All Forum Posts by: Christopher Throop

@Eric Meyer  Sorry about the link.  Try this:  http://www.hammond.k12.in.us/referendum  If that doesn't work, PM me and I'll share the document I'm talking about.

@Eric Meyer And to answer your question about returns on any particular property, I prefer to think about returns as a percentage of my investment. So, instead of looking for a flat dollar amount, I look for a 12% COC return. Unfortunately, it's hard to compare returns with other investors because everyone uses slightly different numbers in their analyses. A property that provides a 12% return to one investor might be a 10% return to another. Or a 14% return. It's hard to get good apples-to-apples comparisons.

So, for your question about whether $200/door is reasonable, it's hard to know without more information. Are you buying $40K properties or $120K properties? Are you considering SFHs or just duplexes? You might want to calculate your return as a percentage of your investment to better compare different properties - $200/door could be a great deal or it could be a bust but if it's a 15% return on my calculator, that would be pretty sweet. But you need to know that I prefer SFHs, I buy with 30 yr mortgages, I'm conservative in calculating my expenses and I aim for properties between 70-100K in B-ish neighborhoods. Oh, and I generally buy them off the MLS or from a turnkey provider because I'm an out-of-state investor. You have a huge advantage being local and can likely get better deals.

Forgive me if I've just told you a lot of stuff you already know.  It's just that $200/door is a hard thing to compare without some context.

Here's a great resource page for the Hammond tax situation.  In particular, take a look at the item labeled "Property tax impact table for 2018, 2019, 2020."  There's a lot of information there, but if you read closely I believe it shows that those 3 years (2018-2020) will have varying tax rates as certain referendum issues take effect and also as an old tax drops off.  By the year 2020, taxes will settle to an overall rate which will be LOWER than what we've been paying in Hammond in the recent past.  Until then, they will be higher.

Of course, the taxes we pay are based on the appraised value of the property, so if the appraisal goes up, then our taxes go too.  That's a different issue from the tax rate, though.  And, yes, if there are additional referendums in the future then the tax rate can go up again, but that's a fundamental risk of real estate investing in any community.

I don't have any experience with A+, but I've been using University FCU for many years and would recommend them highly.  Their website is user friendly, their phone service is excellent, locations work well for me as I still actually visit local branches once or twice a month.  I have used them for car loans but no investment loans or services.

@Brandon Hall  Thank you!  Needless to say, that is what I was hoping to hear. 

I forgot to mention that I don't pay into Social Security at my job, so the $118,500 ceiling is a long way off.  

My CPA has always given me accurate information, as far as I can tell.  I'll check with him next week, after the tax deadline passes.

I would really appreciate any opinions on a new business venture.  I think it's fairly straight forward as these things go, but it's new territory for me and I want to know the tax implications before taking the plunge.

Situation: I am considering forming a 2-member LLC with a colleague. Our LLC would enter into a JV agreement with a flipper and we would be funding his project in return for a share of the profit. If it's pertinent, I have a W-2 job that will remain my primary source of income.

Question: When I file my tax return (pass through to my personal taxes), will the profit from this LLC be taxed as regular earned income, and thus be subject to self-employment taxes? I know that flippers themselves generally need to pay SE taxes but I'm not sure how the government will see my role in something like this, when my LLC is only doing the funding and not the work. It feels more like an investment to me, although I know it won't qualify for capital gains tax since the time period will be less than a year.

Any input is really appreciated (my CPA is in the weeds this week!).

@Ahmed Mahmoud  I haven't yet spoken to any QIs, but its on my short list of things to do.  Let me know if you find a good one.  I'll do the same.

@Chris Dawson  Thanks, Chris.  I knew about the Cerner development but wasn't sure of the exact location.  That helps a lot!

@Dave Foster, @Robert Hetsler

Thank you both for your answers.  That's what I was hoping to hear!

Is it acceptable to plan on doing a 1031 exchange with only part of the profit from a real estate sale?  Can I take a potion of the profit and reinvest it tax-free while using the remainder for another purpose (and then paying tax on that remainder)?

In other words, is a 1031 exchange an all-or-nothing proposition?