All Forum Posts by: Ian Turner

Looking for some discussion and philosophies regarding when to continue operating a rental versus selling.  Here's a property scenario for consideration:

2bed/1bath purchased in 2019.  Owned outright with $63,000 all-in, currently rents at $1200/mo with a current value of $200,000 today.  

2023 Performance: $13,650 gross income, $1,650 expenses, $12,000 net.  Annual RoR right at 19%.

What I'm having a hard time wrapping my head around is IF the performance is based on asset value versus amount invested, that RoR drops to 6% ($12,000/$200,000).  With that level of equity and appreciation, is the smart move to sell the property?

Background: Small town investor, self operator.  No local staff or team to lean on for portfolio management, maintenance etc.  House is minimal maintenance BUT there are always those random things here and there. 

I've seen folks on here recommend Kavadias & Hall, based in Spokane, as a CPA who both own real estate.  My personal network also recommended them and I've been in recent contact as I look to move my business their direction.  Thus far I've been talking with partner Taylor Hall and he's been very helpful and I can confirm they're taking on new clients.

@Davido Davido, great feedback, I appreciate the response.  Adverse possession is an interesting and seemingly complicated topic!  So if I'm reading you right, they could claim adverse possession on the trees and not necessarily be obligated to provide any sort of compensation?  Can they claim the ground under the trees which they have been nurturing for, let's say 10+ years?  

On a similar note, I have another large parcel with a neighbor's shop trespassing.  I bought it knowing the trespass issue was there but its at the very bottom of a cliff and all of my useful ground is above the cliff.  I would like to simply sell them the piece at the bottom of the cliff that ties more with their parcel and would clean up the issue.  I thought we had a deal to easily clean it up but now it seems they are dragging their feet.  Could I technically put a fence right through the line blocking access to their shop or do they actually have rights to the land and shop access due to adverse possession and the fact that the shop has been there for 10+ years?  Hoping they'll just cooperate with the sale but if they don't, who actually has legal high ground here?

Looking at a 3 acre tax auction parcel with a great view that is adjacent to a large, corporate-owned orchard.  Previous owner who stopped paying taxes says that the orchard illegally planted trees on the 3 acres and was advised by his legal counsel to not tangle with the corporation but it doesn't sound like he put much effort into a deal to sell it to them.   I would think the corporation would want to clean it up and own the ground.  Here are options I'm considering as the going price would make it a great deal:

1) Approach corporation to structure a sale of the ground so their orchard is made whole. This is assuming they don't claim some sort of legal loophole stating they get to use the ground and the orchard without compensation because they planted it 15 years ago.  Assuming they have no easement to use the land for agriculture purposes, do they have legal grounds here?  (They haven't paid the taxes on the property to claim adverse possession.)

2) If orchard won't deal, list it on the open market as a view lot ready for a SFR. Great value here but access is through the orchard easement and developing a home site would require the orchard to be cleared. Again, would the corporation have any legal grounds to prevent the clearing of trees in this case?

I believe this is a case of a disgruntled owner unwilling to engage the corporation in a tactful, business-like manner.  I don't imagine they want to spend a lot of time on legal fees and would want to purchase the ground outright.

Any thoughts?

@Dmitriy Fomichenko,I flip on average 1 per year maybe, basically to bankroll the next rental.  At this point I don't have a solid CPA that knows real estate at all.  I've been considering the value a real estate savvy CPA could bring to my operations and perhaps now is the time to make the switch.  Please DM me if you have a recommendation I should explore.

@Daniel Dietz  
My primary goal here is to enable real estate investments with my EXISTING retirement accounts and I'm not as concerned with the future contributions aspect as much. Considering the questionable qualification status of my LLC, the nominal amount of flipping I'm doing, and the aspect of paying SSI, I'm wondering if a SD IRA is more appropriate for me at this time?

@Kristopher Kyzar how did this shake out for you? I too am looking at a similar situation you were in 8 months ago. My investments (bare land, flips, rentals etc) are managed under my personal LLC and I'm hoping I can navigate a qualification strategy to facilitate setting up a Solo K. If that's just not practical I supposed the SD IRA will have to do. I've heard some investors opt to pay themselves a management fee to generate that self-employed income. What was your solution? Who did you use to set up your accounts? How is it working out so far?

Thank you all for the excellent insight. So no, at this point we do not report any income on Schedule C. For the past 10 years or so, we've had W-2 income and not touched our real estate profits for personal use. We hold most of our investments within an LLC but under some circumstances, we've ended up with some properties in our names. Anyway, all rental and sales proceeds enter the same LLC checking account and end up rolled into the next investment.

I like the idea of charging a management fee to generate Schedule C income. Functionally, how would that work for our situation? Investment income generated currently comes to the LLC that we want to structure the Solo K under. If we pay ourselves from the LLC, does that qualify or does it need to flow the other direction? We could start collecting the income under our personal accounts and pay the LLC for property management if that makes a difference.

Hi all, I'm looking for some advice on how I can best structure my retirement account real estate investments to leverage my real estate knowledge for these long-haul accounts.  

Background: Experienced and diverse real estate investor who is recently discovering Solo K and S-D IRA options for my retirement accounts. We hold and manage our investment properties under a family LLC. My wife and I have the following accounts exposed to the market which we'd like to efficiently, all or in part, invest in real estate instead: Husband: 401(k), Roth 401(k), Roth IRA. Wife: 401(k), Roth IRA.

Questions: Since we own and manage our real estate holdings under an LLC solely owned by my wife and I, are we a qualified self-employed business eligible for a Solo 401(k) program? (From what I've read, I would prefer to go with the Solo K if we qualify.)

If we were to establish a Solo K program under our existing LLC, could we roll all of our respective accounts under this structure while maintaining their respective tax and 'individual' rules? My thought would be we would have his/hers, pre-/post-tax accounts (4 different pots of money) within the Solo K and when we structured a new asset holding LLC under the Solo K, that each of the 4 accounts would simply own respective shares of that new LLC entity. Is this allowed by the IRS?

Finally, any advice on a high-quality and efficient Solo K custodian?  I've browsed a number of articles from mysolo401k and they seem to have a lot of happy customers.

Thanks! 

Okay, realizing this post has a lot of parallel’s to syndication.  That said, my investor group is not interested in decision making or ownership.  Their goals are pretty simple: Protect their asset and help improve the community.  Does that make putting this together easier or harder for us?  What SEC implications are there when the investors aren’t looking for involvement or ownership?

I’m in a small, tight-knit community where residents are interested in local real estate investing but lack the time/energy/youth to actively engage.  Due to my growing business and local success, I’ve been approached by multiple private individuals (NOT real estate investors) who have some money they're interested in investing to help launch more projects and are not looking for hard money lender type returns.

We like the idea of assembling a group of local private investors to keep terms favorable and simple.  Let’s say we have 4 investors with $100,000 each.  How can we structure this in a way that affords us the capability to use this fund for capital improvements while keeping it simple?  Can we structure 4 identical loans with these friends/acquaintances, agree to a fair interest rate, reasonable payback/cash out terms, etc?  Are there laws we need to be aware of and what are some pitfalls to avoid?