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All Forum Posts by: J Newman

J Newman has started 11 posts and replied 30 times.

I'm looking for recommendations for a reasonable - read small to mid-size firm, or regional, not national law firm - trusts and estates attorney. We need trusts to facilitate the rest of our corporate structuring. Our corporate attorney wants a T&E lawyer in NC to do this piece. Ours is retiring and was $700 an hour, and I'm looking for a change. Charlotte, Greensboro, or Winston Salem would be best. Thanks!

Does anyone have thoughts on these two? Has anyone switched? Our family has used Rent Manager for PM for 20+ years. We have an internal PM. Reviewing the files, I can see that it's not set up correctly and they are using old desktop version, so it's clunky. It's difficult to navigate and not intuitive. I'd like to transition to another software. I've done demos on a few and liked Buildium the best. The leasing manager isn't going to like this change, and then I've got to figure out what to do with 20 years of data that is probably not recorded correctly, but in the end, what's easiest and most accurate is what needs to rule. I'm going to talk to customer support with both companies again, but thought I'd check on any thoughts from those who might have had personal experience with either company or changing programs in general. Thanks in advance!

Quote from @Basit Siddiqi:

Why did your CPA suggest that you need to break out the income / loss by each unit?

If it is on one tax lot, it would be recorded as one property on your schedule E. Therefore, it is a waste to break it out.

The only reason that you would need to break it out is if you brought a condo where each unit is a separate tax lot. However, I have a feeling that is not the case here.

The only other exception i can see if you request that you want to see the performance of each specific unit.

The next question would be since you already had a couple of multi-family houses, how did your CPA classify them on the tax return?

Thank you! This is new CPA, and when I went back through the email carefully this wasn’t the CPA but his assistant, and it’s not clear she asked him, so I’ll check this! Of course, the Schedule E is tax lot which is how it was done before. 

 Before my mom did this with a bookkeeper only, and no CPA which was clearly too much on her. Sadly, she died unexpectedly last winter, and here I am. So I’m using my bookkeeper and just engaged a new CPA. 

If you have other thoughts or resources though I’d love to have them. Thank you so much for your reply!

We use QB for accounting and Rent Manager for PM (I often feel like it uses us - although there customer service reps are great). I was wondering how people do classing for MF properties. We have 60+ doors. Most multi-families are a few duplexes or a quadplex on a lot, but we do have an 18+ unit quadplex property. Right now, they are classed by the deeded property, so if Property 1 has 18 units. Numbers for all 18 are combined. There are clearly problems with this. The new CPA has suggested classing by unit, and my bookkeeper is not happy. I thought she was going to fire me when I suggested it! She said it would require upgrading to the highest subscription level of QB, which is $200 each - we've got two QB subscriptions for two LLCS. It would be a lot of work for 2023 (we're doing an extension due to changes in management and systems), more than she could take on. She said we would class each property, and then if there are more than 5 units, it wouldn't work because there aren't enough subclasses in the advanced version. I'm also not thrilled about paying Intuit any more $.

This sounds a bit like a mess, so I'm hoping there is some workaround here that I could propose to my CPA. Thanks in advance for any thoughts!

Thanks!

@Teri Feeney Styers Of course! This makes so much sense. I have went over all of the repairs with our maintenance supervisor, so I think I can put this together. I do think that a few of these big things will require a loan - the paving for that one multiplex is estimated at around $30k and the septic tank issue for the large multiplex would likely be even more. If you have any thoughts on lending options for that, please let me know! Thanks! 

I don't have alot of experience with lending. I was thrown in feet first to manage our family's rental properties. I have a few questions on options for financing repairs. Thanks in advance!

Repairs: 

Right now, I'm focused on time sensitive repairs. We need to make some repairs - probably about $10k near term for a few critical repairs and a make ready. We will also likely be needing to replace some AC units this summer - that could be a few or maybe up to 10. Some are really old. That can add up in a hurry.

We do have bigger repairs that we need to make - repaving at a multiplex, etc. but could hold off a year to start on those.

Portfolio: We have 62 units. There are two companies and split about 60/40 across them.

1) My dad has been using his HELOC but it's a bit of a mess on accounting, so I'd like to get away from that. He does have good terms on his HELOC because it's older and a better rate. Can you use a HELOC in this way? From a legal perspective, it seems to be commingling a bit, but I guess it's technically a loan to the business.

2) If that's not a viable option, then I was considering a business LOC. Our cash flow is good, so I was thinking I'd get the line of credit to use for backup on these near term repairs that are less than $10k for what I can't cash flow or cover from savings. For instance, if we had 5 AC units go out, I couldn't cover that on a dime without outstripping my capex and tax savings, but I could probably pay off in a few months. So, the overall function would likely be to buy a few months to replenish savings to pay it off.

However, I do have these longer term things out on the horizon. But in a year interest rates could be better.

The bank is asking me about how long I want the terms to go, amortization, how much, etc. I haven't used a line of credit for, so I'm not sure what I should ask for and how different variables affect the rates and terms.

3) People have mentioned a portfolio loan to me, but I'm not sure if they mean a line of credit on the portfolio for each company or some other type of loan? I wouldn't want a fixed loan for this because of interest rates.

Thanks!

@Rob K. Thanks Rob! Fortunately, we are clear on that. They have had a trusts and estates lawyer for years. He set up a trust for them several years ago, and all of it is held by that trust. Dad and I are co-managing the LLCs, and are co-trustees. I'm an only child. He and I are beneficiaries now, and then me, and then my kids.

@Nicholas L. Thanks for that question! Yes, I want to stay in real estate but realize I've got a lot of catching up to do. My goals are for him -  to ensure that I have enough money available for him to get whatever care he needs (he's fully independent now, still works on his bobcat, healthy, etc. - so I guess I need to estimate what those would be - he is in his 70s and has uncles and aunts that lived until late 90s and one until 102 when no one did) and a comfortable retirement (he is extremely frugal so that's not an issue). I love him more than all of this, and he has worked hard his whole life.  My other goal and his is to build generational wealth. I do want to sell of the lowest performers yes! The main ones are in one neighborhood, and he's said he wants to sell them all or none given what he's seen happen with investors renting to anyone nearby. He owns all of the properties in one large cul de sac. Anyway, with these goals diverging in some ways, I'm feeling the pressure to ensure that I present him a great deal and pick a winner first thing. I am trying to build a network here and find some mentors and assemble a team for investment. Thanks again!

@Dave Foster Thanks for this! I have read your book. I would rather do this than a cash out refi. I'm getting my ducks in a row to speak with him. I would imagine I need the right folks involved as well. Currently, I have no team for investment. They haven't bought or financed anything since early 2000s. The properties are self/family managed as well, so no PM recommendations. 

Quote from @Leslie Pappas:
Quote from @J Newman:

I'm now managing my family's real estate portfolio that's basically just been sitting there being used for cash flow. No new real estate has been acquired in 10+ years. I want to explore some options to exchange some of our underperforming and older properties for other opportunities. I'm also getting the financials straightened out with a CPA firm who specializes in this, so there's no cash for investing yet, but there is 100% equity. All of it's paid for - 60 doors. I'm not sure on what financing options are available in this situation. I also feel strong pressure to get this right because my Dad and I are co-managing, and he has almost zero risk tolerance to invest. When I mentioned a 1031 exchange, he told me that I was starting to believe in the Easter Bunny again. :-)  I'm trying to educate myself, make connections in my area with real estate agents, other investors. I probably need to talk to lenders and hear my options. I have got some meetings set up, but I would love any suggestions. 

Hi J Newman, please let your dad know the 1031 Exchange is a real thing ;-) and an important tool in real estate investing. In your situation, depending on what you want to do next, a 1031 Exchange could make a huge impact. If you have owned a rental property for a significant period of time, when you sell most investors end up paying somewhere between 30-40% in taxes. If you’ve depreciated the property the seller should expect to pay the IRS 25% of that depreciation back. Completing a 1031 Exchange allows you to defer that tax and depreciation liability and invest in another rental property.

There are many experts on BP that help investors perform exchanges on a daily basis, here's some more info on a few blogs I've written on this site.

https://www.biggerpockets.com/member-blogs/7993/65931-import...

https://www.biggerpockets.com/member-blogs/7993/65927-how-a-...

 Thank you! Yes, this property has been owned for over 40 years. I haven't reviewed the depreciation schedules with my CPA, but I suspect that has all been exhausted. Thank you!