All Forum Posts by: Michael Metzger

@Wendy Diaz To use a DST really depends on the state that you are in. If you are in CA, then it makes sense. Otherwise a Series LLC can make more sense...again dependent upon state. It also depends upon your purpose for establishing one- i.e. to avoid taxation on the sales? Because it won't necessarily avoid taxes.

In addition, its' an attorney that would help you set these up, not a financial planner. As a financial planner, I help to recommend the correct strategy, but ultimately its' the attorney that puts this together for you.

Hope any of that helps

@Franklin P. Take the free money. Invest at least up to the full match. Roth is always a great option, but dependent upon your tax situation. If you later want to rollover those free match funds you accumulated into a self-directed IRA, you can after separation of employment from your employer.

@Besnik Kadriu As soon as you have your first property you should have a separate account. You are spot on with getting your ducks in a row. As far as where, it really doesn't matter, just so long as you have a separate account that is solely for business use (rental property use). You can always create a LLC later and switch the account ownership. I would not say that is something that must be done immediately. Just get a large umbrella policy if you are concerned about protection on your first property. If it helps, my business and personal accounts are all through USAA. I have 1 business credit card (for my rentals) with Chase.

@Zachariah Wilhelm Its typically state dependent with additional health insurance options. However, being self-employed really increases that cost, as you are the employer covering it now. You might be able to pool with other businesses for health insurance, but likely you will have to foot the bill. A positive is that if you are formed as a pass-through entity, sole proprietor for instance, it’s deductible for tax purposes.

@Jordan Moorhead I would think that would be less of a necessity these days. With technology and forums such as this one, local knowledge is easy to come by...without having to be in that market- at least for the purpose of REI and not a forever primary home.

@Jonathan M. Instagram seems to be the leader from what my clients tell me and what I have seen. Its more trackable and there is more engagement. Instagram already solved the Tiki’s Tok video platform problems with Reelz, which is already becoming very successful for them and gaining a lot of traction on business accounts.

As far as Clubhouse, I heard Cathie Wood at ARK funds discuss how she considers it live radio and how all the major social platforms will end up adding that as a feature and it won’t be sustainable for Clubhouse to exist going forward with lack of major funding

@Tyler Williams I would say 10% is a pretty good number. It is very market dependent, and a lower number doesn’t necessarily mean a bad investment for some markets. But generally 10% is something to shoot for. And for these housing markets nationwide right now, those numbers are probably looking a bit lower than usual

@Jennie Berger It sounds like you are in a pretty good spot with this institution then. 1.5% is on the higher side of normal (depending on account size...smaller higher fee, larger lower fee).

I would really advise against annuities if they are pushing those. Big commissions for the advisor, but rarely appropriate for the investor.

On the fiduciary front, you always want to work with a Certified Financial Planner (CFP), as it makes them an automatic fiduciary, held to the highest standards in the industry, and the most prominent credential and testing that needs to be passed.

I would not say tax planning is standard, but something that should be. Most modern certified financial planners do proactive tax planning and strategies to create better overall return on income and return on life. You meet with an accountant once a year, typically before the tax deadline. There are many missed strategies during the year simply due to what your accountant can’t see, he can’t know. Getting proactive tax planning advise from your advisor is especially important for real estate investors.

It sounds like they created a comprehensive financial plan that calculates whether or not you can meet your overall financial goals and adjusts the plan accordingly so that you can. That is a good thing.

Food for thought. Hope that helps!

@jennie

A couple of questions and things you might want to consider. What are you defining as a Fiduciary? Is it that they are a Certified Financial Planner? Or did that institution just say it? Unfortunately that word is being miscommunicated and used a lot.

Also, for the fee, is it 1.5% on money they manage? 1.5% of income? net worth? It makes a difference. And what comes with that?

You ideally want a fiduciary financial planner that not only provides investment management, but year-round proactive planning that helps you reduce your taxes, increase cash flow, protect your liabilities, etc. Those services should be included if it’s truly “fee only” and some other planners charge a flat monthly or yearly rate.

What sounds expensive depends on what that institution is providing for you. If they also help you save $5k-$10k a year in taxes and increase your investment assets by x dollars- well then thats a pretty great deal.

Does that make sense?

@Santiago Valdez as @Ashish Acharya said, once you fully retire and no longer have W-2s, it can be possible to qualify as real estate professional status. As long as you pass the 3 rules that the IRS sets, then all of those expenses can go to offset income. It can be very advantageous to make sure you can qualify as a real estate professional.