All Forum Posts by: Kyle Houlahan

Hey Joe,

I appreciate your input. I understand where you're coming from, but I did not know the A/C needed a compressor or anything else for that matter, until the new owner presented this information to me two days after we closed. The technician that I called to come out simply put the gauges on it and said it was low on refrigerant and that it would need a minimum of 4lbs for it to blow cold. He quoted me $660 for the 4lbs of refrigerant, so not a cheap repair to begin with. I actually didn't even know the unit had a refrigerant leak until I called and asked the A/C company to send me a report of the visit, which I received yesterday (3 days after the tech came out). There's a difference in being unaware of the issue and being deceiving.

The house was sold AS IS. The A/C was working completely fine two weeks prior and passed the inspection with zero issues. I do not believe the A/C NEEDS the compressor replaced. Is it an older unit and could possibly use a new compressor, sure, but does it absolutely need to be replaced for the unit to work, I don't believe so. It's like saying your vehicle needs a new engine at 100k miles when all it really needs is an oil change and spark plugs. The technician even wrote on their quote that the compressor and refrigerant was a "Band aid" repair and suggested that they purchase a new unit from them.

Hello everybody,

I'm planning on purchasing a primary residence within the next 30-60 days. I'm located in the Tampa market and the best deals on SFR's are typically older properties that need some work. For this reason, I'm looking into utilizing a Fannie Mae Homestyle loan to purchase the property. This will allow me to put down as little as 3%, as well as finance the rehab costs in the loan. However, I've heard these loans can take a while to close, require a lot of extra documentation, and will make you jump through hoops in order to have the funds disbursed to the contractor performing the work.

Can anyone provide their experience with the Homestyle loan? Also, what is the minimum holding time of the property when using a Homestyle loan. For instance, say I want to relocate to a different area, or simply just want to move back to an apartment. What are the repercussions of selling a property prior to the minimum holding time.

Any benefits of using a conventional loan and funding the rehab myself, in terms of minimum holding time, time needed to close, documentation requirements, etc?

Thanks for all of your input. Glad to hear that I'm not liable for this repair. I found out the buyer did purchase a home warranty, but it doesn't take effect until mid-month. While it may be inconvenient for the time being, the buyer should be able to get all the necessary repairs done for little to no expense out of pocket.

Timeline of events

• 2-3 weeks ago: inspection was completed. No issues with A/C unit given in inspection report
• Day before close: Buyer did a walk through and notified me that the A/C was not blowing cold. I called an A/C technician and he came out and notified me that the refrigerant was low and would need to be topped off in order for the unit to blow cold again. I notified the buyer of this and told them they would need to take care of it themselves as it is classified as regular maintenance.
• Day of closing: Closed on property. Property sold AS IS
• Two days after closing on property: Buyer reaches out and states that he had an A/C technician come out and they told him the unit needs a new compressor, refrigerant refilled, and a few other minor things. Total for the repair is $1,700 and he's asking me how I want to go about paying to fix it.

Am I legally obligated to pay for this repair? I had zero knowledge of any issues with the A/C unit other than that it needed refrigerant, which I notified them of. The contract states the property is sold AS IS, and the A/C unit had zero issues at the time of inspection, less than three weeks prior.

Thanks for the responses! I'm not too concerned with the liability aspect of the LLC being applicable to the property. There isn't much liability involved in this situation and my net worth isn't significant enough to worry too much about a lawsuit at this time.

My primary focus is on the taxation, and I understand that at the sale of the home, LLC or personal does not make a difference. However, my question is related to the costs of fixing up the house, relator fees, etc. I would think that if these expenses are all incurred through an LLC, that they would be tax deductible. Whereas a personal investor would incur these costs and would simply offset the profit from the sale of the home.

For example,

LLC

$10k in repairs (Tax deductible)

$25k profit from home.

Total taxable income = $15k

Personal

$10k in repairs

$25k profit from home

Total taxable income = $25k

I may have this completely wrong, but this is what I'm trying to determine. The house will be purchased in sold in the same year, so whether the repairs are capitalized or not isn't relevant for this specific situation.

Hello everyone, my name is Kyle and I've recently decided to begin investing in real estate. After finding myself on BiggerPockets almost daily reading through posts, I've decided to join!

Long-story short, I've created a single-member LLC with the purpose of investing in real estate and financial securities. I've opened a business bank account and filed all the necessary paperwork with the state.

I currently am pre-approved for a mortgage and have a pending offer on a property that I intend to purchase, rehab, and sell. However, my mortgage application is in my personal name and from what I've read, it's not a good idea to transfer the deed to an LLC after the sale of the property because the bank can call the loan.

My question is, what, if any, expenses are tax deductible through my business? Can I purchase and write-off amounts related to the rehab of the house?

Also, I know that with a single-member LLC, a net loss for the business will reduce your overall taxable income. Is a scenario where my LLC incurs a loss due and reduces my taxes owed on other income realistic as a real estate investor?

Any advice is appreciated. Currently seeking an experienced CPA to help me through this in more detail, but I figured i would post on here to see what you guys thought.