All Forum Posts by: David M.

@Lewis Finney

You might want to check out this very long thread:  https://www.biggerpockets.com/forums/48/topics/1131066-cash-...

Cash flow historically is not the way to go to generate wealth, at least in my opinion.  So, there is nothing wrong with your thinking.

Buying power in your area should continue to increase as military, civilians, and contractors have been getting decent to very good annual increases.  So, the properties will continue to appreciate.

I don't know that market, so not sure on your question between a townhouse or a regular single family.

I hope this helps.  Happy to chat.  Good luck.

@Brandon Smith

I'm not sure why you'd want to do this, other than I think this is a money grab on your part?

In general, I'm not a fan of owner financing since now you have to take a significant credit risk on probably somebody you don't know.  Yeah, the common response to that on a owner finance is "you can always take back the property."  Yet, the common response in most other situations is "foreclosure is a pain, generally takes a while, and you might get the property back in a mess."

I didn't think rates are that high, or are you doing 10% because you are assuming its somebody that couldn't qualify for a conforming loan?  Plus, you make the NIM on the wrapped loan.

You consider doing a 30yr amortization but a shorter term.  If you can get 10%, thats really nice for 30yr, but you might want your liquidity back sooner or not take a chance on your borrower for that long.

The reason to go "creative" is if you have an actual issue.  Of course, if you do...

I'd check the list price of the property.  Perhaps its too high, or as mentioned you have to wait much longer.

I hope this helps.  I guess I'm more conservative.  Good luck.

@Martingale Kim

With so much work from home, there is a lot more people running into this complication. 

However, you should always be able to claim a credit on the other state's tax return.  So, you don't pay anymore than just the higher of the two.  Does that make sense?

Consult a qualified professional.

@Michael Moreno Just be mindful of the self-directed accounts.  Its easy to mess them up and do a prohibited transaction.  My understanding is that will or can destroy your account.  My cpa won't even take a sd case since its cost prohibitive for his company (even if billing by the hour) and the client.

@Elizabeth Taras

I don't think you realistically will be able to offset the sale of a business by buying real estate.

If I may assume...  Many believe that by taking the profits (of the sale of the business) and purchasing something, such as real estate, the profits are no longer taxable.  That isn't the case.  The profits are still --- profit.  You just spent them, and purchase of real estate isn't a deduction by itself.

Also, I don't believe you can do a 1031 exchange from the sale of a business, so you can't defer the tax in that manner.

In terms of how to invest next..  It partially depends on what sort of deals you can find.  Also, depends on what are your capabilities and skills.  People lose money all the time investing in real estate.  Also, while flipping can have a high reward, it also has a high risk.  So, you can seriously lose money doing that as well.  

Honestly, in what manner to get started is based on a bunch of factors, which I'm not sure if can cover all here.  For example, do you already own your own residence?  If you are selling your business, what are you two doing for income now (goes toward financing ability)?  Are you mobile in any way?  etc.

Hope this helps some.  Good luck.

@Al Palomo

So, it looks like you've jeopardized your corporate veil by at least co-mingling funds and under capitalization.  You would have to consult a qualified attorney or two to see what is the status of your corporate veil and your risks.

Otherwise, you could do what many investors do and invest in their personal name. As you are saying, you'd have to move Title to your personal name (Title should be with the LLC right now) and get a homeowner/landlord insurance policy as well as an umbrella policy if you desire. Make sure to keep your property in good repair to limit your liability.

@Megan Klaeger

In short, the partner owns nothing if they don't partake in any risks/losses.  Otherwise, it'd be 25% since 160 is thus far the total capitalization.

@Wenai Ji Up to you whether you want to charge a full month or prorate.  

I usually prorate tenants moving in/out as long as they turn over possession.

Sometimes better customer service goes a long way.

@Diran Deukmajian

Its whatever your lease contract says...

As the owner of the property, any issues should be your issues. So, if the HOA doesn't allow it, its between you and the HOA. I'm pretty sure if she points the camera into somebody's bedroom, as the home owner you are on the hook first.

Letting tenants do their own upgrades is a contentious issue.  Yeah, it can be great if they know what they are doing and do a "good" job.  On the other hand, it can be more of a hassle and expense if they don't.  Even something as simple as painting.  My tenant has repainted portions of the unit without telling me, but planned to repaint it back when leaving.  All was fine until I saw the paint job.  It was horrible.  Had runs and the cut-ins were a complete mess --- basically, they weren't cut-ins.  I kinda figured that was going to happen since thats how they painted their own color in..

@Jackie Linne

You need to consult some qualified professionals, e.g. accounting and legal...

With Title in your name, how/what is the LLC renting out your property?

Your LLC should have income since the leases are in its name and should be receiving the rent, not you.

Single member LLC's are considered "disregarded entities" by the Federal IRS. There isn't a separate return, you just file as part of the 1040 series of forms. So, for a rental, it'd be on SchE with the LLC's EIN at the top instead of your SSN. since the lease is in the name of the LLC, the tenant should be writing checks to the LLC.

You should poke around BP. We have this just about every day whether to use a LLC. Sorry to say, yours is an example of starting off with a bit of a mess...

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