All Forum Posts by: Kevin Yeats

Thanks Charles and Bill.

I have to add that it is very tough to do on your own ... especially while trying to run a business ... or invest in and manage real estate.

The laws changes about every year. (no politics here)

This seems to an appropriate place to share the following:

A Comprehensive Wealth Management plan:

1. Creates and Grows Wealth
a. Assures that their investments are appropriate to achieve desired goals.
b. Reviews their income tax situation to make sure they are not paying unnecessary taxes on investment income and excessive capital gains tax.
c. Assures their life insurance is adequate in case of premature death.

2. Protects and Preserves Wealth
a. Reviews current plans for paying for the consequences of life’s unknowns. This includes a discussion of their overall risk management program -- Life, Disability, Long Term Care and Liability -- to make sure the plans are adequate and cost effective.
b. Considers the overall investment portfolio to make sure investment selection and diversification are managed appropriately.
c. Reviews the overall tax sensitivity of these investments.

3. Plans the Distribution of Wealth during Life in the Most Advantageous Way
a. Considers the IRA and qualified retirement plan distribution plan; not as an accountant, but using a tax expert as appropriate.
b. Assesses who serves as their durable power of attorney or successor trustee of a revocable living trust in case of an incapacity - again using the appropriate advice from a CPA and legal counselors.
c. Considers ways to distribute wealth to children and descendants for well-being, education and other purposes and doing so in the most tax-efficient method.
d. Reviews charitable giving for both tax savings and control issues.

4. Plans for the Distribution of Wealth at Death in the Most Tax-Advantaged way.
a. Reviews the titling of all the assets and whether Joint Tenants with Rights of Survivorship makes sense - using the appropriate advice from a CPA and legal counselors.
b. Considers who will serve as the executor or trustee and whether a lack of continuity in the financial arrangements is an issue.
c. Analyzes the plan to distribute wealth at death to their spouse and descendants for both tax efficiency and control - not as a CPA or Attorney, but bringing in those advisers as appropriate.
d. Reviews the charitable inclinations at death for both tax savings and control issues.

To create this Comprehensive Wealth Management plan one must consult with an accountant and an attorney to assure accuracy and legitimacy.

THIS DOES NOT CONSTITUTE FINANCIAL ADVICE.

I STRONGLY urge everyone who reads this to consult with qualified advisers in each area (investments, insurance, accounting and legal matters).

Charles et al,

More and more I find that buyers need to know a lot about what they buy AND from whom they are buying.

LOTS of "professional" financial planner or investment advisers are really selling a product - stocks, bonds, mutual funds, annuities, insurance policies etc. If the consumer really wants unbiased guidance without the products then that consumer should seek out a fee-based financial planner. Expect no answers without paying the fee.

This is really not much different than many other fields.

Banks don't offer hard money loans to either borrowers or savers.

I've read numerous posts here on Bigger Pockets when the original message really amounts to "Is this contractor ripping me off?" or "is the a good deal?"

I will say in the area of financial planning MOST consumers would be well served to meet with professionals who can help them in the fields of investments, insurance, accounting and the law.

Jon Holdman

No Jon you have it exactly correct and I agree with you 100%. Running any business more complicated than a kid's lemonade stand requires keeping keen records especially if the business how outside investors or hires employees. All this record keeping become triply complex when the business owner seeks to comply with various tax laws and has to prove certain facts.

All of these multiple layers of complications makes lots of work for accountants and bookkeepers ... a Full Employment Act?

This confirms my original response in this thread.

Bill Gulley that is part of it. The previous responses only touched on the major and most obvious taxes that a real estate investor will pay.

Others: Property taxes, employment taxes, local income taxes, personal property taxes, business property taxes, healthcare taxes (don't get me started). I certainly feel that license fees and restrictions amount to a "tax" as well.

This question illustrates the reason that accountants stay busy.

Nate, ask them to explain why the funds have to be transferred into a LOC.

Typically, when a lender supplies a line of credit, the lender will fund a checking account. The borrower then can write checks to draw on the line. For a loan to be useful to a borrower, the borrower must be able to access the funds.

Perchance, did this lender require you to post a bond for all or part of the loan amount and use their bond issuer?

I have become aware of some overseas lenders that offer loans right on the edge of "too good to be true" .... reasonably low interest rates, good terms, even 100% funding ... with the catch of posting a bond upfront and using their bonding agent.

I'm not saying that is what you have experienced or that this group is not fully above board. I'm just sending up a yellow or red flag.

Harri,

Send an email to me and I will send a free (basic) multifamily investment analysis tool.

As you may have learned already, you really need to come up with at least 25% to put down plus other costs out of your pocket.

If you only have $200,000 then you will need to shoot lower (smaller, less expensive properties) or find a partner.

Lenders are reluctant to go far out on a financial limb for someone who does not have much money and does not have much experience in multifamily.

Patrick, this will not help in your situation since you and your partner would have to agree to this at the start.

One great way of breaking up a partnership when one partner wants out is for Adam to make an offer to Bob for Bob's shares. If Bob refuses Adam's offer, Bob has to buyout Adam for that price.

On your 50/50 situation with $160,000 in as-is equity, you could offer your partner $50,000 to walk away (and assuming you could refinance to remove your partner from the loans). Your partner either accepts, pays $50,000 to you and walks away OR you have to accept the $50,000 and you walk away.

You could try it.