I am afraid my credit & complex tax situation is a death sentence

[Harry Karambizi]

Hi! New to BiggerPockets! I was an airbnb investor for a few years but my financial situation got really complicated. Now, I am in a great financial situation and am looking to start investing again. However, I really need guidance from the BP community in order to get started.

CREDIT:

I personally funded my small food business with my savings and money earned from part-time jobs. After 3 years, I maxed out my 3 credit cards, they eventually closed as well as both my business and my personal bank account. My credit is in the 400s. The business expenses were piling up and I ended up selling my condo and used the money to pay down all of my business equipment financing, pay off business debts, and school tuition. After school, I landed my first job as a web developer. My salary and affordable living is great but my credit is still poor and I only have an online bank account now.

TAXES:

This one is a doozy. I was so underwater, I have not filed my personal tax returns since 2015. I sold a home, used the profit to purchase a condo in cash and pay off my car. My business was barely making enough money to keep afloat and I have not paid Sales & Use to the State of Georgia for 2016 or 2017. I have kept documented records of all of my activity over the past 4 years, including my property sales. Since money from my airbnb was spent on my business, and money from home sale paid off my business debt, I feel like this situation is too complex for TurboTax or a trip to HR Block. Does anyone know how they would approach a situation like this?

At the moment, I imagine that I would most certainly have to work a trustworthy group in and established partnership in order to invest in properties. Has anyone had experience with doing this and using platforms like fundthatflip.com or Groundfloor.US?

Thank you in advance if anyone can help in any way. I'd hate to think that it is impossible to bounce back from the failure like the one I experienced.

[Joe P.]

@Harry Karambizi you seem like a nice guy, so I want to be delicate in my response. I don't think, based on what you've told me, you're in any position to invest in anything (today).

Sadly, I cannot personally agree with what @John Franczyk said; I just can't suggest that someone focus on the deal when it appears that his financial situation is not in proper order. But this is just personal "gut feeling" and opinion -- I would hate to see you stretched and I see John provided his response prior to your response regarding your finances. I would certainly hope he would revise his recommendation to you based upon the info you provided.

You need to meet with a CPA immediately. @Amy Beth is 100% correct in her statement. You need to take care of your bills right away. I also agree with her that your credit score should not be your focus now.

It sounds like things are going to turn around for you soon whereby you can save more of your money, and more importantly, take care of this low hanging fruit. @Graham Lutz made a point to encourage you and I want to do the same. I haven't done a partnership (yet) and I wouldn't know the amount of due diligence required, but I hope someone would ask me about my assets, liabilities, income, credit score, etc. (I would certainly ask the same of them) so we can build a profile. Credit score and ability to pay bills isn't the end all/be all, but I would want to partner with someone who has the ability to contribute financially and with their time. Someone with boatloads of time but terrible financial profile is probably not someone I would look to invest with.

Again, I stated I am incredibly cautious and cagey. I just lost a deal because my spreadsheet numbers didn't look "perfect" and in reality, I could have added value to bring up the rents and make it perfect. I am by no means an expert and certainly take my advice with a grain of salt, but I think its vitally important to have a clean financial house before you start looking at others.

You have debt, you might have IRS issues, and your credit score is in the garbage bin. These are all long-term issues where you like the categorization or not. Your debt didn't appear out of the blue one day, your credit score didn't drop 400 points out of the blue one day, and you'll be nearly YEARS without filing your taxes. I think its great you look to the horizon, but you're doing it in while sitting in quicksand.

I wish you luck my friend, but if you are seeking my $.02, there is no question what needs to be done. Sweep your financial house ASAP.