All Forum Posts by: Andy K

Thanks Jon for your reply. So anyone with a day job outside of real estate with a W2 income greater than or equal to 100K or so will not be subject to SET from the flipping profit. Will the profit from flipping be then called short term capital gain tax? 

If one is not going to be hit with SET from flipping on account of having a day job, is there any real benefit to using an entity like S-corp or LLC for the flips? Or it should be okay flipping the property as an individual? Thanks.

Hi all,

A friend of mine and I are planing to partner up and fix and flip properties. We plan to put down payment together, get a hard money loan, rehab and then sell properties. I am an experienced buy-and-hold investor and have been doing this for a few years. But this would be my first time fixing-flipping properties. I have a full time W2 income (not related to real estate) and do my investing part-time.

I have been reading online, and there seems to be a chance that IRS can label us as a "dealer" if we flip a few properties in a year, and then we can be subject to the 15% self employment tax. We would like to avoid that from happening. Hence I would like to ask experienced folks on the board who have been flipping homes - what can we do to avoid being given the "dealer" status by the IRS? Do we need to use entities (like LLCs, C or S-corps, etc) to overcome  this?

Any information on this would be greatly appreciated. Thanks everyone.

Hi everyone,

My wife and I have been contributing toward our Roth IRAs for a past few years. The money has been sitting in a savings account at a local bank not doing much, and we would like to invest the funds in real estate going forward to get a higher return. We wanted to get some advice on how to best invest the Roth IRA funds.

How are folks on the board investing Roth IRA money in real estate? The money is not large enough to be able to buy real estate in SoCal. But it could be used as down payment for flipping properties, or as a private money loan, etc. Any suggestions on what we could do are appreciated.

Also, what can be the best type of account to move these Roth IRA funds into to begin investing?

1. One option could be to move the money into a Self directed Roth IRA with a custodian like Entrust. The downside is that I see there are a number of fees charged by the custodian, like for every check that needs to be made out, etc, in addition to the annual maintenance fees for the account.

2. Another option is to convert this to a Solo Roth 401K. But I read on the IRS website that Roth IRA cannot be converted to a Solo Roth 401K. Is that correct, or am I mis-understanding it?

As always, thanks a lot for your advice and suggestions.

- Andy.

Hi all,

We have a rental property in a not-so-good neighborhood. Didn't realize at the time of buying it that it was quite a rough neighborhood. The last 2 times that the home has been vacant during tenant turnover, it has been vandalized. We are expecting a vacancy again soon and would surely like to prevent the home from being vandalized again.

I would like to ask how folks have been keeping rentals safe in bad neighborhoods and preventing issues like vandalism. Does a security alarm system help? If so, which would be a good, affordable one? Any other things that can be done? Thanks for your help.

Hi all,

We have a rental property in a not-so-good neighborhood. Didn't realize at the time of buying it that it was quite a rough neighborhood. The last 2 times that the home has been vacant during tenant turnover, it has been vandalized. We are expecting a vacancy again soon and would surely like to prevent the home from being vandalized again.

I would like to ask how folks have been keeping rentals safe in bad neighborhoods and preventing issues like vandalism. Does a security alarm system help? If so, which would be a good, affordable one? Any other things that can be done? Thanks for your help.

Hi Tom,

Thanks for the advice in your post. Great thinking in diversifying out of real estate by opening a wine and liquor store in a commercial unit you own ! Thanks for sharing.

Hello everyone,

I spent quite some time thinking about this, but when I could not come to a conclusion, I thought about posting this on the forum. I am an (experienced) real estate investor, been investing in Single Family rentals for the past 5-6 years in So Cal. I am still learning everyday through experience during property acquisition and also managing my rentals. But I can say now that I am comfortable investing in residential real estate.

Having done this for a few years now, I have been thinking of taking my investing skills to the next level. That could mean investing in types of real estate that I have not done before or don't have much knowledge about right now. I read in an article that after acquiring the right skill-set, the time and effort spent in a $100K acquisition maybe the same as a $1 million acquisition, but the profit will be larger in the latter as long as it is done correctly (small as well as larger investments require similar time and effort most of the time, but the dollar profits are bigger in the larger investment).

I would like to hear from other more experienced investors on what they did after investing in residential real estate for a few years. Did you move on to commercial real estate projects (like apartment bldgs, mobile home parks, office space, etc)? And how did you gain the skills to move to the next level? Any advice on what I could do next? I am sure there are several others on the board facing the same question as me regarding their next steps and investing career growth.

Also, I would like to know if folks in So Cal (or from anywhere else in the country) would be interested in meeting up to discuss investing ideas and maybe forming a mastermind group and partnering together to learn about and then take on larger projects.

As always, your thoughts and any advice is greatly are appreciated. Thanks for your time.

Thanks everyone for your replies. Sorry guys, I have a lot of questions since this is the first time I am going through this.

My dilemma is whether I should call my home insurance company (Farmers) and let them know about this leak? My deductible on the policy is $2500 (and that is what is going to be the cost to fix the slab leak, so won't get any payment from the insurance company). Also, it seems like they don't cover the cost to fix the leak, but cover any damage done by it. But the question is whether there is any damage done (like mold) due to this leak, since looks like it has been going on for 9-10 months. And I won't know about the damage till the plumber opens up the drywall.

Is it okay to call the insurance company after the drywall has been opened and IF there are signs of water damage? Will the insurance company still process the claim or will they deny it since the dry wall was opened and work began on it?

I am looking for advice on the best way to handle this situation - whether to call the insurance before beginning the work or wait till later. Also, can they deny the claim saying it was negligence since it has been going on for a few months now (the tenants never informed me till late last week).Thanks.

One question: When can a slab leak cause mold to grow? If the leak is under the bathtub or the cabinet, can that cause mold? What kind of surface does water need to come in contact with to cause mold? Thanks.

Is it true that mice and other rodents can chew through PEX piping quite easily and cause leaks, as compared to copper piping?