All Forum Posts by: Dorys Prentice

@Lois S.. "In Italy, in a similar move, the government plans to temporarily suspend mortgage payments during the outbreak.". If they ban evictions, they need to also force banks to temporarily suspend mortgage payments.  Otherwise, the only losers are the property owners that are highly leveraged.

@Jason Scott. We closed on a BRR (last R is in flux now) a couple of weeks ago.  All cash also.   We're not regretting our purchase because we paid $40K for a $180K after remodel house.  We will take steps to do the remodel as efficiently (ie, cheap) as possible but still offer a quality product at the end. This is in a C+ - B- neighborhood.  Rents should net us ~$700-$800/month cash flow.  Granted all these numbers are based on pre-covid19 numbers.  We'll see what happens in the near future but we feel that our $$ are better invested in RE than just sitting in the bank at 1% interest.  

Now our IRAs in the stock market... I have to just not look...don't look.  I keep having to remind myself not to look at the balance!!!  

Just messaged you.  

Hello,

Looking for recommendations on who to call to get temporary insurance on an empty rental property while we do the renovations.  I called AAA and their commercial division will only do builder's risk insurance.  I'd like to have liability insurance also.  Already called NREIG and waiting for con call to get quote. Any other insurance companies in TX that you can recommend?

We close on this property on 2/21/2020. 

So just to update this thread, the initial sale of this house fell through and it looks like my husband and I are purchasing the house by ourselves.  No partnership with friends.  Much better in the long run.  Plan is to renovate and rent.  Maybe sell in a year or so.

@Bob Norton. thank you. The plan was to split all the expenses and income in 1/2 so I'm not quite sure how we could account for that haivng one prime and then a sub prime.

@Michael Plaks thus why i said i'm getting advice from a local CPA.  

So I found this article which basically says that a joint venture does not file a separate tax return.   https://smallbusiness.chron.co.... Not sure how valid this is but it is something for me to verify with a local CPA.

Is a Joint Venture Agreement Required for Tax Purposes?
by Jack Gerard

When two or more professionals or small businesses work together on a single project, they may declare the project a joint venture. Joint ventures are formalized by the signing of a joint venture agreement, a contract specifying the rights and responsibilities of each party. Since many joint ventures are created for manufacturing or other for-profit purposes, some may wonder whether a joint venture agreement is required for tax purposes.

Joint Ventures
Legally, joint ventures are similar to general partnerships and are treated as such by some states. One of the primary differences between a joint venture and a partnership is the fact that joint ventures are created with limitations: a joint venture only exists until the purpose it was created for is accomplished or until the time period specified in the joint venture agreement has passed. Like general partnerships, joint ventures are created and maintained at the state level.

Joint Venture Agreements
The joint venture agreement defines every aspect of the joint venture including the specific role of each member, what each member is expected to provide as a part of the joint venture and the circumstances under which the venture will cease to exist. Financial distribution is also typically included in a joint venture agreement, with any profits or losses suffered by the venture distributed among the members according to the method described within the venture agreement.

Flow-Through Funds
A joint venture does not earn a profit itself; any money earned by a joint venture flows through the venture to its members. The profits are distributed according to the method described in the joint venture agreement, with no portion being held back for the venture itself. Any funds that are not directly distributed to one of the members must still be claimed by a member even if the funds are being paid to a third party or deposited into a trust fund or other financial service. Any losses suffered by the venture are distributed in the same manner.

Joint Ventures and Taxes
Because any profits made from a joint venture flow through to the individual members of the venture, the portion of the profit that each member receives is claimed on that member's individual or corporate tax returns. The venture itself does not make a tax filing on any of the funds that flow through it. Like general partnerships, the IRS does not consider joint ventures as a business structure and does not require a copy of the joint venture agreement or other proof of the venture's existence.

Thank you again.  Yes, I did get that my first question was answered just not sure that I stated the 2nd part clearly enough.  I'm looking for a local CPA as we speak.  

@Natalie Kolodij and @Michael Plaks Thank you for the replies.  Maybe I worded my question incorrectly. 

Part a is a tax filing question. My husband I and plan to create a LLC for ourselves. My question about "partnership" was with regards on how to file our tax returns as either a SMLLC vs a partnership LLC.

Part b is the actual flip of this one house.  We plan to have a notarized joint venture agreement between our LLCs and our friend's LLC. We are not creating a legal entity called a Joint Venture Partnership (if there is such a thing).  @Michael Plaks will just a paper agreement trigger the need for a separate tax return?