All Forum Posts by: Kyle Pierce

@Carl Fischer and @Michael Plaks thanks for you input. I was able to explain it to my lender. He'll be lending out of one of his IRAs. Thanks for the help

Hi BP, I have a question about private lending. I have a lender who wants to lend me 100k to use in our flipping business but was wondering if there was any way to structure the deal so the interest that he receives is not taxed as ordinary income. He would like the money we pay him to be taxed as dividends or something else more favorable than ordinary income. Would love to hear any tips. Thanks

My partner and I currently have 3 flips on the market, 2 under rehab, and 1 in the pipeline. We're trying to scale and need help funding our future deals. My question is what is the best way you have seen to get funding for rehab/purchase price aside from hard money. Hard money is great but as you know it gets expensive. I know private money and getting private lenders is key to scaling. I have been Networking at meetings and talking with family and friends and that has helped.

Also, how hard is it to get a business line of credit from a local bank. If they saw a year of successful flips and a good profitable PNL are they likely to give a line of credit? If I go to them with 50-100k in the bank would that also help or are they typically wanting to see much more than that?

Right now we're flipping and wholesaling homes near the Salt Lake City area.

Law Office of James H. Deans are great eviction attorneys in utah

I have been working with a seller to purchase his duplex, however the only way I see it working is if I can purchase the duplex then convert it into two separate condos/townhouses. The duplex is in salt lake city. Does anyone have any experience with this? Does it just depend on the zoning? It is currently a legal duplex. Is this something I need to just call the county on? Is it as simple as going to an attorney and have him draft up some documents thats allows me to sell them individually?

Thanks!

@Derek Wheeler Got it. Your part of the few people that actually want to show more income haha. So as long as your entity elects to be taxed as an S-corp then you would issue W-2s. Even if you set it up as LLC and then elect to be taxed as an S-Corp you would issue W2s. The way it works is, you as an owner decide what a "reasonable salary" is and pay yourself from the S-corp. On that income you would be subject to Social security and medicare taxes (payroll taxes) and federal & state withholdings. You would most likely also have to make quarterly payments and quarterly filings (forms 940, 941, etc). Any income that you do not pay out as wages (your reasonable salary) would come to you as "distribution to owners" which is not subject to payroll taxes.

So i like the set up as LLC then elect S-Corp strategy the best. Ease of organization, and you can save on payroll taxes if you want. Or you can just pay out all the company's earnings as Wages in order to show more income. Banks should take into consideration your distributions too though, however I know they probably like W2s the best. Stupid Banks :)

@Derek Wheeler I'm a CPA full time and also invest in real estate so I might be able to provide some clarity here. What I would recommend is starting an LLC (for asset protection purposes and ease & flexibility in business operations) then elect to be taxed as an S-corp.

If you started a corporation or "C-Corp" then elected to be taxed as an s-corp you would get the tax benefits of an s corp but then you'd have to deal with ongoing filing and record keeping requirements. As an LLC, the rules for maintaining the LLC are much less rigorous. It is also usually less costly to set up an LLC

It's pretty common for real estate investors to start an LLC then elect s corp status. Unless your planning to take your real estate company public with an IPO someday, I would recommend starting LLC then electing s corp. This is just a quick summary but, hope this helps.

I also have a bookkeeping business where we handle the books using quick books or xero. We'll be taking on new clients in the near future if that's something your interested in. Always nice to have your books in order come tax time ;) It's also much nicer to run your business with an accounting software rather than excel spreadsheets. The software goes a long way in saving you time and energy and making everything nice & clean. 

Nice Job Daniel! Your story resonates really well with me as I'm about to close on my first property in Salt Lake City (Sugar House Area). It is definitely a competitive market. I got the deal from a wholesaler and there were 10 other investors looking at the property at the same time I was. I put in an offer a little over asking and the wholesaler said I was tied with someone else but since I offered first they gave the deal to me. Beginners luck maybe :). I'm also using a HML, rate is pretty high but worth it since I'm getting 100% of the purchase price from them and this is my first flip. Thanks for sharing, you give confidence to us all.

Super helpful, thanks. I'll be there tonight at The Huddle. Look forward to meeting people. 

Are these meetups still going on. If so, I would like to know when the next one is. Tried looking at the SLC investors association website but it seems like it hasn't been updated since April or so. Anyone know of other investor meetups happening in Salt lake county?