All Forum Posts by: Brad Williams

See SSA Publication No. 05-10070, I don't think it is based upon the last 5 years only.

So long as you are setup as an LLC with an S-Corp election and so long as the split passes the reasonableness test, its only the salary amount. Dividends do not count. With LLC taxed like a partnership, all income is income as subject to social security tax. Also, you are only taxed for social security for the up to $106,800.

I believe they take an average of the highest 35 years of earnings so, yes taking less as salary will decrease your benefits at retirement (unless you already have your highest 35 years)

NOW! Unless your judgment-proof (a.k.a broke) and plan to stay that way.

"Lead with Revenue"

I will add to Sharad's response that it would depend on the level of protection is involved in the deal and the exit strategy (or speed to which it can be executed).

Personally, I would be willing to risk up to 20% of my net worth and none of my spouses money (unless she personally wanted in on the deal, then she can make up her own mind)

Your question makes me and probably everyone else on this site want to say, I can help you with that --- just send me the money. So I have to agree with Jon's #1 suggestion.

But, since this is a family deal, I will share a personal experience. Given the very depressed market, I purchased a Gulf front condo and closed early 2010. It was a foreclosure for well within your dad's budget. Even with the largest oil spill in US history, renting it as a vacation rental, our net cap rate was higher than 8%. Since we rent it ourselves using VRBO, it does take some time to keep it rented but, the really awesome flip side is, when it's not rented, we have a business purpose to spend a week at the beach. There are a lot of other ways to use the money, with better returns but, not very many as fun. Just thought you might want a fun alternative to achieve your dad's goals.

Based on my observations and, having had a sister who lived in California for several years, $450,000 seems would go a lot further elsewhere. So I doubt this deal would be possible there.

IRA Trust Services has low reasonable fees and has been in business for a long time. They are merely a custodian so, they don't provide the LLC creation etc. But, I use them and have been pleased. And just FYI, I think at least one of the companies on your list actually uses them.

Mitch,
Because you asked here are my thoughts...

LLC's can protect your personal assets. The law is not as well established as with C or S Corps but, in many jurisdictions they are being given the same protections. (some are not, get some good advice on your jurisdiction). There are a number of attorneys who err on the side of caution and tell clients to use S Corps instead.

Land Trust are nothing more than a way to hide the ball -- great if you are just trying to hide ownership but, as far as protection, worthless. Makes it just a little harder to find you but, you are still exposed once they do discover the ownership. So, if you do an land trust, ownership should still be a corp. entity.

Again, these are just my thoughts, everyone would be very wise to retain a good attorney that knows the law in your state.

I am certainly no expert on how you should do this but, I am an attorney who has pierced a corp veil. You can have as many LLCs as you like but, ultimately you need to treat each as a separate entity. Each has to be adequately funded, have adequate insurance for the risks it takes, and never, ever, commingle funds from any other entity or personally.

Obviously, if your a real estate investor you have some level of risk tolerance. Buy adequate insurance and separate entities when you can not adequately moderate the risk by other means (i.e. insurance). In my humble opinion, an LLC for every property would be a nightmare to keep separated enough to avoid piercing of the veil.

It can be done. I have done a few flips, work full time, paid a realtor on the buy and sell side, managed the contractors. Two were extensive jobs requiring total remodel with foundation repairs.

It is a lot of work but, if you get up early and stay up late, you can do it and make some serious money. But, anyone that tells you its easy is just plain wrong. You gotta like it but, its very rewarding if you do.

Good luck.