All Forum Posts by: Account Closed

Last time I lived on the Westside, Vine City was a no-go zone, with not much investment happening. I know the stadium is near there (and the awesome Busy Bee Cafe), and the Beltline is slated to come soon, but how much progress is all of that actually generating in the area? I was thinking the stadium might rejuvenate some of the commercial properties nearby, but then I'm not sure if it will given that most stadium-goers won't wander too far into the neighborhood. I'm curious what all of your thoughts are on what's propelling the neighborhood, besides the general REI frenzy in Atlanta at the moment.

@Brianne H., It should be a pretty easy fix - sand, and fill with resin. Unfortunately, you'll probably see a dull patch where you sanded, unless you really want to buff it out! 

I've used something similar to this before: Acrylic Repair Kit

There are other resin systems you can use to fix it - if you know the tub manufacturer, someone in the technical department can probably give a recommendation.

West Systems makes great resins, it might be worth checking their catalog for a product too.

Be sure to let me know how it goes, and good luck!

@Ciprian L., I agree with @Aaron K.'s idea of using laminate for the floors and making your rental dirt-proof. Laminate should have around the same installed cost as carpet, and can be used pretty effectively in wet areas like kitchens and baths, so you don't have to worry about replacing peeled/bubbled sheet vinyl or linoleum either. It's also super easy to clean,  pretty scratch/dent resistant, and can usually be refinished once or twice depending on the quality. LVT is also a great upgrade.

Consider this: Laminate is about $5/sf installed, and can be refinished for about $3/sf by stripping and reapplying finish (no sanding). Given it's durable, you might refinish every 5 years. Places like Lumber Liquidators usually have deals-of-the-week for $1 or $2 per square foot.

For a 1000sf rental, your average annual capex for flooring over the 9-year lifecycle of the floor is ($5,000 + $3000)/9 = $889 per year.

A nice wood laminate might even help you bump up the rent and get better tenants.

@Davidson Francois - not sure why I couldn't tag you in my post above.

The traditional wisdom is that an LLC taxed as an S-Corp (partnerships/proprietorships can't file as an S-Corp) saves you money when your business income is greater than what your salary would be if you were paid W-2, and an LLC taxed as a proprietor/partnership saves you money when your business operates at a loss and you have other personal earned income streams.

The new GOP tax plan for 2018 has largely leveled the playing field by introducing a 20% deduction of business income on your earned income (unless you are a professional service like a lawyer, accountant, or architect).

Here's a hypothetical business, taxed two different ways:

My LLC earns $250,000 in gross profit. My LLC pays $6,000 in rent & utilities, and depreciates $4,000 worth of a company car.

As an LLC taxed as an S-Corp (Proprietor/partnerships can't elect to submit taxes as S-Corp):
The structure of an S-Corp allows me to separate wages and distributions, and pay self-employment tax (SS & Medicare) only on my wages. My distributions are only taxed as income. If your business is earning more profit than your salary is worth (and in this case, you want to say your salary is as low as possible to avoid paying more self-employment taxes) this method will save you some money.

I paid myself $75,000 as my reasonable compensation (wages).

This leaves $165,000 to be distributed to the shareholders (me) and taxed on my earned income tax returns as pass-through income, but exempt from paying SS and Medicare tax. Furthermore, under the new tax plan I could deduct 20% of these dividend earnings from my income taxes, limited at 50% of my wage income.

Come tax time, I have $75,000 in taxable wages, and $165,000 in distribution income (essentially non-qualified dividends). First, I pay self-employment tax (SS and Medicare) at 15.3% only on my gross wages. Then, I add together my wages and distributions, deduct the lesser of 20% of distributions ($33,000) or 50% of wage income ($37,500), or else take the standard deduction ($12,000), and pay income tax on this - in this example you fall into the 35% tax bracket. Math below:

LLC's gross profit: $250,000
Expenses: $10,000
Wages: $75,000
Net: $165,000

Earned income tax return (2018)
Wages: $75,000
Distributions: $165,000
Deductions: -$33,000 ($165,000 x 20%)
Taxable wages: $75,000
Taxable income: $217,000

Income tax bracket: 35%
Income tax rate: $45,689 + ((Taxable income - $200,000) x 35%)

Taxes paid (2018)
Self-employment tax only on wages: $75,000 x 15.3% = $11,475
Income tax on wages + distributions: $45,689 + (($217,000 - $200,000) x 35% = $51,639
Total taxes paid: $63,114

Net income of you/LLC: $250,000 - $63,114 = $186,886

As an LLC not taxed as S-Corp, or proprietorship/partnership:

The difference here is that 92.35% of your LLC's profit is taxed with the 15.3% self-employment tax. There is no separation of wages and distributions. However, if your business is operating at a net loss and you are receiving income from other sources, this benefits you because you can deduct your loss from your other earned income.

Here I get to deduct 20% of my $240,000 income, and additionally I trigger the self-employment tax cap. I only pay Social Security tax (12.4%) on the first $128,700 of income, but I do have to pay the Medicare portion (2.9%) of the self-employment tax on all $240,000-minus-deductions. You'll notice in this example that I get knocked into a lower tax bracket, which is nice, but not always the case. As a note, if your income is over $200,000, you owe an additional 0.9% in Medicare tax on the amount exceeding $200,000.

LLC's gross profit: $250,000
Expenses: $10,000
Business income: $240,000
Business income subject to self-employment tax: $240,000 x 92.35% = $221,640

Earned income tax return (2018)
Income: $240,000
Deductions: $48,000
Taxable income: $192,000

Income bracket: 32%
Income tax rate: $32,089 + ((Taxable income - $157,501) x 32%)

Taxes paid (2018)
Self employment tax broken down as Social Security and Medicare:
Social Security tax: $128,700 x 12.4% = $15,959
Medicare tax: $200,000 x 2.9% + (($221,640 - $200,000) x 0.9%) = $5,995
Income tax (after deductions): $32,089 + (($192,000 - $157,501) x 32%) = $43,129
Total taxes paid: $65,083

Net income of you/LLC: $250,000 - $65,083 = $184,917

Besides the tax differences, LLC's theoretically offer legal protections for the company, as everyone's mentioned, so long as you prevent 'piercing the corporate veil'.

Hi @Joanna Eldridge, welcome to BP! (I'm also new to posting around here)

My opinion is mostly coming from the perspective of a designer/architect, not a landlord, so I know what clients ask for when I'm designing and specifying renovations, but I haven't had to deal with any headaches myself. 

1) Tenant preference for gas vs. electric usually comes down to the local cost of utilities, $/kWh or $/Btu. If your unit is already using gas heat, then the cooktop probably won't sway their opinion much. In general, I've found most people think of gas ranges and induction ranges as being nicer and more fitting of a nice kitchen than radiant electric. Landlord preference is usually a matter of what's going to be easier to install. If a gas line already exists, use it and save the $300 an electrician would charge to route a 240v line to your kitchen. With gas, make sure you have a CO detector in addition to a smoke detector, and you are required by code to have ventilation for the stove (this could be a simple recirculating hood if local code permits). 

2) I would say this depends entirely on your tenant audience and local comps, sorry I can't help more. If you want to make the kitchen bigger - is it possible, and worth it - to knock out a wall and put in an island? Or, move a door to an adjacent wall?

3) Same as above. 

4) Have a pro inspect your septic system. How old is the house and the system? Eventually they need replacing, typically around 30 years, and it costs a few thousand dollars to do so. You'll want to get it inspected annually for clogs and general condition, and get it pumped every 5 years or so. Ask the previous owner how recently it was pumped and how often... if they had to get it done every year, it could indicate that a major fix is in need. To @Account Closed's point, I had a mentor in Atlanta who had a tenant dump pasta and grease down the sink (no disposal) which eventually clogged and corroded the drain pipe. A garbage disposal can help with the longevity of your system if used properly by the tenant, but it'll be one more appliance that will eventually need repair/replacement.

See you around!

Hi Brian, I hope you don't mind me sharing my opinion here. I've designed a few kitchen reno's where we repainted the cabinets and replaced the hardware. In my opinion - use the paint to cover blemishes and hide ugly, outdated wood (like red oak), just don't layer it on til it looks like a wedding cake.

But, in my experience... the hardware is the money-maker. It might sound dumb but it's the shiny accent that'll catch a potential tenant's eye, and it's the piece of the kitchen that they'll actually be touching every day. A really simple, modern bar pull like the one linked below from HD costs a little more than the bottom of the barrell, but we're talking $3.50 vs. $1, so it won't break the bank.

Simple Bar Pull

Brass pulls on dark grey or navy blue cabinets, or nickel on white is guaranteed to impress a potential tenant. Bottom line: if a tenant sees "trendy", they won't be thinking "cheap". Just replace the knobs every 10 years.

P.S. to Amy Beth's point of the paint chipping: Get a painter to give you a quote or walkthrough and ask what kind of paint he thinks is on the cabinets. Certain paints can't be layered over other types of paint. I.E. using oil over latex. A good painter will know what you're dealing with and what kind of paint to use to cover it, or he can tell you what's already there and you can do a google search to see what you should use to paint them yourself. Good luck!