All Forum Posts by: Bob Norton

@J. Mitchell Bernier The reason that a farmer rents his land to his farming LLC is that he pays SE taxes on his farming income, but rental income is not subject to rental income. So, he reduces his overall SE taxes by lowering his farming income, but he still pays regular income tax on his rental income. As @Tom S. mentions, by placing your primary residence into an LLC removes your ability for a tax-free gain on the sale of your home (since it is owned by your LLC and not you.)  Also, when you sell it, you would have to pay tax on depreciation recapture.  As @Natalie Kolodij mentions, there are special rules for "self-rentals", an example is that you cannot deduct rental expenses in excess of your rental income.  So, you will not be able to deduct much of the depreciation on the property (or other expenses if you don't charge yourself market rents) while you rent it to yourself.  And, if you did generate a profit from renting to yourself, then you would be paying taxes on phantom income (which is income that you never actually received.)

@Matthew Henderson Search for "Lonnie Deals" in BiggerPockets and on Google.  This is the strategy that I would use for mobile homes.  Basically, you sell the mobile home to your tenant with owner financing and you rent the land to them.  That way you have cash flow with the cost of ownership of the mobile home.  If they pay off your note and move the mobile home, then you can purchase another one and repeat.

@Carl Ohai You are asking good questions.  Each brokerage is different, but generally all brokers are looking for new agents, even part-time agents. They split commissions with their agents, so their revenue grows with the number agents they have affiliated with their brokerage.  Many brokers also earn money by charging their agents monthly fees. You should call several agencies in your area and ask to meet with the managing broker to ask your questions and listen to their recruiting pitch.  Then, befriend several agents and ask them what they like/dislike about their brokerage.  Most agents' business cards are displayed near the reception desk of each brokerage.  Make sure you ask the broker what training opportunities they offer new agents.

@Chris Poitivient You are describing Contractor's Liability insurance.  Check with your insurance agent and describe what type of work you do and they should be able to find the type of coverage that you need.

@George Martinez Check out @David Greene's book on BRRRR. It's available on BiggerPockets or Amazon and Audible.

@D Bazzel I own property in another state and get mail all the time.  (I hang onto the mail to see who's consistently marketing and look for ideas for copy to use.) Like me, you are on a list that some wholesalers are buying for their marketing.  I've recently received texts and played around with a few of them and figured out that they were using some software to gather info.  When I stopped replying to the text, no one followed up.  I generally let callers that are not in my contacts list go to voicemail and then block any telemarketers.  The only thing I've come up with to stop calls is to get rid of my phone, but unfortunately I need it for business.

@Malik Eleby  Yes.  You could consider buying the property, keeping the land and then selling the trailer with owner financing using a "Lonnie Deal".  The new owner of the trailer would rent the land from you.  Search for that in BP or on Google.

@Tyler Meade You can stop mold by stopping the moisture source.  Get a quote for repairing the leaks in the roof and basement to see how much that will add to your repair estimate.  If you purchase the property and repair the leaks, then you can clean the mold up and it shouldn't grow back if the house stays dry.  You will need to check any HVAC ducts for excess mold there as well.  Then, hire a home inspector to run a mold test to make sure the home is clear of mold.  As for the comps, you will have to increase your search radius until you find comparable mountain homes - that is what an appraiser will have to do.  Alternatively, you could hire an appraiser.

@Jason Quesada I have clients that subdivided lots without the proper tax planning and it didn't work out so well for them.  The IRS classifies a person or company that subdivides property and then sells it as a dealer, which means that the property is considered inventory and you pay ordinary income tax, plus SE tax on the sale (less operating expenses).  You will also pay that tax in the year that you sell the property, even if you finance the sale, so no deferring gains with an installment sale.  Check with a CPA that is familiar with strategies to mitigate taxes for subdividing property.  If you can't find one, then PM me and we can setup a short strategy conversation.

@Effram Barrett Yes, I would recommend a smaller local bank.  You can build a relationship with a banker there.  There is a higher probability that they may be portfolio lenders, which means that they hold onto their loans, instead of sell them.  And, loan approvals are handled by a local committee, which usually includes the banker that you have a relationship with. They usually also have better terms for business accounts regarding the amount of fees they charge.  I have always preferred using smaller banks, and as you can tell, recommend that to anyone.