Rental Property Investor · Cincinnati, OH · Member since 2015 · 127 posts · 59 votes
Hello BP Community,
General question regarding using some of the cash flow from REI to fund monthly expenses. As an example, if I have 10 properties each bringing in $1000/month net for a total of $10k net monthly REI income, and I want to reinvest 80% of these earnings directly back into my investing but use the remaining 20% to fund daily & monthly living expenses, how is it technically done?
Meaning - can you transfer funds directly from a bank account that is tied to an LLC to your own personal account without penalty to the LLC?
I am using this strictly as an example because right now I have only two properties bringing in $1600 net monthly income, and every bit of that gets reinvested, but I want to plan for the future as we are talking about my wife quitting her job at some point, etc.
I am not an expert to maybe you should consult with lawyer and accountant but if its sole-ownership LLC, it doest not really matter for tax purpose if you are filing schedule E.
If you are on a partnership and file 1065 and K-1 for your individual tax return, if you send money from your LLC to your personal account, it could be considered as equity movement. You can consider it as a loan to you but then you have to pay the interest even its your company. Maybe pay as a salary? Your accountant will be able to help you out for sure.
Rental Property Investor · MN · Member since 2017 · 864 posts · 555 votes
7y
Hey Kyle!
If you LLC is a sole proprietorship, it's pretty simple. You can transfer money straight from your business bank account to your personal. Just be sure to keep up with your bookkeeping
Love that you want to reinvest 80% of your income, quick lane to financial freedom!
Rental Property Investor · Indianapolis, IN · Member since 2014 · 354 posts · 167 votes
7y
@Kyle Neff
When you write a check from an LLC, you are performing an equity withdraw. My account has me write "equity withdraw" in the memo line of the check for cross reference.
I am not giving legal or accounting advice but mentioning what our LLCs do
I am not an expert to maybe you should consult with lawyer and accountant but if its sole-ownership LLC, it doest not really matter for tax purpose if you are filing schedule E.
If you are on a partnership and file 1065 and K-1 for your individual tax return, if you send money from your LLC to your personal account, it could be considered as equity movement. You can consider it as a loan to you but then you have to pay the interest even its your company. Maybe pay as a salary? Your accountant will be able to help you out for sure.
This is what I had heard from others but never hurts to get a 2nd (or 3rd) opinion! Ultimately I will consult my REI lawyer and accountant but good to know it can be done simply. Thanks for the encouragement!
Thanks! Good to know there are easy ways to do it. Ultimately I will probably re-invest 100% back into the business for awhile but need to start getting familiar with all the moving parts.