All Forum Posts by: Ben Trageser

It all really depends on your appetite for risk. As an investor in a market where cash flow does not come often and appreciation is a bigger play, I understand your mindset. 

Personally I never listen to what the seller states the income is as they are sometimes way off. Make sure you do your research on comps. Also make sure you are comfortable with some holding costs if the units don't get rented right away (if vacant).

Also look into if there is rent control in the area that the property is located. It may seem easy to jack up rent but there is something to be said about good, on-time paying tenants.

As an accountant, I always rely on the numbers. If they work and the risk level is something you are comfortable with, go for it.

There are a number of tax strategies which you could benefit from. I recommend finding an accountant who specializes in planning.

 Thanks Denver!

I can only speak regarding structuring the deal as I have not utilized partners personally but it really can be anything that you want. You want to make sure the seller is getting their fair side of the deal but especially from a tax perspective, there are ways in which you can make it very lucrative for them.

Hi Nicholas! Would love to learn more about your family flipping business.

Just note that if you want to put the property into an LLC and have a mortgage on it, you will need to talk with your provider to see if this is possible without refinancing.

Hi Kamal! Recommend Denver as we has a number of options

@Denver McClure

 I have a tax firm that specializes in working with real estate professionals/investors.

It is really hard to make the case that if you have a full time job, you would fall under the 500 hour rule. I would tend to agree with the other CPAs typically.

The 500-hour test is one of seven material participation tests used by the IRS to determine if a taxpayer is actively involved in a trade, business, or rental activity. The participation must be regular, continuous, and substantial as defined by the IRS. Time spent as an investor or in activities not customarily done by an owner does not count towards the 500 hours.

One thing to note is that if you are married, you can combine hours with your spouse's to meet this threshold. You would essentially be working 50-60 hour weeks when combining with your full-time job and the real estate to qualify.

If you have a detailed and accurate hours log, it is possible but just note that it may raise scrutiny by the IRS.

*This post does not create a client relationship. The information contained in this post is not to be relied upon. Readers are advised to seek professional advice

I'm a little biased but I think having an accountant that specializes in real estate and speak your language can always be helpful. We have clients that have come to us from other providers and been able to provide them with strategies to help mitigate their exposure. It also depends on the complexity of your flip and how your bookkeeping has been for expenses.