All Forum Posts by: MaryAnne Burrows

Thank you ALL for your input and response to our question. 

@Aaron W. Thank you for giving us your input from a non CPA point of view and helping us to realize other reason why we should consider a CPA now instead of later.

@Eamonn McElroy Thank you for giving us your input from a CPAs point of view. Since this is our first rental property and plan to have many more we want to make sure we are doing things right from the start, instead of having to fix problems in the future. 

Newbies here, and we have some questions in regards to taxes and if we need a CPA or if we are good to wait till next year?

Here is our current situation:

Early in 2020 we put money into a deal with a partner to purchase a home to flip. We put a small amount of money into this deal, the main purpose was for this partner to show us how things can go when flipping a house and some tips and tricks.

We put $12,000 into the deal and made $2,669.

Next, we decided to make our own purchase and get our first rental. July 4th we bought our first investment property using a hard money lender. House was rehabbed by Oct 10th but we decided to try and sell it instead, after not having any luck and running our numbers again we refinanced and kept the house as a rental. Tenants moved in Dec 28th, 2020 and the house was refinanced Dec 30th, 2020. The prorated rent was given back to the tenants dues to issues out of our control but caused a bit of an inconvenience to the tenant. So we did not receive any income from the property in the year of 2020, but had all the expenses from the rehab. This is where all our questions come in, and also questions we probably are not even thinking of being this is our first property.

Do we need a CPA this early into our investment journey or can we tackle our 2020 taxes without a problem?

Do we use a schedule E?

For the property with the partner: How do we record the money from the flip? Can we also claim all the expenses that went into the flip?

For our rental: Do we claim the money that went into the rehab?

What are some questions we may need to be asking but are not thinking of?

David,

Thank you for taking the time to explain this, it was very helpful and we now have a better understanding of how the property can be assessed. 

Have a great day! 

Thank you for your help.

Jeffrey Edwards,

The property is located in Indiana. 

We are trying to understand how assessments for property taxes may affect our deal when doing the BRRRR method.

We are buying a house for $50K, putting in $20K for rehab. Our ARV will be around $105K. We plan on refinancing $80K.

Currently the house is assessed at $46,400, with property taxes currently around $928 for the year (taxes are 2% for rental properties where we are currently investing).

How can we get a clear answer if our property taxes will go up next year after it shows a higher appraisal when we refinance?

We have just bought our first flip!!! We have a partner who put in most of the cash for this deal and from the beginning has said he would put a majority of the money down and we come to the table with “x amount,” so he can help us get started and see how he does things first hand. Here is where I need help; my husband and I see the potential for this flip to be an awesome brrrr, we have talked with our partner about it but he has no interest in keeping the property, he has said that if we are interested he would sell it to us! This is good news, but he wants us to come back with some numbers so he can take a closer look at the deal. I am stuck in some ways as to which calculator would be the best to use in this situation.

Here are some numbers:

Purchased the home for $71,500

Rehab $10k

Rent $1100

ARV $140k

From what it sounds like our partner is wanting back what he put into it + 20k

Thank you for the help. 

My husband and I will be investing out of state due to where we currently live. We are reading the book Long-Distance Real Estate Investing by David Greene and we are getting ready to build our team. First step, find an agent! As I finalize what it is I want to say in our emails, we are hesitant to send it out yet. We know we will be ready with enough cash (at least 20%) for a down payment early next year (2020), but currently we have roughly 13K to use towards investing. Going back to the book, David points out that you don’t want to have the agent working to find you homes within your criteria if you are only going to say no to what they find. So, do we wait to find an agent to start looking for homes until we have that cash, or do we go ahead and send the emails out? I am open to all suggestions, but I would love to hear it from an agents point of view. 

@James Wise Thank you for explaining that further. That makes complete sense and is very important to know. Much appreciated! 

@Christopher Petrillo Thank you for reaching out to us. Do you have an email that goes out to your investors of property you have for sale? Do you wholesale in other areas of Indiana as well (South Bend, Mishawaka)?