All Forum Posts by: David M.

@Dan Fritschen

You could look into 1031'ing into a DST investment (Delaware Statury Trust). Usually, DST's are brought up in conversation for the yield/cashflow and since DST have been declared as eligible for 1031 by the IRS.

But, they have DST investments that are used to "park" funds. As you can imagine, having the timing just right for a 1031 can be problematic at times. This sounds like a decent use of one..

I've never invested in a DST...

@Dave Foster have you ever done one? Or, I'm sure you have DST contacts for this?

@Account Closed The profits from the sale of a "business," not the business real property, is considered a capital gain?

@Patrick Chafe

What did you purchase the property for?  With a 454 mortgage, I'm guess no less than ~$485k?  A sale at $700k would still mean you'd be under the $250k sec121 exclusion (since it sounds like you arent' married yet).  But, good to double check these things.

While it might be "nice to have another rental," check your numbers.  Not quite sure how you are "making $1400/mo before expenses/capex."  What other expenses?

I am guessing you are on the younger side...  Taking the capital gain tax free is very powerful, if not the most powerful since other strategies can only defer the tax.  

Holding the property free and clear maybe nice, but you are losing out on the so called "power of leverage."  

Like you said, "...would feel really nice to have a property paid off."  But, you'd make more money leaving it in a money market fund at ~5.25%.  Nobody has a perfect crystal ball, but probably next year it MIGHT be 4% (or even still higher).  That beats your 3.5% with all the risks of being a landlord.  You could hold dividend growth stocks (like the PG and KO...) and still get a better dividend and growht (to account/offset property appreciation).

Don't forget that depreciation has to be paid back when/if you sell the real property to fully access your cash.

https://www.biggerpockets.com/forums/48/topics/1169308-equity-rich-need-advice?highlight_post=6659747&page=1#p6659747 check out my post here.  Don't get trapped into paying for your own money...

Does your current primary really well suited as a rental?

Funny, there was another thread just recently where the young investor wanted to payoff his mortgage.  Don't payoff the other rental's mortgage.  Don't "trap" your funds into the equity of the property.  I haven't found a way to use Title to a property to pay my bills.  Keep your capital around.  Like I said, it should be earning a solid 5.25% (maybe 5.0%).  Let is sit around/grow until you find something else you'd like to invest.

Hope this helps.  Happy to chat.  Good luck.

@Jay R.

There is no real difference between a the two. The main diff is that with a partnership you have another return to file, and thus more accounting costs. Keep it simple and use a single member LLC.

Also, if you pass costs/losses to the S Corp side, I could see them being "trapped" or used within the S Corp which might not be so good.

@Jay King Almost all loans are sold off or resecuritized.  Only those few true "portfolio" loans are held on the bank's book.  So, no point for the "bank," who is only the servicer (and making fees as such), to try to call the Note.  The "securitized noteholder" has no reason either since it just reduces their return.  With the way the bond market is structured, lots of the costs structures are effectively "baked in."

@Jeff Stevenson

Here is that thread about llc lawsuits you can see plenty of opinions:

https://www.biggerpockets.com/forums/926/topics/1151922-than...

@Jeff Stevenson

You really should consult a qualified professional or two, specifically at least attorney.

So far, your lender is correct that legal entities, such as LLC's, are not eligble for conforming residential loans. Most investors are moving Title to their names, then moving the Title back to the LLC's. In my layman's point of view, this is co-mingling and alter-ego violations to piercing the corporate veil. The other issue is the mortgage is in your name, and nothte LLC. To obtain the limited liability protection, you really want everything under the LLC's name. Remember, it is its own entity and has to be managed as such.

The Due on Sale clause is hotly contested. There was a change recently, a few years ago now at least, where transfer to Title to a LLC of your own is okay. Anyway, as mentioend, you really should take Title to the LLC and get a commercial loan.

Trusts are mentioned a lot as well. They generally at best help to provide anonymity. In practice, it can be difficult to not sign your name on some publicly recorded document, or some other document that can be gotten a hold of... The primary way to get the "protection" is through the LLC. Otherwise, trusts can be useful but for the uber wealth when they setup the irrevocable trusts.

Poke aruond BP. The LLC issues comes up many times. Many investors, like myself, just hold TItle personally with homeowners/landlord insurance, umbrella policy, and keep the property in good repair. Those investors who want the LLC but won't pay for it (ie move Title back and forth and get commrecial fiancing) APPEAR to be messing with their corporate veil anyway.

Its up to you, but you should do it correctly.

Oh, other issues with moving TItle back and forth include invalidating your Title Insurance policy and decreasing the validity of the Chain of Title by using quit claim deeds.

The protective benefits of the LLC are commonly touted. however, it depends on what you are doing and your personal preference. There was a recent thread asking for results of actual lawsuits to their LLC. It was pretty long and basically barely found one and it still all boils down to insurance. Remember, even with a LLC you still need insurance, otherwise you'll go broke protecting your LLC in legal fees. For those that say the insurance company's job is not to pay out --- then perhaps you should go with a more reputable insurance company...

Hope this bit helps.  Happy to chat.  Good luck.

@V.G Jason Yeah, that's probably a big clue that something is wrong.  But, I feel lots of these video influencers basically draw a "cult-like" following, for lack of better term.  

Also, how was the $100m market size determined?  Sorry if it was in this thread, with all the replies its too much to scroll through.  If its by the loan size of the loans being affected by subj-to then, its not even what people are really making, at least in the near term.  In subj-to people are "saving/making" money from the interest differential in using the old loan.

Anyway, i guess there are multiple ways to consider it.  But, it seems people have paid more money to him than whats been "saved" using this technique...

@Matthew Matilsky

I'm not multi investor here, but I think there is still value.  Another investor I know bought some duplexes south of Morristown and I think is doing well.  

You might consider staying local since its what you know...  Continue to build your network here.  Investing long distance brings on a whole bunch of additional/different issues.  Our values here are high, and generally continue to go higher.  So, that will bring you long term wealth, not cash flow.

https://www.biggerpockets.com/forums/48/topics/1159104-overleveraging-net-worth-cash-flow-and-headache-factor  You might take a look at what happened to this investor she tried going out of state...

Hope this helps.  Happy to chat.  Good luck.

@Candi Kham

You looking to use real estate as a tax shelter?  There are plenty of posts looking to do that.  But, You really can't deduct passive losses onto your main 1040, especially since you are in the 37% bracket.  Additionally, you need to have losses to deduct --- that's kinda the opposite of making money.  You can try to use depreciation, but there is only so much, you still have to pay the depreciation back (unless you basically die...)

You should check out these threads basiclaly about high quality vs cash flowing...  I'd stick with high quality.  

https://www.biggerpockets.com/forums/48/topics/1159104-overleveraging-net-worth-cash-flow-and-headache-factor

https://www.biggerpockets.com/forums/52/topics/1159067-less-...

https://www.biggerpockets.com/forums/48/topics/1131066-cash-flow-is-not-king

Its a bunch of reading.  Hope this helps.  Happy to chat.  Good luck.