All Forum Posts by: Mark Perlberg

My greatest regrets in life were from when I didn't go for an opportunity because I made fear based decisions. I realized that the pain of fear and taking risks is far less than the pain of regret that you never went for it and boredom from a soul-sucking job. Also, read the War of Art by Steven Pressfield. 

* Also consider who found the deal! 

@Brian Eastman thanks for providing your insight on this topic. Are you aware of a specific threshold where too many wholesales within an IRA will create UBIT? Just more than 1? I'll dig a little deeper into this topic as well, and maybe connect with you in the future to discuss this and other related topics.

You can wholesale a property within a self-directed Roth IRA, and the profit will not be taxed.

50/50 split is okay, but you may need to have a more detailed discussion with your CPA and attorney on this investment. The cash investor's money could have been leveraged into other assets. Consider the time value of money for leveraging cash in real estate and cash-on-cash return as his opportunity cost when he invests in this deal. If we split it 50/50 even, then the non-cash investor is having the same benefits of income and depreciation write-offs, but not having to put any money in up front. Even though that person is liable for the other half of the purchase, it's paid over the life of the mortgage/loan as the property generates revenue. Because of this, you may choose a special election for the partnership to allocate more depreciation write-offs and/or income to the cash provider. Also consider who will be managing the property as a variable in determining profit splits. 

You can finance an owner occupied loan up 4 units with 3.5% down via FHA financing, and get a 203K loan for financing improvements. However, there is more red-tape with government lending programs, and the seller may be more attracted to cash offers or buyers using conventional bank financing.

One of the greatest challenges I see is that investors over-hesitate, over-value risk, and get stuck in analysis paralysis. The duplex house-hack is a great way to start. Consider that even if you're not living for free, you'll still be paying significantly less than if you lived on your own. Even if it's not profitable in year one, consider the value you'll gain in experience as well as appreciation and rent increases that property will have over time. 

Don't try to figure out your own taxes to save money. I'm biased here, but I strongly believe that a great CPA can help with maintaining compliance, understanding your finances and reducing taxes to free capital that can be reinvested. Also, team up with a good attorney, local banker and agent who are aligned with your goals. 

@Ronda Bakos, the initial publication of the CARES Act was filled with ambiguities and subject to multiple interpretations. If you're getting a solid ROI on the social media consultant, it may make sense to keep the service going, but it will not be forgiven. Independent contractors can apply for their own PPP loans, so the government doesn't want you double dipping on covering their income. It may be possible to consider turning this person into a part-time employee so you can cover the costs with PPP funds.@Omar Moses You can use the funds to make mortgage and lease payments, and utility payments as well. To future readers, please note the date of this post. Things are changing all the time! 

Wanted to give my thoughts on what I've seen from state and local taxes on STR's. Airbnb will charge the state taxes to the guest, and you won't even see it. You can see what guests are actually paying to stay at your place by switching into traveling mode and blocking off the dates. There is usually a state and possible "lodging" or "hotel" tax. It can be pretty brutal from what I've seen from my clients in NC, SC, VT and MS, because it's ussually 6-8% of gross revenue, not net. So even if you're losing money on your rentals, you or your guest will be liable for a taxable portion of revenue before expenses. If you're using a platform that doesn't take it out for you, I believe VRBO is one of them, you'll have to pay this tax. Consider these factors when pricing your place in different platforms and determining what tenants are willing to pay.

Most states will eliminate the above described tax if the occupant stays for a certain length, usually 90 days from what I've seen. Check your state for this and consider this as a variable when pricing your stay, structuring leases and budgeting for taxes. Hope this helps! 
 

The IRS recently released a statement that expenses funded by forgiven loans cannot be written off. Keep this in mind when budgeting and setting aside additional funds for taxes.