All Forum Posts by: Christopher Lee

@Willie Alderson - Geez, thanks that was a typo. 

Hello,

I'm looking for some recommendations for property managers that service the Kokomo, ID area.
My partner and I are investing in single family and small multifamily homes long distance.

Thank you in advance,

Christopher Lee

@Ashish Acharya - Thanks for the information. The mortgage really is a big question mark as both of us we'll eventually have different mortgages in each of our names that we'd want to deduct.

Also to clarify our intent, currently it's to get started with as little friction / up front cash as possible but still have some sort of written legal contract between us stating our expectations and have a way to report our taxes correctly so we don't end up owing the IRS.

Once we have our first few properties I don't mind spending the money to set up an LLC or whichever entity type is best.

@Lance Lvovsky - Yes that was the initial plan along with creating an operating agreement. I have a ton of questions as to how to get one set up properly and not a ton of up front cash to pay someone to figure that part out for us unfortunately.

@Michael Plaks - Yes, I completely agree. We currently have a document shared between the both of us that we're working on which covers our roles / responsibilities and worst-cases.

My partner and I are getting close to buying our first buy & hold property and I wanted to know how we should handle paying Uncle Sam his cut. 

At first I was sure setting up an entity would be the most logical route for protecting ourselves and paying our taxes. 

But after spending some time doing some research I've found that doing a partnership agreement along with having an umbrella insurance policy could possibly be less expensive to get started.

I also feel it would cause less initial headaches than trying to figure out how to structure the entity, we're both doing long distance investing across states and we both live in different states from one another.

For our first property and subsequent properties each would be in one of our names and my basic understanding is that both of us would report rental income and expenses on Schedule E, Supplemental Income and Loss. Schedule E would then be filed with our Form 1040.

If a single property is solely in my partner's name am I able to take any deductions on that property? If so do we just add up all the deductions and split them evenly and report that on our taxes? Are there deductions only the borrower can take?

Ideally any profit or loss we would like to split 50/50.

Thanks in advance for your help.

Christopher Lee

@Phil Sharp Yes you can make any property cash flow positive if the numbers make sense. But don't let that be your deciding factor. If you're in a warzone area where all you get are headaches, you've bought yourself a job and not an investment. If you're in an area where people aren't looking to rent you're going to have a much bigger problem. 

David Greene's book suggests finding the people that know about the markets you're looking to invest in and asking them about the finer details Justin mentioned in his post above. Then from there you'd do your due diligence to check that information.

If you haven't already checkout Podcast 257 it talks all about investing long distance. 

Best of luck in your investing journey.

Hello @Samantha Fairbairn

Welcome to the BP community!

What made you want to start investing in real estate? And what type(s) of homes are you looking to invest in? 

Hello @Chris Sherman

From what I've read here on BP some folks like to see at least $300 in cash flow or they won't even take the deal. There is a forum post on this (even though it's from 6 years ago) that discusses this if your interested:

https://www.biggerpockets.com/forums/48/topics/806...

What I would add to this, is really look at the property taxes you'd be looking at on whatever property your interested in, that could easily eat into your profits.

Hope this helps at least a tad bit.

Hello @Brenna Chalifour,

This very topic came up in the last REI meetup that I attended. An investor was house hacking his first property which he used an FHA loan to acquire it and wanted to know what his options were for his second property. The experienced investors stated that so long as he refinanced out of the first FHA loan he could have as many as he wanted just not simultaneously.

You've stated that your first was a conventional loan, that would lead me to believe that it is possible.

And of course from what I've heard here on BP a lot, is that there's never one definitive way to do things. You mentioned that you didn't have the money to make a big down payment, there is a blog post here on BP on using private money lenders that might be helpful if you haven't already read it. 

I'm thinking you could keep your existing house and find someone to fund your first deal.

https://www.biggerpockets.com/renewsblog/find-priv...

I'm thinking that you might be able to find someone to fund your next deal and keep your first house.

Hope this was at least a tad helpful, I'm a newbie as well and trying to get started with long distance investing since my backyard is nuts right now.

Hey @Daniel Granger, welcome to BP!

Indiana is one of the three states my partner and I are considering to start long distance investing in.

Are there any reasons why you'll be looking in Tennessee verses your own backyard?

Hi @Crystal Taitt-Phillip and welcome to BP!

If you're worried about your own budget I've read / heard on BP that the best way to get around that is to use other people's money if your budget doesn't allow for it.

Podcast 289 talks about this a lot if you'd like to look more into it.

Best of luck on your investing journey!