All Forum Posts by: Cory Binsfield

J, thanks for the advice. Cash is always a challenge when raising the down stroke on a multi. I have been toying with the idea of the hybrid flip model (flip to buy and hold) versus my current approach of buy, renovate, refi for next down payment and hold.

Based on all the feedback I have received from this forum post, it's definitely something worth looking into.

@Will Barnard "Judging from your profile, it appears you are a property manager with only a few buy and hold properties of your own. You are clearly misinformed, being a landlord is NOT entirely "passive".

Will, I totally agree. Being a landlord is not completely passive. 

Just to set the record straight, I am a property manager of my own portfolio which consists of 97 units and 29 buildings in my strike zone that I have farmed since 1998. 

I can't manage for other folks since I'm not a realtor /broker. 

I also don't have partners since I have not learned how to effectively create and run a successful partnership yet. 

In  my opinion, the toughest ship to sail is a partnership. 

All of these properties were purchased via a buy, hold, cash out refi for next building model. 

I just don't want the members to get the wrong impression due to your last post.  

Bottom line, I practice what I peach. 

I'm sure I could hit my massive passive goal faster via flips and holds. However, I'm not a full time investor like you and like working my other job as well. 

Ok flippers, let's agree to disagree.

It was not my intent pull a Putin and cross your border. I simply wanted to brag about my deal and educate folks on why it may not be in their best interests to flip. 

For those of you who think my tax projections are off base, check out this post from Amanda Han What Every Investor Need To Know About Flipping

For those of you who think buy and hold is stupid but would like to pay less to Mr IRS, I would recommend you review your tax return this year for the following. 

Did you contribute the max to a 401k,  SEP or solo 401k?

Can you convert taxable interest or dividend income to tax free or tax deferred income?

How about fully funding a 529 plan? 

Hold for one year then sell at the lower capital gains rate? 

1031 exchange? 

Passive losses to offset passive gains?

S Corp to reduce self employment tax?

Profit Sharing plan along side the 401k? Allows you to write off up 25% or more of your income while saving for retirement. 

Defined benefit plan? The mother of all write offs. 

You are saving for retirement right?

All of these items will allow you to reduce your taxes without having to deal with tenants, taxes and toilets-the curse of the buy and hold investor. 

Finally......I agree with Mark Ferguson that you don't want to let the tax tail wag the dog. 

Just to be clear Mark, I'd  rather make a million dollars and net $600,000 than earn $25,000 and pay no taxes. 

That's a no brainer. 

My point is this. 

Why not net $600,000 a year for the rest of my life with buy and hold passive income and pay no taxes? 

That's just the cash flow from his portfolio mind you. 

Imagine the tax deferred appreciation potential?

I know an investor that's doing that. He's my inspiration. 

I get the same result with half the work.

Do I net $600,000 as a passive right now? Of course not. That's why I joined Bigger Pockets! 

Will I get there in the near future? 

Time will tell. My goal is one million in annual rents. It's big, hairy and scary goal. 

I'm just saying flipping seems like a lot of work (based upon personal experience) to build wealth when you can simply achieve similar results with less time and effort through buy and hold. 

Plus, I actually love my day Job. 

How weird is that?

Given that you spend so much time up front finding the property (be it a fix and flip or buy and hold) why sell it after it's fully rehabbed turn key business? Just pop a nice renter in there in collect a monthly check for the rest of your life. 

Why kill the goose?

Nice!!!!!  

Thanks for the comment Reginald. Not sure why the flippers are so frustrated with this post. For me, buy and hold fits my goal-massive passive income. Flipping is a great strategy for generating down payments or acquiring bigger and better passive income streams. 

I would definitely consult a CPA on this one since I'm not tax expert. I have an S Corp for another business and it helps defray some but not all of the self employment tax. My goal is massive passive income since it's one of most tax favored incomes outside of long term capital gains.