All Forum Posts by: Brandon Turner

Any tax pro's out there?

If I own a LLC that owns an apartment building, do I have to pay self employment taxes on the cashflow each month? I know normally passive income does not get taxed with self employment, but if I don't technically own the apartment (I own the LLC that owns it), is it still passive income?

Also, to throw another wrench in, I have a separate LLC set up to manage the LLC that owns the building. Both are taxed as a "sole prop".

Any thoughts? Thanks

brandon

I have a question about using seller financing and then taking the property back and re-selling them using seller financing again. When you do this - do you have to pay Excise tax every time you sell again? So if you sold using seller financing, took it back, sold it, took it back, etc for a number of times, that would really add up for excise tax.

Any help or insight would be awesome.

Thanks

Brandon

Hey guys. I will post this message in another forum as well but I thought you might know -

Frank- you mentioned selling properties using seller financing and then taking them back and (I assume) re-selling them using seller financing again. When you do this - do you have to pay Excise tax every time you sell again? So if you sold using seller financing, took it back, sold it, took it back, etc for a number of times, that would really add up for excise tax.

I know every state is different.

The reason i'm asking is because I'm buying an apartment from a friend, and he sold it several years ago using seller financing and paid the excise tax. Now, he just took back the apartment in foreclosure, (did not have to pay excise to take it back). However, if he sells it to me, it will be close to 8,000 in excise tax, which would require me to pay 8,000 more for a down payment (that's the deal we have worked out, since I am buying it with very little down. I'm only paying enough down payment to cover his costs, like the back taxes, closing costs, etc).

Would it be better for me to instead use a triple net lease option, and thus not take title yet to save some cash?

Thanks!

I am looking at the "for rent" section in the paper at various aparments in the area, lots are giving "move in incentives" like free rent, discounts, etc.

So I am thinking of offering Free Nintendo Wii's with any 1 year lease signed for the apartment I own. They only cost $200 and I think its kind of quirky, funny, but might work and help the ad stand out a bit.

Just an idea I had. Any thoughts? Anyone done something like this? Am I just asking for the wrong type of tenant?

Thanks, yes I will definitely be doing lots of curb appeal. I hope to go drive around some nice/trendy neighborhoods in some big cities nearby like Seattle or Portland and take tons of pictures to get ideas.

Any good marketing ideas?

Hey everyone. I have been working on a deal to purchase a 24-unit apartment complex for the past year, and it is finally happening. One problem though - the apartment is currently 40% vacant (mostly due to the run-down condition it has fallen to, but the poor economy, poor previous marketing, and being only a decent location are also factors)

So I thought I would generate a discussion here so people could share their ideas on decreasing vacancies. Marketing ideas, promotions, concessions, etc.

I have looked a bit at banners online, to replace the current 8x11 inch red and white 'for rent' sign. Anyone have experience with this?

Thanks everyone.

I agree, you would need a more active investment to pull this off. Or just get real lucky.

I like to think like this: If my standard is to pull off 100 per door in cash flow with property management in place, I would need to get 30 units to reach $3000 Per month.

So you could use your $100,000 to put down 20% on a $500,000 property. But is it possible to buy 30 units for 500,000? Maybe, but probably not in a good or even fair condition. So maybe if you bought an amazing deal, hired the right contractors and great property management, you might be able to pull it off.

Sounds like a fun challenge to me. But again, its not going to be real "passive" at the start.

Hey, I've heard a lot of news lately about SBA Loans and the government's push on banks to do more of them. Has anyone done these? Especially, has anyone received any SBA Line's of Credit to be used for purchases/repairs/etc on flipping properties? I have a few rentals with some good equity, but little "earned income" to get normal financing.

I know SBA does loans for new start-up businesses. I was thinking that might apply.

Ideally, it would be great to have a $50,000 line of credit to purchase some of the cheap houses around here and stop using expensive hard money lenders. I just don't have the income to justify a normal $50,000 l.o.c.

Thanks

I often do what Mark Yuschak does. I always keep an eye out for cheap/free washers and dryers and then offer to sell them to tenants when they move in. I've made a few hundred bucks this way, it gets the tenant their own washer/dryer, and I don't have to worry about maintenance.

I do always provide the fridge on my rentals, but they are pretty low income housing, so people wouldn't have their own.

Thanks Jon. So it sounds like it can be done. I guess I now just need to figure out how. Is this generally a city question or a county question? Probably both huh?

Also, currently, the units are on 2 separate parcels. So if I can get the units in tip-top shape, I may be able to sell off half the units and maybe pay off the original loan. Owning 12 units free and clear would definitely not be a bad thing.

Anymore thoughts anyone?