All Forum Posts by: Kevin S.

While you may have a point, the data of San Francisco is probably based on 'growth' past 5 decades. What if there is negative migration? Many office buildings in big cities like NY are having trouble renting out for lack of tenants. Would this affect rent negatively? What about value of the building?

Sure, policies of blue states make it difficult but if there are shortage of renters how will that help rent or appreciation? Is that left to speculation from here on? If what you are saying applies to existing landlords (which I believe it does), then nothing changed.

Would I place my bet on Texas/red states where there may be more competition for landlord but population growth is all but guaranteed? Probably.

4 Votes

@Michael Plaks

Thanks for the clarification, Michael.

1 Vote

Philadelphia, Pennsylvania

Quote from @Michael Plaks:

Quote from @Sean Sheridan:

Hello I just got my first flip under contract and did very well on it. I’m trying to find if there is a way to lessen the amount of capital gains I pay. I never made the property my primary and only had the house for 8 months. A 1031 exchange is great idea but is not something I want to do with this property. Any advice would be greatly appreciated. Thanks

Flips do not have capital gains and are not eligible for 1031. Those are for rental properties, not for flips.

What you normally have on flips is ordinary income plus 15% self-employment tax. You cannot do much to mitigate it if this is all you do. You can redirect some of your profits into a retirement account, but then you cannot spend this money or reinvest it into your next deal.

"Flips do not have capital gains and are nor eligible for 1031". Is that true if Sean sell after 12 months? Thanks.

0 Votes

Philadelphia, Pennsylvania

All factors being equal, doesn't it make most sense to pay off the one with the highest interest rate first(IF you were to do it)? At least that's what you would do if theses were credit cards?

0 Votes

Quote from @Chris Seveney:

Quote from @Huiping S.:

One LLC bank account of SDIRA has extra cash which not enough or read to put on property yet, and the bank gives money market interests, which is under 2%. The banker said to get higher interest, such as 5% needs to buy business CD. Will this be a problem for IRA?

My understand is I can buy properties, buy any product of Wall Street, buy CD also. When I talked to Fidelity to open a small business bank account for SDIRA LLC, after almost one month they review the operation agreement, Fidelity told me NO and they will not deal with anything of IRA.

Can experience SDIRA investor share your valuable knowledge?

Thanks.

You should be able to, but there are plenty of private offerings out there where you can invest money from $100-$10,000 min that can pay you 7%+ - you may want to also look at or consider one of those.

Chris, are you allowed to share those offerings here?

1 Vote

Tampa, Florida

Quote from @Elise Bickel Tauber:

This is a question of area and what is being done. For anything cosmetic (paint, flooring, kitchen cabinets, etc) you dont need a permit. And most boros around Pittsburgh don't even have an option to pull for that. When it comes to anything major like electrical, plumbing, or structural...I think you need a permit. And I know it eats up time, but honestly, those are big things. Switching out a toilet, no you dont need a permit (imo). Running new plumbing lines to a house. Yes. The answer as to why homeowners or investors choose to do unpermitted work is both time and money. It has to be done by the books. The construction company my husband and I own have a city license which is required to get a permit in the city of Pittsburgh. It is a pain in the *** to get and not cheap. The extra insurances we need to hold, bonds, etc. But, we do a lot of work in the city so it's worth it.

I will also tell a cautionary tell. My client was selling a duplex in the city and when they went to sell, they found out that the guy they bought it from did a whole bunch of unpermitted work and the inspector prior to the current one was his buddy and let it pass. Well now my client had to rip out all that work and re-do it with the correct permits of the city wouldn't release the lien letters. It cost my client tens of thousands of dollars. I say just do it right the first time!

Wasn't this part of the inspection done at the time of purchase of the property by your client?

0 Votes

Philadelphia, Pennsylvania

Quote from @Carlos Ptriawan:

Quote from @Elise Bickel Tauber:

sometimes my licensed plumber has two offering : with unpermitted 5k with permit 10k, technically it is the same job by the same subcons….
and he said if city ask permit later on , I will bill you 3 k later , so there are these model as well.

INTERESTING!

0 Votes

Philadelphia, Pennsylvania

@Stuart Udis

Does LLC need to be done by an in-state attorney?

You said it cost more to transfer from personal to LLC after the sale. I hear many recommend to 'consider' LLC after buying more than one properties, not the first and only property.

Isn't there a yearly cost to maintain LLC? If so and I was to create LLC after buying my third or fourth property, is the cost of transfer to LLC at a later date really that expensive compared to the maintaining of LLC on just one property for few years?

Thanks.

0 Votes

Quote from @Basit Siddiqi:

Take a distribution from the retirement account over the years where it doesn't hit you up to the next or higher tax bracket.

I.E. if your income is $80,000 and the next higher bracket is at $100,000, you may want to take a distribution of $20,000 from the retirement account to help you fund your real estate purchases.

Thank you. You recommend that over buying RE in SDIRA?

0 Votes

@Matt Devincenzo

Thanks for your response. I guess I have to add relevant facts to my original post.

1. Yes, I am at the age where I can withdraw without penalty.

2. I meant not to live on but solely to withdraw, pay the tax and invest in RE.

I am trying to decide if I should draw out everything from tax deferred retirement account, pay the tax and invest in RE (move into Roth as another option)before I hit RMD point.

Hoping to hear from those who have walked the walk and share actual experience of their success/roadblocks. Thanks again.

1 Vote

All Forum Posts by: Kevin S.

Kevin S. has started 22 posts and replied 381 times.

Post: Investing in Blue States > Investing in Red States

Post: Capital Gains Tax

Post: Capital Gains Tax

Post: paying off rental property loans - which loan first

Post: Can the not-invested SDIRA funds buy CD?

Post: Why do some investors allow unpermitted work?

Post: Why do some investors allow unpermitted work?

Post: Attention New Investors - Asset Protection Simplified

Post: Use up retirement account for REI or non-retirement account first?

Post: Use up retirement account for REI or non-retirement account first?