All Forum Posts by: Bob Norton

@Andrew Schmidt If any of your 30 cities are in tax-free income states, I'd recommend considering those cities as your start.

@Joshua Scott Yes.

@Rick Hoffart You will only be able to deduct the expenses up to your rental income.  Any expenses in excess of your rental income from related parties is not deductible.  For instance if your rents are $6,000 for the year and your total expenses are $10,000, then you can only deduct $6,000 of the expenses, so that your rental income is zero and the other $4,000 in expenses are not deductible.  To get around this, you must rent to related parties at fair market rents and be able to document that what you charged in rents are comparable to going market rents.

@Martin Lindsay I would say that the appraiser's value trumps your ARV estimate. I think you are right to be concerned that the property will appraise at the lower value. The appraiser is looking at the recent sales in the area. Not sure about Gastonia, but the general real estate market appears to be coming off a peak in prices, so basing your ARV on a 2 year old comp is dicey. The recent sales that the appraiser is using is taking into account the value that the new development is bringing at this time in the market. It may improve prices in the future, but betting on appreciation is speculation.

@Josh Numa Are you asking how to estimate what it is worth before any rehab? You'll have to determine ARV, then multiply ARV by 70% and subtract your estimated repair costs to get estimated current value, which is also your maximum offer price.

@Daniel G Blais You have two simple options.  1.  You have a partnership, so you can get an EIN for the partnership and file a tax return reporting the income split to the IRS.  Your payment is a distribution from the partnership.  2.  Your father pays you as contract labor. He issues you a 1099 and gets to deduct the amount he paid you from the profits and reports his net profit as income on his tax return. You will report the 1099 income on your tax return.  Use #1 if this is a rental property, use either #1 or #2 if it is a flip.

@Joshua Scott I'm assuming that the new business is the single member LLC and its sole member took out a personal loan. Since the LLC is disregarded for tax purposes, it will be able to deduct the interest paid in the course of conducting its business.

@Brandon Ramsay I wouldn't recommend selling your house subject-to to tenants with bad credit.  If they stop making those payments, then the foreclosure would ruin your credit.  You could consider selling it to them on a land contract, if you have those in Canada, or rent with an option to buy.  Part of the option price is that they maintain everything for the property.  Then, when they have repaired their credit and can refinance the property, you can transfer it to them at that time and have your loan paid off.

@Kiontray Davis Most states require that newly licensed real estate agents be sponsored by a licensed real estate broker. I'm not sure about Nebraska. However, joining a good real estate brokerage will offer training in real estate sales, contracts, and basic transactions. You will also get access to the local MLS, which is the goldmine that you can use for all your comps and some other property researches. Look for a local brokerage that is known for its training programs. Ask other agents in the area that you meet and interview different brokerages to find the one that fits what you need. Make sure the brokerage is also investor friendly and allows you flexibility in setting your commissions on your own deals.

@Ryan Deasy Yes, if you qualify as a real estate professional under the tax code, then your rental losses are not limited to $25k.  You make an election with your tax return.  You should review the criteria with your CPA to make sure that you can meet the time requirements.