?
Yes, as a true owner, any equity gains realized are yours.
CAN MONTHLY OPERATING EXPENSES INCRESE?
All operating expenses are passed through at cost, and all cost statements are available to owners upon request. Overhead expenses cannot increase fees without cause.
CAN CHANGES TO THE OWNER OPERATING AGREEMENT BE MADE?
Material changes require an ownership vote. The Operating Manager has limited authority to make non-material changes (e.g., change of address for state reporting purposes) on behalf of the ownership group.
WHERE DO THE RESERVE FUNDS GO AND HOW ARE FUNDS USED?
Reserve funds are held in the individual LLC's bank account, managed by the OM. Funds are only used for the home’s repairs and maintenance. When the need for a major repair arises, LLC, via owners, will allocate funds after a transparent competitive bid process.
HOW DOES VOTING WORK? HOW DO OWNERS CALL FOR A VOTE?
Every share owned holds a vote. Owners can bring major issues about their home to a vote of the group (e.g., a decision to upgrade the sound system). To call for a vote, notify your OM.
WHAT KIND OF LLC IS CREATED?
We use a multi-member manager-managed LLC. These LLCs are a unified front that represent and protect a group of buyers. Each LLC has its own bank account, tax ID number and holds title to the property.
WHO PAYS THE LEGAL FEES IF THE LLC IS SUED?
Legal expenses, to the extent incurred on behalf of the LLC, may be passed through to the owners as a Basic Expense of the LLC. Each home has a homeowners liability insurance policy.
CAN AN INDIVIDUAL OWNER BE HELD LIABLE?
Generally, to the extent such costs are not covered by insurance, the LLC indemnifies owners acting on behalf of the LLC in good faith and in accordance with the LLC operating agreement. Owners who act on behalf of the LLC with gross negligence or willful misconduct, or violate of the terms of the LLC operating agreement, will not be indemnified by the LLC.
CAN OWNERS DECIDE TO RUN THE LLC WITHOUT THE OPERATING MANAGER?
The OM works at the service of its owners. If owners decide that the OM is not providing adequate service, the owner group can vote to remove the OM as the manager of the property and self-manage the property.
WHAT IS CONSIDERED A “ROUTINE MATTER” THAT THE OM CAN RESOLVE WITHOUT OWNERSHIP VOTING?
Routine matters are minor repairs to keep the home in owner-ready condition. Examples are ongoing home maintenance like winterizing a deck or replacing a broken dishwasher.
WHO IS RESPONSIBLE IF SOMETHING BREAKS?
Owners are not individually responsible for life-limited items that eventually need repair or replacement, like a dishwasher; those are paid for by the LLC reserve fund.
WHAT HAPPENS IF ZONING LAWS CHANGE?
OM would step in and advocate on behalf of the LLC. However, this is very unlikely. Many properties are comprised of LLC-owned properties. We do not anticipate local zoning laws to change, given it would disrupt many households in many markets.
HOW IS THE DEED RECORDED?
The deed for each property is recorded in the name of a property-specific LLC. Each owner holds their interest through the LLC, which provides for both privacy and liability protection.
- Updated On:
- April 8, 2023
- 3 Bedrooms
- 2.5 Bathrooms
- 2 Garages
- Year Built: 1987
- Principal and Interest
- Property Tax
- HOA fee