All Forum Posts by: Account Closed

Found a great investment property but trying to keep everything as cheap as possible and do a deal without a real estate agent(nothing against real estate agents). I found the owner of the property and can message them on social media but I'm not sure where to go from there. I've bought a few homes with real estate agents and I'm familiar with you usual steps but are there other things I could do myself to save on closing costs. Title fees, etc... Would love to hear from other who do it themselves!

I'm wondering what will the possible penalty to be if the property we purchased not as our primary residence by using VA or FHA loan after lender found out? Anyone experience have with this?

 Thank you and yes, great advice.  Have an appointment tomorrow with a CPA to walk through the scenarios.

As far as the Quitclaim vs warranty?  Any advice either way?  My folks have title and a warranty deed from when the house was built in 2012ish.  

We plan to sell the house once both of them pass. Will it make it more difficult to sell the house then if I don't have a warranty deed under the LLC?

As a starter, at what timing is good to hire a CPA ? on the first property? second or after several ?

Both are important. The cash flow helps secure the best financing terms but equity is where you ultimately make your money. The key is to focus on acquiring assets where the equity can actually be realized at the time of sale. A lot of equity is what I refer to as paper equity. It is equity that is shown on an appraisal report (typically relying on income approach valuations) but these reports are tied to assets located in lower or no entry of barrier marketplaces. This is common in the lower income SF space and also see this frequently with warehouse conversions to smaller office/studio spaces. The owners tend to have difficulty selling these assets at the appraised values, thus fail to ever realize the equity shown on paper.

Hello all. Looking for some advice as I did not find an answer to my specific situation. My parents are wanting to transfer their paid-off home into an LLC owned by their 4 adult children, me included. This was a home that was new construction, pretty typical of Florida, national builder. When they (my folks) bought it they got a warranty deed and title insurance.

Now we are trying to decide the best way to transfer the home into the LLC. The home will be rented when in the LLC. Question:

1. Do we need a warranty deed or can we just simply use a quitclaim deed?

2. Will using a quitclaim deed make it more difficult to sell the home later?

3. I assume the Title Ins they now have will NOT transfer, but since this is their home, and we are their children, do we need to care about this?

Much appreciated in advance!

Best, ~JP

Hi everyone, I came across this internal debate when I compared a fixer I found that I could add a lot of equity to through rehab and another property that didn’t need as much rehab but had an opportunity to increase rents with a little bit of renovations and could have it cash flow nicely. I know in an ideal world having both would be the goal, but in this market its been tough to find either. I'm hoping that once I get my first property under contract the ball will start rolling for me and I'll have the opportunity to continue building my portfolio.

I was wondering if any of you had any insight as to if it’s more important to look for cash flow or equity in a deal? Or does it really depend? I certainly understand the significance of both and can see the strategies behind either, but I was wondering what your options are. Thank you all so much for the advice. I truly appreciate it!

Hey BP folks!  

I bought a single in 2020 for 175k (almost doubled in value since) and a condo a year later (50k equity built).  

I'm self employed, my DTI is gonna scare away any bank and my liquid capital is minimal. Where do you go from here? Is it time to scale? Cashflow is good on the single (1200/mo) and ok on the condo (400/mo).

Was thinking of building an arbitrage portfolio and putting all profits in a side account to pursue DSCR loans on semi rehab properties but its such a long game.

Am I missing the obvious?  Scale into commercial?  Hold and be happy with where I’m at?? 

When most of us think of having the IRS audit us, we get anxious. Audits can be very expensive, invasive and ultimately time consuming. Some audits are inevitable. However, there are multiple preventative measures that can be implemented to reduce the risk of being selected for an audit.

Here are my top 6 tips to consider as we head into tax season!

1. Report all income

Failing to report all of your income to the IRS can trigger an audit and is a common mistake among taxpayers. The IRS will compare what you put on your tax return to the income they have on file for you. This makes it very easy to detect a difference. Be sure to include all the forms you receive including 1099s, W-2s, K-1s, and any income from work such as investments, side hustles or freelance work.

1. Keep accurate records

Keeping up-to-date and organized tax records is a huge benefit to you as well as essential to avoid getting audited. And also essential in the event that you do get audited! If your records show transparency in your financial transactions and are comprehensive, the IRS is unlikely to select you for audit.

1. Avoid abnormalities

Abnormalities can be a red flag for the IRS. Your year over year changes should be explained and reasonable so that your tax returns are fairly consistent each year. Avoid high deductions for incomes that are not typical for your profession - rapidly increasing income or unusually low or high income.

1. Don’t claim unsubstantiated deductions

This can be another red flag for the IRS. Do not try to claim deductions to reduce your tax liability that you are not actually eligible to claim. All deductions must be accurate and you must have the supporting evidence such as invoices, receipts or other documentation that supports the deduction.

1. E-file rather than mailing

This can help you reduce calculation errors, processing time and is proof that you filed your return on time. Additionally, when e-filing, you are typically provided with status tracking to know if your return has been accepted, when to expect refunds or if anything was wrong with your tax return.

1. Accept help from professionals

If you are unsure of any tax regulations and issues, don’t be afraid to ask a professional. You want to ensure your tax return is as accurate as possible and tax professionals will have a very in-depth understanding of the different compliance rules with the tax code and can help you with compliance, tax planning and advisory services. Some professionals can even help you increase your knowledge and understanding of taxes by giving training on policies and procedures or other tax matters.

Like I said before, it’s impossible to completely avoid audits, however your focus should be to provide accuracy, honesty and transparency in your tax return. Utilizing the tips above should go a long way in helping you reduce your risk of audit. The best way to avoid an IRS audit is to be transparent and stay compliant!