All Forum Posts by: Dean D

Sorry, Heres how I'm setup now.
I have a full time job. Real estate is a
weekend hobby.All property is bought under an LLC, I reside in mi.
Currently flipping 4 srf's a yr.

1st yr we did my taxes. Flipped 4 homes treated it as an investment and paid capital gains. This 2nd yr the accountant wants to treat the flipping as a business and pay self-emp, taxes.
He wants me to decide, he'll do either way but prefers the later.
I'm sitting on the fence. I feel like its an investement as I am the
$ behind all transactions and sub out 90% of the work. But I also
don't want the IRS coming back later to decide for me.
What are everyones thoughts?
Thanks

All good responses. I realize that there
are rules and I have to learn how to play by them. This deal will close shortly.
Aaron, I wish I was the type of person to
start a movement. But that is not me. I prefer to stay behind the scenes. Not to attract any attention. I still drive my old beater truck to look at real estate. Don't
want to look like I have deep pockets.
Ralph: great idea on the Lein Waiver.
Looked into it and already have copies ready to go on my next flip I close on the 3/19.
Thanks for the replies. Its good to hear
others feedback.
Good Luck to all of you...
Dean

Just before closing. The buyers lender has asked for a Sworn Statment with a detailed list of all contractors and vendors including contract prices with balances and or paid in full amounts.
They state their intentions are to make sure that no contractor can put a lein on the house after the sale.
Couldn't I just sign a Sworn Statement at closing stating that?
Instead of listing all my contractors and $ into project.
This is my concern.. Its happened on my last 3 flips.
1st appraisal comes in fine. Goes to underwriting(BAD)
2nd appraisal is ordered.. 10k or more lower. I have very little choices here.Mostly FHA loans people with no money down.
Take it or sit on it. I usually have room to close and move on to another. But now this comes along. I feel violated and they are asking for to much information that they can and will use against me.
What are everyones thoughts....

Thanks.

Perfect,
Thanks for the lead. I already found the website and am reading up on this.
Thanks again.

I accepted a full price offer of 115K with 6% back to buyers for closing costs/downpayment. This being Fannie Mae, they require
2 appraisals. My first came in at full price. The 2nd came in at 106K. This really screwed me as now they won't approve the loan for no more that 106K. I'm told with F.M. if i pass on this deal the
appraisal is stuck with this house for 6 mos. So I have to hope for other qualified buyers non Fannie which are most here in S.E Mi.
I have lots of room in this deal so I'm going forward with the closing date. But what really upsets me is I've sold 3 other 3BD 1 Bath brick houses with 2 car garages in this neighborhood this summer. They all app. over 115k. Now I'm worried this guy just
lowered the bar for the neighborhood.

My question is this: My realtor has 3 times requested a review with the app. co. and has been denied every time. He faxed over the 25k in rehabs costs and all my past sales and other comps in the hood. But they won't budge. Is there any other appeal process that others may be aware of with F.M. We even asked if they would average the 2 together. But no...

Thanks

RECPATAXMAN...
That was a great explanation. I will print it out , study it, and look
for a CPA who can understand the process. I totally agree that most
lawyers and or anyone who can set up an LLC will just blow wind back at you.... take your money and put no effort into it.
I have an appt next week with a real estate CPA. I'll follow up here to let everyone know how this goes.

Thanks again for the education
Dean

I just found this....
Are we talking about Taxation of S Corporation Distributive Shares?

Here is the link to the article.

http://en.wikipedia.org/wiki/S_corporation

Dean

RECPATAXMAN,
If you could go into a little more detail on this S-corp SE savings.
I'm not clear on how the end of year dist. will be excluded of S.E. tax.

I'm currently interviewing Atty's to setup my first LLC and have mentionrd to 2 of them my intentions of forming maybe an S-corp and so far both have talked me out of it. I'm still not positive they are the end all answer to my question as this board has been right more than wrong for me. Next week I'll be meeting with a Real Estate CPA to discuss my future business setup and will again address this issue. I only want to do this once. So I'd like to get it right the first time.

F.Y.I. I reside in Michigan, My intentions are to buy and flip a couple of properties a year.

Thanks again for all the great advice in the past.
Dean

Eric,
I'm about 20 miles south of Detroit, southern part very close to Ohio.
Its a very average suburban area. I'm on the fringe of alot of new construction. But I'm focusing my R.I. in a littel closer in established neighborhoods. Yes its true about Detroit. You can buy a house much cheaper than a used car. Their was an auction here last summer and the auctioner had to stop and remind everyone that the sale of the house did include the land and lumber :crying: . At that auction I watched inner suburban houses go for 8-10k. I was no expert at the time but most of them looked to me like they needed almost no rehabbing. Its a sad time for sure here. But I'm hoping to take advantange of it.
Glad to hear you went full time ...congratulations.
I'll probably looking to you for some advice soon.

Have a great day
Dean
[

quote="EricFoster"]

Hi Dean...

Thanks for the reply. Seems like I have seen some real cheap houses out your way. Where exactly are you? I see and hear a lot on Detroit.

I do that too... try to stay in the first time buyer price range... I like to have the nicest, cleanest house for the money.

Thanks for the comment on the website... I just switched it over to a "Sales Page" type of site… I am just testing it now. We will see how it works...

And yep... last year I took the plunge and went full time. Been quite a year that’s for sure!

Take care and keep in touch.