Good business ideas to synergize with rental portfolio

[Allen L.]

What are business ideas that people implement that complement a large rental portfolio? I'm not nearly there yet but I think it's good to plan ahead.

For example, some people start their own in house property management business to take care of their properties and take on others.

Other people become realtors and can deduct their commission with rental property paper losses

While some others have flipping businesses and also use losses from rental properties to reduce taxes from flipping business

[Curt Smith]

Hi, for a rental business strategy jump start for everyone, I wrote up how we run our rental business.   Read the file linked off my BP profile 1st paragraph;  how to buy a bullet proof rental portfolio.

Join your local REIAs, for local boots on the ground investors, buy and holders to learn from.

At some point some folks create side businesses to create tax advantages and some to reduce costs;

- An in house property management co. Typically an LLC single or multimember (husband/wife etc) and you send in the IRS form to be taxed as an s-corp. You signn a PM agreement between your holding co (or yourself) and the PM co for a fee. That fee pays you a W2, an a K-1 to your 1040 or like me, I pulled all my Schedule E (rentals) off my 1040 up into a partnership LLC, multi member / husband-wife, where I file a 1065 and k-1s to my now nearly stripped of REI 1040. If you are only managing your OWN rentals you do not need a licensed agent/broker on staff.

- a property maintenance / construction co. Typically an LLC single or multi member, you'd also want tyhis taxed as an s-corp. Folks do this to reduce maint costs by employing (w2) handymen that just work on your properties, build, etc. At some point you can soak up excess capacity by offering to do maint on local investors/friends properties too. Now you have more income not just reduced expense to your holding companies ownership of rentals.

- I really don't hear of many getting licensed as a way to save money. I know flippers who are licensed who still off load to another listing agent. IMHO I don't view getting licensed as very useful to REI. You have to pay to hang your license somewhere, pay for CE credits/yr etc etc. But some do I don't see the value.

=== BTW the rumor of huge rental losses to be used to negate gains else where in your tax return needs to be studied. My portfolio of rentals all here in the South East (lower purchase price, hgiher rents, lower mortgages) have all been hugely profitable. No losses except for last year in 8 yrs of filing. Huge gains! No losses to be used elsewhere. I stopped claiming RE Professional, there's IRS/tax disadvantages if you get audited being RE Pro. My loose last year came from the same rental income (no covid drops), but a huge rehab at the end of year without any new income from that new rental. I did have some lower STR income and higgher expenses from the STR too. But normally my rentals contribute alot of income net on my tax returns. Owning older houses that need expensive upkeep, high purchase price for depreciation, hiigh mortgage and bearly cash flowing rent iis how I can guess you'd own rentals that on paper loose money. Most of us in the SE and I'll guess you in KS have difficulty loosing money owning starter homes y9ou rent to blue collar and DSCR >1.5 ideally 1.7. You WILL generate great returns when you can buy at DSCR >1.5 then it goes up with rent raises (mine are 7% to 10% this yr, just mailed them all out).

Best to all.