All Forum Posts by: Mike Huang

That is good to hear, thanks for clarifying!

Link to News Source

So by suspending the mortgage insurance, he has effectively taken away the FHA loan since that's a major reason why lenders would accept a low down payment. Am I hopefully wrong in thinking this? Further implications of this?

The only difference between selling a property cash and a conventional mortgage is that the bank procedures aren't involved, so a lot of hassle regarding pay stubs and credit reports are no longer needed.

This still means you need the documents necessary from a legal perspective, which your attorney should be supplying. 

Aside from that, you are going to want proof of funds, so a bank statement from the seller would suffice for that.

You may also need to provide a report with the condition of the property and your knowledge of it (lead paint and such). 

Did the prospective buyer include any contingencies on the agreement sent over?

You would ask your attorney to transfer the title over to the LLC.

As for your tax question, currently an LLC can be treated as either a partnership or a corporation. By default, it's the former. Partnership income flows through from the entity to you, so there is no entity tax there. As of now, corporations pay tax at the entity level and then when the corp distributes its after-tax profits to you, you pay tax again as an individual. This is why investors normally don't do corporations.

If you want tax advice on the future, no one can really help you there because we don't know what's going to happen. If Trump does lower the corporation tax rate but doesn't remove the double taxation effect, then it wouldn't matter either way to you. 20% tax on the corp level and then being taxed at whatever your tax bracket is would still be higher than just paying a tax on the individual level.

There is also talk of Trump adding a tax to the flow through type of income. If that is lower than the personal tax rate, then things become very interesting... But that's beyond the scope of this thread. Don't count on things happening soon, anything tax related is through Congress. Trump can't pass changes that fast even if he wanted to and if we know anything about Congress, they will take awhile.

What are your passive income goals? If your intention is to hit a certain number by a specific timeframe, buying another rental will probably serve that purpose best. If you want to put yourself in a better financial situation for the time being (which sounds important to you, judging by the wording of your post), then pay off the debt now and save up for a purchase further down the road.

And just to put it out there, the reason why buying another rental would accelerate passive income goals isn't just because of the cash flow but also the tax savings and equity+any appreciation that will play a factor in case you want to do a trading-up strategy later down the line where you sell your properties to buy an apartment. You would be putting the 25k to better use if that's what you want in the future.

This really does depend on the market and your goals. I found that hitting a higher ROI is easier in lower priced markets, though cash flow may not be as great as something with low ROI but in a higher priced market.

If you want a comparison, look at other deals in your market to see if your ROI % is making it a great deal or not. If you don't know, you may want to do enough deal analyses to really understand what good numbers look like for your market.

@Nick Adams I mainly look at Binghamton.

Many investors start off by working a full time job before getting into investing and many also never leave their W-2 job. 

Going into property management to learn the industry is a good idea, I think becoming a contractor is even better because that's a skillset with more diverse opportunities in the real estate investing world.

However, I think the issue here is taking the time to educate yourself, paying off your debts and saving up. While you do seem to be looking for creative financing, it never hurts to have a strong cushion to lean back on. 

It depends on how far you're looking. I went to school in upstate NY. As I know the area there,  I invest there. 

If you don't have boots on the ground, what about partnering up with someone who does?

If you want to stay in NYC, you will definitely have to look at the riskier areas.

You can also bring in a partner. Part of a deal is better than no deal.