All Forum Posts by: Adam Byrne

I want to publicly thank Dave Foster, who is the MAN when it comes to 1031 exchanges. Dave, thanks for your help on my last 1031. You're proving again why I chose you in the first place. I'd love to pick your brain on this best-of-all-worlds situation. 

Hi Amit,

I wound up doing a conventional exchange with replacement properties. No zero coupon products on the market have reached maturity yet. Most likely because they are so new and their horizons so far out into the future. 

At this stage of my career, I felt it was a better move to hold a real asset and manage it than have some exotic debt reduction tool creating a paper liability. 

Adan

Hi BP!

I am 1 year into a property I 1031 exchanged into. I was given an offer to sell (and seller finance) I can't pass up. I understand from 1031 rules that I need to hold the property for at least a year to keep the exchange valid. 

My question is how to calculate my cap gains and depreciation clawback on the exchanged property. 

I plan to use this number as the minimum down payment requirement on the deal so I'm not out of pocket. 

Any help would be much appreciated!

Adam

Hi BP!

I'm applying for a HELOC since i have a lot of equity in my primary residence that I could put to use BRRRRing properties. The problem is, I am a guarantor on my commercial properties' loans. According to a national bank, my debt to income ratio is out of their initial underwriting guidelines.

According to their algorithm, I'm a bad candidate for a HELOC since my personal income wouldn't cover the debt obligations I'm currently guaranteeing. However, the properties held in my LLC pay those mortgages and make a profit. I have substantial equity in the properties; in fact, our Current ratio (Assets/Liabilities) is 2:1 which should be considered very healthy.

Has anyone had this problem in the past? Is there something about real estate businesses that skew debt to income ratios in underwriting? Is there a better way to explain this to the underwriter or am I better off looking for an alternative to HELOC financing?

Thanks,

Adam

Hi BP!

I've been building a multifamily portfolio in the mid-west to build passive cash flows. For whatever reasons, as I've been networking for deals and explaining my personal strategy, a few people have approached me and asked that I use their cash to generate returns for them. Most would be happy with a 6-8% return and open to some kind of partnership.

As I've mulled this over, I've considered building a consultancy business: helping others build BRRRR stacks. But thinking it through, I'd be providing most of the value, so charging fees (asset acquisition, management, disposition, etc.) wouldn't generate a good enough return. Taking an equity position would mean analyzing whether I want to be partners and if our interests align over the right term. I'm not excited about managing a bunch of LLCs with different partners who could change their minds every year. I might want to use the cash as hard money, but most want to park the cash somewhere "safe" and generate consistent returns.

What are some other uses of OPM you would try and how would you use it to help you build while providing value to your investors?

Thanks,

Adam

@Eamonn McElroy

Thanks Eamonn!

Another concept I’m learning about is guaranteed payments. If our operating agreement is modified to allow for them, would my guaranteed payments be subject to SE tax if we primarily collect rents?

Adam

@Eamonn McElroy

Thanks for your responses!

We hold rental properties as our main business activity. My income is booked as a management expense since I actively manage part of our portfolio.

Does my 1099 get taxed as self employment income or rental income?

Is there a way to optimize that?

Thanks again!

Hi BP!

I am a partner in a multi-member LLC, taxed as a partnership. Since I'm actively managing, I pay myself a management fee and 1099 myself at the end of the year.

I like to show the income to season my tax returns for refinancing purposes but would like to optimize my tax expenses.

Would it be advantageous to change our filing status to S Corp (or other) or should we keep the Partnership designation? 

Thanks, Adam

Hi Bigger Pockets community! 

I'm in a 1031 exchange, having sold a commercial property in Los Angeles. I'm looking for similar mixed use properties out of state for better return on equity. I've identified and am under contract with something that fits my profile. I've found it's a bit of a challenge getting terms I can qualify for here in LA. 

Any advice on positioning myself to get the strongest terms? 

Do I search out large institutional banks or smaller local community banks? 

Is it bad form to share a term sheet with competing banks?

Thanks,

Adam

Hi Neal, I'm looking for SFRs or multi family units.