All Forum Posts by: Chris Coleman

Steve Vaughan I have setup a LLC this year to do as you describe here (I think, if I understand your post correctly). Can you share a little in how your accounting is setup to manage when the rental check comes in addressed to your s-corp, but you don't actually hold the property within your s-corp (i.e., it's in your personal name)? If this applies to your business setup... Thanks, Chris

Thanks everyone...very helpful.

Don Hines and John Schmitt Thanks, that makes sense. But here's a follow up question...why would someone want to put up $67K in capital to purchase a note on a property worth only $150K? For $67K, I could purchase two $150K valued properties (assuming 20% down), and cash flow them (together) for more than what I would be making on the $74K note. Is it basically the attraction/benefit of not having to be the landlord/rental owner in the note situation? And (hopefully) not having to deal with the actual property itself? Thanks again...just trying to get my mindset around owning the paper rather than owning the actual property.

I have Buy/Hold in the Manassas area, where the better cash flow seems to be in Town homes. But even those have risen quite a bit in the last few years, and it's getting harder. I've lived in NOVA for 16 years and most all of the MF 2-4 type seem to be closer in toward DC...Arlington, Alexandria, where the prices are very high. I've recently been considering looking into the market in Warrenton and Culpepper, and even Richmond and the Hampton area. The "NOVA" area just keeps expanding.

I'm a newbie to Notes.  I own SF rental property, and am now exploring notes.  In doing my reading and studying, I started browsing LoanMLS to get an idea of what I'm looking at, terms, numbers, etc.  So here is the scenario and my question(s) in trying to understand buying notes only...

A Private Money Loan note (1st lien) has a Selling Price of $67K. The Loan Balance is $74K, term is 8.5%, 30 yr fixed. The Property Value is $150K. I think this looks pretty good, as its a 45% CLTV.

But am I understanding this correctly in that this Seller is selling a property worth $150K for only $67K? (assuming the property valuation is accurate).  Why would they do that? What am I missing here?

@Steve Vaughan, thanks. So for tax filing purposes, does having your wife as a Member make your LLC a Partnership and thus requiring its own annual return (Form 1065), or is it still just a pass through (Schedules C and E) on your Joint return?

@Cameron Skinner and @Stephen Chittenden, thanks much! 

Thanks.

What are the SE Tax implications of adding my spouse to my LLC? Here's my scenario: Right now, all of our income comes from my employment salary, and from investments (rental income from RE and Stocks). My income is high enough that all of my SE taxes are paid from it for the year. My wife currently pays no SE taxes, as she is not employed and has no personal income, i.e., we are a single-income family. We file a joint return. Our RE rental income (and other side ventures) are managed in an LLC, which has been only me (no employees). If my wife starts to work with me in the LLC, is there a preferred setup that would lessen the tax implications of her having to pay SE tax? Should we make her a Member? An employee? None of the above? Does it even matter? Bottom line, I don't want to incur a bunch of additional SE taxes on our joint return simply because my wife started working in our own LLC... Thanks.