All Forum Posts by: Jon Fletcher

Thoughts on Adam Neumann's real estate strategy post-WeWork? It sounds like he is using depreciation to create passive losses so that he can offset active income from his enormous golden parachute? If so, it seems like a smart strategy. This is from the RealDeal article yesterday: 

"And thanks to a special tax classification for real estate professionals, Neumann and his family may be able to shelter an extra $500,000 of his golden parachute. What’s more, he could exploit the latter loophole each year, provided that he remains a real estate professional. But that is not a shoo-in. The hurdles are not minimal to being considered a real estate professional,” said Donald Williamson, professor of accounting and taxation at American University. The tax classification would be hard to achieve for anyone moonlighting as a property owner. Its strict requirements include spending half of one’s time on business related to real property, and at least 750 hours, in a given year. 

“Most real estate professionals are agents or brokers who believe in the product, and work hard on a handful of properties they own,” said Williamson. The main barrier is that people often spend too much time doing other things."

@Alexander Felice this is extremely helpful, thank you. Has anyone else had success with a non-recourse loan? 

@Alexander Felice Am I right in thinking that you can't purchase the building through an LLC if going with a Freddie Mac program?

@Alexander Felice you've peaked my interest! Can you share the name of the Lender? Or should I send you a direct message? 

Congrats @Wesley Sherow I'm sending you a DM now. 

Thanks @Alexander Felice I'm assuming that the terms for a non-recourse loan would be much less favorable? 

@Taylor L. what sort of lender would you suggest? Although only contributing 20% of the equity, I am more than capable of guaranteeing the full amount of debt. 

I've put together a real estate deal where my LP will be contributing 80% of the equity. They're doing the deal because it's a great investment and I'm doing all of the legwork. The problem I'm running into is that every lender is insisting that any person with more than 10% ownership be a guarantor. Are there creative workarounds for this? I know on very large-scale development deals, GP's guarantee the loan all the time without the LP. 

Have any real estate investors used their passive income to purchase a 6,000lb+ vehicle? I'm trying to understand the full benefit of the Section 179 tax code. Using simple numbers, if I purchase a used SUV for $25,000, I can finance it and pay small monthly payments. But I can still claim the full depreciation in Year 1? Which theoretically could be used to offset taxes on income? 

@Bob Reinhard I think you left out the advice ;)