All Forum Posts by: Marshall Secord

Thanks everybody. I'm actually wondering if my best strategy would be to open a solo 401k; make a maximum contribution; defer taxes on that contribution and potentially jump down a tax bracket since that contribution would no longer be considered part of my annual income. Then I could take a loan out from my account for 50% of what I contributed, tax and penalty free. I would just need to pay it back over the course of a few years with interest being paid to myself. This way, I can save on taxes and stay relatively liquid, while some of my money does stay in my retirement plan.

Hi BP, I've been flipping houses in Philly for nearly two years and I am coming up on my first year that I need to pay taxes on my gains. I recently met with my CPA to go through some of the best strategies to minimize taxes. I will of course be taking advantage of every write off I possibly can, but I am also interested in deferral strategies. I think a 1031 Exchange is out the window for this year, but I am very interested in what I've been reading about a solo 401k and my ability to make a tax deferred contribution to this type of retirement account that allows me to invest in real estate. Can anybody tell me if they think this is a good idea? I'm hoping that I can take 20k of my 2022 profits and contribute it to a solo401k in order to avoid about 5k in taxes this year. I just want to make sure it wont be a pain to access that money for my next deal. I would need to combine that 20k with funds from a different account and I would need a lender to be ok lending to me knowing that a portion of my down payment / closing costs are coming from this unique retirement account. Can anyone shed some light on this?

Hi BP, close to two years ago I quit my full time job and started flipping houses full time. I have not yet encountered a tax year where I've had to work through and claim income for flipping, but that is coming up in a couple months. I'm wondering if anybody has tax strategies they can share. I keep hearing about 1031 exchanges, but I'm finding that flips typically can't qualify because I need to hold the property as an investment for two years and then my profits from selling need to be held in a 3rd party account until the purchase of a new like kind property. Is this the case or is there some kind of work around? Additionally, I will be trying to deduct everything that I can as business expenses. Are there any other strategies or loop holes out there that can shield me from Uncle Sam?

Now that I've looked into it and actually had time to grasp it all, It makes a lot of sense. Thanks everybody

Hi BP I just listed my first rental property for rent on zillow after buying it and doing some renovations. I thought it was easy as that, but I just came across something about needing to apply for a renal license or else pay $300/ day if I'm fined. Can somebody tell me if this is really something to worry about? I'm sure technically its a city requirement, but there seem to be a lot of permitting and code requirements out there that nobody actually pays real attention to. 

Thanks for the replies everybody. I really appreciate the depth you have all gone into. This BP forum has been such a great place to get clear answers on things, especially for my particular market. 

Thanks Ari, I understand that it’s definitely the right move, but I’ve had multiple contractors tell me that in 9/10 of their rehabs, they don’t do permits. Basically the responses I’ve been getting are that Philly is the wild wild west and L&I doesn’t pay a lot of attention. I want to make sure the work is done right, but if I can avoid architecture drawings, permit fees and inspection scheduling, that would be great 

Hi BP, I'm trying to do some research for Philadelphia building permits needed for single family home rehabs and it all seems so convoluted. I just sold a property that I completely rehabbed myself without a problem. I may have gotten lucky because it sold for cash, so a bank never got a chance to snoop around and check on permits. For that project, the biggest alterations I made were a new kitchen, new light fixtures, floors, an outdoor privacy screen and I converted a half bath into a full bath. Could I have gotten in trouble with any of this if my buyer got a mortgage rather than bought it cash? 

I'm currently in the process of buying another house that has a huge, deep basement that I want to totally finish and I also want to add a bathroom. Are these things that I need permits for in order to not get myself in trouble when I sell the place? I'm planning on using contractors on this one, but not sure what can be done with no permits vs EZ permits vs some other building permits and where and when I might need engineers and inspectors to review plans and ensure that work is being done to the permit standards. Any clarification would be greatly appreciated. Thanks!

Hi BP, I've got a house in West Philadelphia that I plan on adding a bathroom and finishing the basement for. The basement already has huge ceilings and won't need to be excavated or underpinned. What I'm curious about is the permitting necessary for these kinds of jobs. I've had some contractors tell me that I need to bring in an architect to draw up plans and an engineer to make sure its viable then get a couple permits, etc. Then I've had contractors tell me that they can just go do it no questions asked. I'm basically just concerned from a resale standpoint. I want it done right, but I'm mainly just concerned that when I go to sell the house and it gets looked at by an appraiser, There will be no official documentation and permitting to prove that the house now officially has another bathroom and a finished basement and it won't appraise correctly unless I tear everything out and redo it all with the right permits. Can anybody shed some light on this? Thanks!

Yeah this makes a lot of sense and seems like much less of a headache. It really makes it hard to understand how some full gut row homes in areas like Brewerytown and Point Breeze can still sell for 150k when their ARV is anywhere from 300k-325k. Not a lot of wiggle room in there for profit. Especially once you factor in fixed costs.