All Forum Posts by: Dominick Johnson

In 2021, goverment is throwing money to us by giving 30YFRM a 2% rate. And residential market explodes.
Now the goverment is throwing us money again to us, by giving 5%-7% to almost riskless cash position LOL 

I know it doesn't tick all the traditional calculations for rental properties but our strategy is to scale up our portfolio looking at the equity instead of huge cash flow. All the properties we are purchasing have 15yrs fixed rate loan terms.

I am new to real estate investing and sometimes find myself stuck on where to start. I have done a lot of research and feel a bit overwhelmed. I am torn on whether I should use a HELOC to purchase my first property or continue to save and be patient so I can purchase through my LLC. Any tips or suggestions? I am also looking for a mentor if anyone is interested.

Your answer is very market specific and may be correct in you market if you are excluding sweat equity.  But there are markets that have monthly returns more than the entire rent and cash flow provides a small percentage of the return.  

My lowest return RE has exceeded $2.5k month.  My best is over $8k/month.  In 12 months $96k ($8k *12). 

RE has some facets that are National but there are some facets that are local.  Be careful attributing attributes of one market to all markets.  

The 70K estimate is coming from 3 items.

1.) Fencing around the house (There is no fence around the pool). Fencing in the back is completely broken with vegetation destroying most of it. The owners have practically neglected it and let the vegetation destroy it. Around 300 feet of fencing needs replacement.

2.) Pool plaster and pool patio.

3.) Pool equipment (None are working)

 Not to mention, the water is green and filthy with zero visibility underneath.

I doubt any buyer will buy a house with a fixer upper pool. Pool adds around 150-200K of value to a house post covid.

 Thanks for your reply Dominick. By this are you meaning $300/mo per unit?

While I have never read the IRS info regarding age, I've always been under the assumption that if you document properly, you can pay your kids.  Modeling etc. could qualify, I would just make sure to document everything to protect yourself. 

As far as how to save / invest.  I have 4 kids.  5, 15, 17 & 19.  I decided on a UGMA (uniform gifts to minors) account.  I decided on this because it's flexible.  We save in their account and have control over it.  Until they become the age of majority which you can typically elect to be either 18 or 21.  A key thing to understand is, at the age of majority you can no longer make any changes to the account. Only your child can.  

Also, at the age of majority the accounts becomes property of the child, so they could go blow it all on a car or something stupid.  The real key is... 

The child needs to know where the money is, and sign paperwork to change ownership.  So in my case, I have the accounts invested very aggressive while the kids are young.  As they get closer to the age of majority, I'll move it more diversified & conservative.  If it sits invested for a few years because my kids don't now where the money is held, it can stay invested as is for as long as you want. 

I hope that makes sense... Message me if you have any further questions. 

@Dominick Johnson, we started paying our kids for a marketing engagement which allowed them to max out Roth IRAs in 2019 when they were ages 5 and 2.  We would have started earlier if our CPA had mentioned the strategy earlier.

In late 2020, we (and the company) got SSA notices for the kids asking to verify the reported pay info.  The notices seemed to be directed toward the younger kids.  For example, my business partner only received a notice for his youngest kid who is a year older than my oldest, and he didn't get notices for his two older kids.  My CPA said this was the first time he knew of that his clients received such notices, but they seemed solely meant to verify that the earnings were being reported on the correct SSN like to prevent SSN theft.  Once we (and the company) verified the info was being reported on the correct SSN, the earnings were credited to their SSA accounts.

1.  Term life insurance.  View your spouse as a single parent.  Your kids lifestyle and future plans without you.  You might want a policy of 25 years.  This will het them through adolescence, college, maybe a wedding.  Car for high school.

Amount. You want all of your debt paid off, PLUS. Cover your REI exposure. Example if you were in the process of building a house and had $150,000 sunk into it and debt of $125,000 they will not get $125,000 for a half built house. So cover your exposure.

2.  529 plan

3.  Use the lookup on my name.  Look for a post.  What happens if you die.  For example. You die. Go into probate.  Your Joint personal and business accounts are frozen. You have cash but your spouse can’t access.  Set them up as TOD. 
4. Are you doing business as an LLC? If not your family assets are exposed

5.  Personal guarantees.  Your family assets are exposed.

Basically review how you are doing business to protect your family assets.  

Then work on their investing.  As mentioned advertising.  How do you get them a car as a business expense?  How do you pay for their college as a business expense.  Etc.