All Forum Posts by: Account Closed

I've come to the conclusion that it depends on your strategy.

If you want to "build wealth" then leverage yourself to the hilt, pray there isn't a downturn, and "let your tenants pay down the debt".  Keep in mind, this is not a form of financial independence - you are still working for the bank and making money for them. Working to ensure you can pay that mortgage every month, on top of property taxes and insurance and repairs, is a JOB.  (that comment will upset folks - but that's my position on the matter).

If you want mailbox money/extra cash/cash to live on every month, then pay cash or pay off the houses as quickly as you can.  When you're cash flowing $100 per month net because you are leveraged, it takes a lot longer to recover from replacing a roof or a water heater or a furnace, than it does if you're cash flowing $500 per month net.  You'll also sleep better at night when there's a downturn in the market.

 ...and restaurants (Dairy Queen), and the Beverage Industry (Coke), and Oil & Gas (Suncor Energy), etc., etc., etc.

The other side of the coin is he also missed the .com bubble burst in the late 80's.

I tend to feel the same way...if you're going to invest, then invest in something you know.  If you're going to gamble, then go to Vegas - at least they'll comp you with free drinks.

I once bought Enron when rumors of bankruptcy were surfacing.  I knew they had this huge asset in the form of a pipeline so I gambled on it.  Price was $1 per share and per my analysis, the pipeline was worth at least that.  They sold off the pipeline and I sold at 10 cents per share....sometimes it doesn't work out even if you do understand what's going on :)

I think it was Warren Buffett that once said he didn't invest in anything he didn't understand.  I tend to agree with that philosophy.

I would hire a CPA so you can get specific and legitimate advice.  Here's why:

1) Your mileage may OR MAY NOT be deductible.  It depends on whether or not the IRS will classify this as a commuting expense or an actual mileage expense.

2) If your mileage is deductible, you may OR MAY NOT be able to deduct it as a line item.  You might have to capitalize the cost (in the case of a rental) or include it in the basis of the property you are going to sell (essentially adding it to the purchase price).

3) You state you've created an LLC. How you report on that LLC is dependent on how it was formed. If you formed it as a single member LLC for just yourself, that goes on Schedule C of your 1040. If it includes your business partners, then it gets reported on Schedule E. Since the property is in your name, the sale of the property will be treated as a capital gain (Schedule D item) and not on Schedule C or Schedule E being treated as ordinary income. Any losses you take on Schedule C or Schedule E will be passive losses since the house is in your name and the business does not have any ordinary income to offset those losses - and your losses will be carried forward until you either close the business or create ordinary business income to offset those losses.

Hire a CPA - talk to them.  It will save you money in the end.

My day job is in the accounting field.  Anything over $100 is basically frowned upon and can be construed as a 'bribe'.  I have a buddy that's a real estate agent and buys his clients a wine basket upon closing without issue....just curious if real estate agents/property managers have certain restrictions like accountants do?

I understand ethical guidelines may be different in different states.  I'm very grateful for the help I've received from various agents and property managers over the past year.  I'm curious if there are ethical issues within various jurisdictions.  I'd like to buy gift baskets for folks I've worked with over the years - do I need to keep it under a certain dollar amount?  My specific curiosities are in Colorado, Indiana, Arizona, and Ohio, but I'm sure it would be good to keep up in other jurisdictions.  Any thoughts?

Sounds like a great opportunity either way.  Good luck on the purchase!

Sounds like my kind of house.

1) Everything salvagable left behind gets put on eBay.  If it's not salvageable then strip the copper, aluminum, etc. out of it so you can sell it to Atlas Metals.  Books get sold to used book stores.  Dishes get thrown out or donated to ARC/Goodwill for the tax write off...one man's trash is another man's treasure.

2)  ALL CARPET GETS REPLACED.  Seriously...carpet is cheap (stay away from Home Depot - there are better options...and carpet is cheap).  Mice and droppings go out with the carpet...in fact, once you remove the food source, mice generally go away as well.

3) An inspector doesn't care about huge portions of space and honestly, if it's sold as is, an inspector is no different than a contractor that comes in after the fact...I would also go as far to say if you have any experience with construction/rentals, you're wasting your money with inspectors - it's being sold as is...the only value an inspector is going to give you is to tell you what you need to do to sell it to someone else - if this is a rental property, the new tenants aren't going to care about the same things an inspection is going to reveal.

Based on your post...this sounds like your first deal.  My general comment that I argue with people all the time about is that in real estate, your money is made up front - not after the fact.  I don't care if you're considering this for a flip or as a rental, if you're looking at a house in this condition, it needs to be priced at 60-70% of reselling market price.  In other words, if it can sell for $100k, you need to pay between $60 and $70k.  The difference will be repair costs...and they should be much less than $30k.

Carpet is cheap, paint is cheap.  When valuing this property look for low hanging fruit...do you need a new furnace?  Do you need a new roof?  Do you need to replace the sewer pipe to the main (big deal here in Denver)...etc.  Is your objective to rent it or flip it?  What are your goals?

If it is in fact your property taxes, you might want to talk to a property tax consultant in the area that can file a protest for you.  I've used Ryan & Co in the past (at my day job) - they do a great job and can help in that area.

Don't have any suggestions on the mortgage company...

Here's an older article from the Denver Post =>  http://www.denverpost.com/2011/09/25/denvers-platt...

...and another => http://www.denverpost.com/2014/03/10/pot-growing-w...