All Forum Posts by: Matt Moldenhauer

I'm curious to know how other people handle their receipts with their CPA. This past season was the first time we claimed our first rental property on our taxes. We only had a few receipts to turn in to our CPA, so i just gave them to her in a folder with all of our other paperwork. This next year will be a different story though. We've done a lot of minor things to our rental house and plan on purchasing two more before the end of the year. We will keep all of the houses and expenses separate. Looking at the Schedule E, is that something I should go through my receipts for each property and fill out to the best of my ability? Or should I just hand over the file for each house and let her do all of the work so everything gets classified correctly?

@Jay Hinrichs best piece of advice yet. 

Focus on things that don't require a lot of cold hard cash. Invest in yourself first. Have your husband get his feet wet with someone else's money like Jay suggested. Get your brokers license so you can start managing property or selling it. All of those options are working off someone else's money. 

I don't think anyone here is trying to be mean or discouraging. Just trying to point you in a possible better direction based on the info you've given. There is no point in wasting time and focusing energy on trying to find a house to flip, dealing with a realtor then a lender, only to find out you are a long way from qualifying for a loan. 

I'm still pretty new at investing and doing my research, but from what i've read there is a LOT more research that one needs to do before deciding to go the LLC route for protection. From what i've read you need to be very responsible to operate one in a manner that will provide you with that kind of protection, i.e. Piercing the Corporate Veil. I've heard too many people talk about LLC's and "oh yeah, i'm covered I have a LLC" etc. I've yet to sit down with an attorney and go over my options, but it may require more than one LLC to really protect yourself, especially if you self-manage. From my research you can't commingle funds, need to have a yearly meeting with minutes and a host of other things. Long story short, you can't just slap an LLC behind your name and think you're covered.

I'll throw my two cents in. I don't know the answer to your question, BUT I do know paying a CPA is well worth the money. I have always done my own taxes in the past. My wife always went to a CPA because of her job and deductions. Our CPA did both of our taxes, handled our everything for our single rental home and answered an hours worth of questions for $150. That's money well spent. 

I don't know anything about wholesaling, so maybe Russell is correct. 

You will have no cash flow with an FHA a loan and 3% down. Without 20% the cash flow wouldn't even be worth it. Trust me, I know. I'm in the process of refinancing my primary residence so we can turn it into another rental in a year. Even with a .75% better interest rate, 80% LTV and dropping PMI, it's still not going to be great for cash flow. The COCR is good, so that's why we're doing it.

In my location a $100,000 house would have a total payment around $725/month. Max rent would be $800, $825 at the most. That's $900/year cash flow. Water heater goes bad, there goes your years profit. That's just one of the MANY things that could go wrong and cost money to fix. If things don't get fixed they might not be able to rent it. If they can't rent it that's $725/month that just came out of their pocket. If they're already having a tough time making ends meet, that rental could eat their lunch in no time. 

I'm not trying to be negative or discourage their dreams, just trying to be a realist and shoot them straight. If Madeline has experience in property management, maybe she should focus on that. Maybe look at forming her own property management company? She'll make plenty of contacts that might set her up for future investing and good deals. It would be a lot safer and require less money. I would think it could even be done out of her home to start with. It sounds like you would already have your first client(Dad), so that's a nice way to start out a new business.

Good luck!

Matt

I'm not really sure it would even be feasible with no money to invest. You're going to be pretty hard pressed to find a lender without at least 20% down and six months reserves in the bank or retirement fund. I would venture to guess your debt to income ratio is pretty high as well, which will hurt you. Trying to find a private investor(s) will only eat up any kind of profit to be made. Your best bet would probably be a loan from a family member or close friend. The saying, "It takes money to make money" rings pretty true when it comes to investing in property. 

Find someone (maybe a realtor) who is awesome at finding deals and pay them a finders fee. Tell them what you're looking for and let them do the rest.

I have a person on section 8 i've kind of been working with. She has a voucher for a two bedroom house, but our unit is a 3/1.5. Will she be able to qualify? She and I are both new to the program and trying to get info out of the local HAS is proving to be difficult. 

Bump. I'm wondering the exact same thing. 

That's exactly the answer I was hoping to hear. Thank you  very much!