All Forum Posts by: Michael Rinaldi

There is an active group that meets in Norwalk. See link below:

@Yohan Athulathmudali @Peter Clayton@Jennifer Buchholz

https://www.meetup.com/Real-Es...

Where in town?

I picked up a midtown duplex last October. Going OK so far, but worried a bit about my ability to turnover tenants and get rents to market with the new Good Cause bill. Good luck!

@Paul David I've been looking in that area of Fairfield County lately as well. I've seen some MF in the $300-400k range pop up in Danbury, but they're not in the nicest of areas. An interesting strategy to start out might be to find a house between $300-400k in Danbury that has an in-law suite. You can get the advantaged owner-occupied financing, rent out the in-law suite, and look to move out onto the next property in a year or two. Your payment after income should be below $1600 and you get the benefit of ownership. Thoughts?

PS I have an agent very active in Dabury if you're interested. 

Bogdan - I can't join on the 14th but please add me to your distribution - [email protected]

Thanks!

Mike

 Yes - thanks Tim.

Hi BP Community,

Today some tax news came out that is very relevant to the industry. I'm sure many are aware of the new Sec 199A deduction which essentially allows for a 20% exclusion of income earned for business owners. Until today it was not entirely clear how the new rules applied to the owners of rental real estate. Specifically, it was unclear whether owning rental real estate would qualify as a trade or business for purposes of the new rule and therefore it was unclear whether your average investor would qualify for the exclusion.

Today, as part of the finalized regulations on Sec 199A, there is a new safe harbor that can be used to determine what constitutes a trade or business for purposes of 199A. In order to qualify, you must meet the following:

1. Property must be held directly by the individual or through a disregarded entity by the individual or passthrough entity seeking the 199A deduction, e.g., a person who owns a single-member LLC which holds a property would qualify

2. Commercial and residential real estate may not be part of the same enterprise

3. Separate book sand records are maintained to reflect income and expenses for each rental RE enterprise

Note: A separate real estate enterprise may constitute multiple properties as long as all commerical or all residential as noted above

4. 250 or more hours of rental services are performed for the enterprise (see detail below)

5. Contemporaneous time reports or logs are maintained to substantiate these hours, including hours, descriptions, dates, person involved, etc

For purposes of #4, these services include advertising to rent the property, negotiating/executing leases, tenant screening, collecting rent, performing repairs/maintenance, supervision of contractors/employees. Note: Services performed by owners or employees, agents, or contractors all count toward the 250. Time spent on financing or investment management does not count towards the 250 hours threshold.

Someone house hacking is excluded - you cannot live in the residence that is connected with the enterprise on which you are trying to take the deduction

As always - read the rules yourself and consult your tax accountant. There are other considerations for RE professionals not covered here. I'm a CPA but this does not constitute tax advice.

Safe Harbor Proposed Revenue Procedure

Final Sec 199A Regs

IRS Circular 230 Disclosure: This note and any attachments are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

Does anyone know if this requirement still applies for an FHA loan? I was thinking about potentially buying a 3-4 unit building and owner-occupying but was not aware of this requirement.

Hey @Chris Rey ...the good news is there is information on all of that here on BP. I found this podcast to be especially helpful for those of us that are just starting out. It goes through 4 stories of how newbies got started, the first of which used an FHA loan - maybe it will help give you an idea of where to start.

http://www.biggerpockets.com/renewsblog/2013/07/04/real-estate-beginner-newbie-podcast/

Hope this helps!

Congratulations @Kyle Civittolo sounds like a successful first flip! You should consider starting a blog to document your progress as you continue along the process to help others that may come after you avoid the pitfalls that you may have found yourself in.

I'm originally from Southwestern, CT and it's good to see other members here from our state.

Be sure to let us know how the selling end of the deal works for you.

Hi Chris,

Welcome to BP! If you are still renting, a good way to jump in may be to buy a duplex or 3-4 unit multifamily through an FHA loan and rent out the other units while you live in one of them. It is possible that you end up living rent free but now you are building equity in a home that you could later move out of and rent out. Anyways, good luck!