All Forum Posts by: Evan Haag

Hi @Ashish Acharya, Thank you so much for the explanation. I've had it explained to me before, and as you stated, incorrectly. My understanding was that when distributions were taken, that it resulted in a new adjusted basis. And at time of sale, that would be taken into account.

Do distributions or "paying yourself" through distributions year over year have any effect on capital gains at the time of sale?

I've been very interested in how I could transition to managing my 40 units and paying myself through the partnerships, and I've been told that Guaranteed Payments may be the best option from a tax perspective. I'd be interested to get your thoughts on that also.

Thanks!

Hi All!

I have a few investment properties in separate LLCs with the same partner.

Question Up Front:

Is it possible to exchange shares or stake in our LLCs to each other?

For example, we both own 50/50 in entity A and B, but want to go 100/0 and 0/100 in each entity.

I’m trying to find a way to transition from my W2 job to full time real estate investments, and finding that income from the partnership (or lack there of) is playing a role.

This may be my lack of tax knowledge, but As I understand taking out money from a partnership can lower your basis in the property (or the entity), therefore not being a great long term strategy.

Whereas if you have full ownership of the property, you can take that income and have it taxed at your normal income rate.

Any advice out there on this situation?

Thanks!

Myself lol. I got fed up with a majority of realtors that I tried because they did not have an investor mind, and were completely motivated by the sale versus helping me. So I got my license and practice on the side.

Another that I would suggest is Joe Bramlage from Sparen Realty. He is a great realtor, and has several units himself, so has an investment mind, and does just shovel you garbage listings because he's trying to make a target number. 

@Jay Mersfelder 

Hey Jay, so I'm a little spread. I have a 12 unit on 6th street, a mixed use on Pike, a 15 unit on 12th, and then a 6 unit on the 1200 block of Scott St. So clearly deal with very difference clientele based on the property. I just purchased a Single Family between Covington and Ludlow off Highway Ave with intentions to BRRR.

@Sean Robinson

I’d suggest Ludlow, Bellevue and even Dayton, KY.

You may still be able to find affordable and performing duplexes, that are in desirable enough areas to attract great tenants.

Thanks @J Zev J.! I had read a few things about quickbooks desktop version, so that may need to be my next step. Or at a minimum, something to research further.

Hey Sean, 

To Jay's point, there are definitely good and bad areas of Covington. I'm finding that in the desirable areas right now, a high majority (95%+) are homes that are either fixed up and selling at a premium, or priced to be owner occupied, and leave little to no margin for an investor.

There are several areas in Covington that are not as "hot" that deals can be made. However, that is for a reason. Personally, I own about 40 total apartment units across 5 properties in the Covington area, and this is what I've seen as of late.

Studio, 1bd: These are on the market and snatched up immediately be renter demand. When I have a vacancy, I get calls left and right about these. Example: I listed a studio on Facebook marketplace for $550, and had 100 messages within 24 hours.

2bd: I only own 2 of these, and these took a little longer to fill.

3bd to 4bd: I own 1 of these that I just purchased, so I don't have a great feel yet, but I can tell you my perception. Finding a person that is qualified for a $550 studio means its just one person. That's easy. Finding a couple or group that can afford a 3bd or 4bd, your tenant pool will obviously be reduced. That being said, again to Jay's point, there are a handful of properties, even on the MLS right now, that could be bought, fixed up about $10k or $15k, and still be a 1% or maybe even a 1.5% property. But without the fix up, you won't get a qualified tenant that wants it, and be left with many applicants that have 1.5x or 2x the income instead of the ideal 3x.

Just my thoughts, good luck and if you have any questions, shoot me a message!

Hi All!

I was curious if any multi-property land lords have a good system (or suggested products) for keeping expenses straight and annotated throughout the year for their different properties.

I have separate LLCs and bank accounts for each property, however when I go to export and classify most of my expenses for the year, I'm finding that I forget what some unlabeled (or hard to decipher) expenses were, and thus may be classifying them wrong.

I'm looking for something like Quickbooks, but that can handle multiple LLCs/Bank accounts, because as I understand Quickbooks requires different user names for different businesses.

Note: I have tried Stessa (and honestly, what it does is what I'm looking for....) but because I use smaller regional banks, the connects to the accounts have troubles several times a month, and I end up having to go back and manually import transactions anyway, so it ends up taking more time than it saves me.

Thanks!

Evan

Thanks for this post @Cameron Lam! Honestly was a great read!

A few questions I had in my head as reading...

1.) Is your $100K cash flow value after debt service? (I assume yes, but I've read several articles and realize at the end, they didn't mention the $1800 mortgage payment lol).

2.) I notice that a larger share of your portfolio is SFH so for those I assume there are no utilities in your name. What about for your duplexes+? In my area, and lot of 2+ unit places have been converted, so utilities are sometimes shared.

3.) This is a legal-rookie question, but how do you handle the payment to your investment partners via the cashflow. As I understand, if a partner takes money out of the LLC (like a payment from you from your "profits") then that is considered a distribution and it must be matched by the other partner, or be considered a guaranteed payment. Trust me, I'm not well versed in this topic, but I haven't found a great explanation on how to make that imbalanced (no money down) partnership work from a tax perspective. Any comments you have on it would be awesome!

@Matthew Reid You may want to contact a lawyer to understand exactly what your recourse is. In my area, it would be against the law for me to shut them off, and the only recourse would be to serve them a notice regarding not fulfilling lease requirements (non payment of utilities) and then evict unless they conform. My rentals are in a Uniform Residential Landlord Tenant Agreement (URLTA) zone which has uniform guidelines, so worth looking into.