All Forum Posts by: Caleb Dryden

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $85,000
Cash invested: $100,000

This was my first BRRRR purchase from start to finish. Property is in a great area with businesses, restaurants, and schools nearby. It's cash flowing nicely and I bought it right so appreciation should be stead throughout the years.

What made you interested in investing in this type of deal?

I recognize the long-term benefits to buy & hold given monthly cash flow, tax benefits, appreciation, etc. This property fit my criteria and was a no brainer.

How did you find this deal and how did you negotiate it?

MLS, for sale by owner. I was it hours after posted.

How did you finance this deal?

Private investors.

How did you add value to the deal?

I found the deal, completed renovations on my own & am actively managing the rental.

What was the outcome?

Projected numbers (budget, ARV, etc) came in at what I projected so getting my 75% equity out of the deal was smooth. I used the refinance to pay back my investors and now I have a cash flowing property and investors who want to continue doing business.

Lessons learned? Challenges?

I think I could've got the property for less but I really wanted it so I offered a bit higher than my original number. Also, I would've hired out more of the work (even though that would've cut into my budget) because I could've had it rented quicker than it was.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I went on my own on this one.

Hi there, I have 2 seasonal rentals in my local area and there are a few more I would pursue but am lacking the funds. The seasonal renting business is doing very well where I'm located as we have many second home owners and vacationers visit us all year round. Looking for any investor(s) who are looking to make passive income while having a secured asset as collateral. I can provide more information if you're interested just send me a message and we can get the ball rolling. Also, let me know any questions you have. Thanks for your time...

@Patti Robertson thanks for your comment and article. This was extremely helpful. I had never heard of or dealt with section 8 in the past but this gives me a lot to think about. 

@Paul Allen and @Ashish Acharya thanks for your response. I didn't realize LLCs and their benefits differ from one business to the next. My friend has tax advantages b/c he has his own business (outside real estate). I was comparing apples to apples but apparently an LLC through another business avenue is treated differently than RE. I plan to put each property I own in an LLC for liability purposes only. Thanks for your advice and feedback.

@Michael Blank the distinction you made between my friend and I was exactly what I was looking for (but didn't know). He has tax advantages through his LLC (which is not related to rental properties). I didn't realize there was only liability coverage for rental properties within an LLC. Thank you for your response and clearing this dilemma up for me.

I have a 3 bed 1 bath house available for rent starting October 1. I've had lots of interest but no signed contract yet. Lately, I've had several section 8 inquiries which I have no experience with. Has anybody out there rented to a section 8 tenant before? How was the experience? Thanks!

@Basit Siddiqi that makes sense. If I bought a house and it is a JV. Is that a scenario where I would want to do an LLC in both our names before flipping it? Or are the advantages again still only related to liability and not tax breaks on the earnings?

@Steve B. I haven't attended any so far. One of my closest friends owns his own successful business. He recommended getting into an LLC and lumping all my properties together. The way he put it was...

There are two advantages to having your properties in an LLC:

-if you get caught in a lawsuit situation, they can only come after your assets (whatever is under the LLC)

-income from your properties (rentals or flips) in the LLC will be taxed separately from your W2 job

But what I'm hearing from y'all, there are no tax benefits to having an LLC? I will always pay taxes on the entirety of the income from properties in my LLC and my W2 job? Unless I 1031 the property I sell of course but this wouldn't apply to a long-term rental.

Again, thank you for the feedback...

@Eamonn McElroy @Basit Siddiqi @Dave Foster thank you for the advice and recommendations. They were very clear and understandable. A couple follow up questions. 

1) What qualifies an LLC as "disregarded?" Or should I say, how do you avoid this classification, since there seems to be no point in having an LLC once it is deemed disregarded.

2) I also have a few rental properties. Is an LLC a better idea in this scenario where I have long-term renters and am holding onto the property year after year? It was my understanding that I can count the rental income as "LLC income" if you will, and file separate from my W2 job, thus avoiding moving up to the next tax bracket. Example: Say I make $70k in my W2 job but making $25k in rental property income. By having an LLC doesn't the IRS view these income streams separately so I'm now getting taxed on the $25k on it's own then the $70k on it's own rather than $95k altogether?

3) What is a situation where an LLC would be beneficial? You guys rock, thanks for your help.

@Wayne Brooks meaning no value in the LLC?