All Forum Posts by: David M.

@Andrew Reyes

Yeah, its tough.  Lots of NJ sfh don't pencil out well as rentals.

I would be concerned a bit about the remodeling plan.  Is there enough parking to go with it?  Are you keeping each room a single --- just double check zoning you don't max out occupancy or become categorized as a hotel.  NJ is kinda annoying since you have to file for CoH with each tenant.  So technically you need to file if anyone changes as I recall.

Also, I suppose when you go to sell in the far future, you'd change the property back?  That would be its best use and the point of waiting for the appreciation.  Are the costs worth it?

Lost track of your numbers, honestly.

I don't invest in Montclair.  You guys should have public water and sewer, right?

@Art Giacosa

Oh, if you are an attorney than having this setup is no big deal...

With the new Corporate Transparency Act, I see a big change.  Its not intended for general public consumption.  People can argue otherwise...  To me, its like saying something like since the DMV has your personal information, anybody can find you from your name or license plate.  I don't believe its that easy.

I think the privacy issue is somewhat overblown.  With your experience you may see it differently ...  I think much is a matter of "sampling error."  You hear about the "ambulance chasers" etc, but I don't know of anybody who really has had those sorts of frivolous lawsuits, if thats the correct term.

I've been a landlord for over 20yrs with a good number of properties in my personal name.  There are plenty of other investors who use their personal name...  Actually, in my case realtors would ask for my property by name..

So, I'm not familiar with developing structures for anonymity. It just seem overkill. I guess which public record are you staying out of? And, to what degree of searching? If you just used one LLC, after searching the deeds I'd have to search the LLC ownership. So, apparently you want to cover yourself for two degrees? But, if i looked at the deed wouldn't I see your name/signature?

But, anyway just look at how you could/would perform any transactions.  I'm guessing you are good with purchase, sale, 1031, or anything else? 

@Mohan Deep

Mainly just hold onto their security deposit until the bill comes...  Is there a timing issue with your state's laws?  You could try to ask for a separate meter read and billing perhaps from the water company?

@Jack B. As mentioned, the financing doesn't affect your capital gains tax at all.  I think we covered this in your other threads.  Your profit is still generally your sales price minus your cost basis.

Your cost basis is generally your purchase price adjusted by certain costs such as closing costs, major capex.

Good luck.

@Ashley Guerra

some stuff... Have you looked into a conventional loan with a "renovation option?" same thing as a FHA 203k. "203k" is a term specific to FHA.

There are all sorts of "w2" jobs.  For example, a tradesperson such as an electrician can have a W2 but is an hourly/wage worker.  So, its not a salary and the income isn't guaranteed.  A "white collar" worker with a guaranteed salary is different.  You can pretty much start from day 1 to get a loan.

@Joshua VanName

What are you planning on doing with these?

If you sell them, it just means that you cost basis is lower, and you earn more profit (which was the point of doing the labour yourself)...  No point being spiteful to pay somebody else to do the work.

Not seeing how real estate professional status (reps) helps here.  You need to have losses and you don't have much in the way of depreciation just yet, or not much at all.

you need to consult a qualified professional how this development will be taxed.  I am wondering if it will be capital gains at all.  Building/developing like flipping I thought was dealing in inventory.  So, it will be taxed as ordinary income.  if you can declare a business around being a developer, then sure you could probably expense an excavator, truck, etc against your income assuming you sell them.

If you keep an rent them, not sure if you could use an appraised value as a cost basis --- probably not.

Hope this little bit helps.  Good luck.

@Brian Newsome

Yes, you claim depreciation for ~11.5 months 2023 --- as I recall on SchE.

It will all be recaptured via the other tax forms, e.g. f4797 and something like the SchD tax worksheet.

Depreciation unrecapture can be pretty wacky on the forms if you are trying to figure it out yourself.  Maybe if you are using Turbotax or something the program will figure it out.  Otherwise, consult a qualified professional.

Does that help?  Good luck.

@Costin I.

Oh, yes I definitely misunderstood.

However, I don't believe what you are asking about applies to cash accounting methodology.  So, to do what you are asking, make sure you are using the appropriate accounting method.  Good luck.

@Costin I.

For myself, I wouldn't bother setting up a trust or escrow account.  Its just funds sitting with my "reserves/savings" --- whatever you want to call it.

If you manage your money by account, then by all means create another savings account, or whatever account you use.  (personally, I use a brokerage account so I can get the pretty risk-free 5.25% in a money market fund that is completely liquid).

To be blunt, if you really are limited in funds...  Then, the first tier of funds to have on hand is for repairs and smaller repair/replacments.  For example, a leaky faucet or toilet.  Nowadays a plumber costs a bit, but you need to have "$100's" handy.  Every 7-10yr'ish you need to replace a water, or whenever it goes, so maybe $1500.  Since you have three properties, if you can afford to have ~$5k handy in case all three go at once that would be nice.  But what are the chances --- until it happens LOL

Of course, you need to save up potentially for some vacancies...  Hopefully, you don't have all three go vacant at once.

Then, you need to have a plan for larger expenses such as a new roof, driveway, etc.  Granted, if your plan is to swap properties before major capital expenses, that makes it easier --- pretty standard plan.

Otherwise, just use whatever investment plan you have for the extra cash flow.  You need something to complement real estate since its usually done in large chunks of money.

Good luck.

@Matt Eade

I'm not even sure what you are doing...  You and your sister plus 4 other siblings makes 6 siblings to me.

A 12unit and "...each receive a SFH separately" means 7 properties to me.

You want to "...combine all three properties.." and then "...buy out the siblings..." and "...keep separate titles..."

Title has to reside with some entity or entites, be they just legal or warm-blooded entities. At least if a legal entity hold titles, its easier to buy out the partners as you just transfer ownership of the LLC. I guess you could keep refiling the deed to show change in fractional ownership...

Obviously, this requires some serious looking over and structuring from a qualified professional or two, doubly so since it coming out of probate.  The correct entity/person needs to receive what is due to them.