All Forum Posts by: Ashish Khera

@Tushar Shah I would love to hear about you turnkey experience.

ashish

Thank you everyone for your help on this. I did not realize all the wonderful answers and thought I was getting. I’ve been looking at BiggerPockets on the mobile app and hadn’t figured out where the responses were coming!

Again thank you so much – really appreciate the community.

Hi All, I have just started out on my RE journey and have 2 properties. One turnkey and one other SFR. Both of these properties are financed with a conventional loan at 25% down. I have a question about financing. Say I’m looking at a 150K property. If I have the cash upfront to do an all cash deal, do you think that is better than doing the deal with a conventional mortgage upfront? My thought behind this is that once I make the purchase I can then pull out the money through a mortgage after the sale. Also, this would give me an advantage during the purchase by offering the seller all-cash and therefore a faster closing as well as the potential to make an offer without the mortgage contingency and potentially get a better deal that way. I have very good credit so I’m not worried that I wouldn’t get a mortgage. What are the downsides to this approach? Do any of you use this strategy? Thank you for all your help. ASH

Hi All, I have just started out on my RE journey and have 2 properties. One turnkey and one other SFR. Both of these properties are financed with a conventional loan at 25% down. I have a question about financing. Say I’m looking at a 150K property. If I have the cash upfront to do an all cash deal, do you think that is better than doing the deal with a conventional mortgage upfront? My thought behind this is that once I make the purchase I can then pull out the money through a mortgage after the sale. Also, this would give me an advantage during the purchase by offering the seller all-cash and therefore a faster closing as well as the potential to make an offer without the mortgage contingency and potentially get a better deal that way. I have very good credit so I’m not worried that I wouldn’t get a mortgage. What are the downsides to this approach? Do any of you use this strategy? Thank you for all your help. ASH

Hi All, I have just started out on my RE journey and have 2 properties. One turnkey and one other SFR. Both of these properties are financed with a conventional loan at 25% down. I have a question about financing. Say I’m looking at a 150K property. If I have the cash upfront to do an all cash deal, do you think that is better than doing the deal with a conventional mortgage upfront? My thought behind this is that once I make the purchase I can then pull out the money through a mortgage after the sale. Also, this would give me an advantage during the purchase by offering the seller all-cash and therefore a faster closing as well as the potential to make an offer without the mortgage contingency and potentially get a better deal that way. I have very good credit so I’m not worried that I wouldn’t get a mortgage. What are the downsides to this approach? Do any of you use this strategy? Thank you for all your help. ASH

thank you for the answers.  This generally matches my research.  Appreciate it.  I would have responded sooner but I think I must have notices turned off or something.  Will have to look at that.

Follow up question - since posting this I see that the FED long term AFR rate is 1.95%.  I'm planning to use the FED AFR rate and do a 30 yr loan.  Any thoughts on that?

Ash

Hello All,

Loooong time lurker - first time poster.  Have learned a lot over the past year!

I own a C corp with one other partner (my brother) - completely unrelated to real estate.  Generally we zero out income from the C corp as salary to the two shareholders so we don't get double taxed.  We have reasons to be a C corp (foreign investors etc).

I've been looking to get into real-estate investments for a while and have had issues with initial funding.  This year, our C corp had a very good year and we have a decent enough windfall which will allow me to take out the capital I would need to invest in my first real estate property (properties).  

I'm struggling with the best way to take this money out of the C-corp in the most tax advantaged way.  If I were to take this $$ out as regular W2 income, the tax rate will be 50% (CA + Federal).  I've come up with two strategies that I could potentially get the cash out without the tax (or reduced cost) and wanted to see what you all thought.  

1) I personally take a shareholder loan from my C corp. I would structure this as a 30 year loan at 3% interest + principle with all the proper arms length paperwork. The loan is an expense for the C corp and this would not be income for me so no 50% tax paid. I would then form an LLC or S corp to buy and hold the real estate in and I would pay back my C corp on a 30 yr basis.

2) Similar to 1, except, my C corp would loan the money directly to my LLC. The LLC would be owned by my wife and myself. The LLC would pay back the C corp on the same 30 yr schedule.

Is this possible?  Would this be considered as self dealing?  Anyone done anything similar to this?

I've seen posters suggest this, but the C corp has always been a real estate investing company.  In may case, the C corp is completely unrelated (we are a tech company).

Regards,

Ash