All Forum Posts by: Mark Rogers

I'm leaning toward going the route of an LLC with S Corp election for flipping and setting up a separate LLC for buy and hold rentals (but haven't analyzed the S Corp election for the rental side). The initial plan is to pay a small "reasonable" salary and to take out anything else as dividends. My wife and I are also setting up a 401(k) within the LLC for the ability to put away more tax deferred and for the ability to borrow against it. I meet with tax planners after their Oct. 15 rushes so may come away with different preferences later.

If you do go with the S Corp election, don't just check the box and proceed. Many boilerplate operating agreements for LLC's will probably fail to qualify for S Corp taxation because many fail the single class of stock requirement. If you elect S Corp treatment, make sure that you have someone familiar with that issue review your operating agreement to make sure that you qualify to reduce the risk of losing the S Corp treatment after the fact and getting hit with back taxes and penalties.

Andrew, thanks for the lead on the Kohler books.  I just ordered one and look forward to moving a little further along the learning curve.

Thanks, Eric!  If he has handled even a fraction of your deals, he has exactly the type of experience I am hoping to find.  

From your profile pic in uniform, you might want to explore whether you meet the service requirements to qualify for a VA loan. If so, it might tip the scales in favor of buying with zero down instead of renting.

I agree wholeheartedly with Jacob. Setting up a simple LLC is no problem using the Secretary of State's site. If you want to add a few bells and whistles, an attorney is a good idea. For example, if you want to set up an LLC and make an S corp. election for tax purposes, you need to be careful about how you structure your operating agreement to reduce the risk that the IRS might take the position that you don't qualify as an S corp and decide to treat you as a C corp after the fact, with added taxes, penalties, and interest. You might also want to talk to a Third Party Administrator about setting up a 401k plan for the company. You might also want to form more than one entity to handle different pieces of the puzzle: maybe one entity for your flips and one or more entities for your rental properties.

Hi Landon,

Thanks for saying hello.  I attended 3 or 4 auctions strictly to learn before buying our house and definitely recommend doing that.  I used Google to find an assortment of articles on auctions, and there are several sources to watch for upcoming auctions, like arkansasonline, auction.com, and the Pulaski County clerk's website.  The Saline County website wasn't as user friendly.   The foreclosure law firms also use the Daily Record and a handful of different sites to publish their required notices.  I've been using Zillow in combination with those.  

There is a decent learning curve.  Foreclosures get canceled and postponed fairly often.  Also, banks frequently bid the amount owed on the note, which is often more than the property is worth, so deals can be few and far between.  It takes patience and a lot of advance planning and due diligence, but there are deals to be had from time to time.

Thanks & Good Luck

Mark

My wife and I recently had a very good experience buying our current home at a courthouse auction, and we plan on buying and flipping another house soon. Our short-term goal is to create a part-time job for my wife, and we hope to grow it from there. Our initial plan is to flip a couple of houses for proof of concept and then try to work in a mix of flips and BRRR's .

My wife has a strong history of making nice returns on her homes, has a good eye for figuring out rehab steps that are cost-effective, and is good at staging.  My background as a lawyer will help with the contract side of things.  I also plan on getting my real estate license, have finished the pre-licensing course, and will sit for the exam soon.  

We're off to a good start building our rehab team and have pulled together the resources that we need to pay cash for our first attempt to buy and flip. My attention is now turned to identifying a local accountant with experience working with real estate investors, husband and wife LLC's, and solo 401k's.