All Forum Posts by: J M

Hi, As I'm still trying to educate myself on these things can someone please help out whilst I wait for the mailman to deliver some books on the topic and before I see an attorney/CPA.

After reading many of the posts on asset protection, liability, taxes etc.

My question is, are there any benefits/possibility on having properties in an LLC but under a S-Corp?

Will the tax implications pass through the LLC to the S-Corp?

My understanding is you will have the corp setup with owner and/or shareholders to whom a salary & profits must be distributed.
Is payment to the owner to be comensurate with the job at hand? ie If earnings/profit are low initially can a lower "token" salary be paid?
Is it possible to reinvest all earnings/profit and not pay the owner/shareholders?

Does anyone know if S-Corp can have a non-resident as shareholder or owner?

Obviously I need to seek professional advice for my own personal situation but am curious nonetheless.

Thanks

Thanks everybody for their views and advice on this one.

I will definitely seek professional advice on the most productive/protective way to facilitate the building of a portfolio.

I note that some people here & at home mention the net asset value which I don't disagree is faster using debt. However, what concerns me with this method of borrowing heavily is that market forces dictate the house price not a bank valuation. It's only worth what someone is prepared to pay for it. Then whatever I take from the sale price less initial purchase costs, residual loan, selling costs, tax to be paid often winds up being a great deal less than the paper value profit I just made on the house.

As I'm only new to these forums and have read a good deal of the advice given here am curious to know anyones' opinion on the following idea. There are many variables to the equation and I am aware of this but its more about the underlying idea of eventually gaining an income.

The Plan. Am in a position to purchase at least two properties of reasonable value outright, ie. Built within last few yrs, good condition, good neighbourhoods, reasonable rent (assuming occupied).
Would like to purchase the two properties A & B outright. Then borrow to purchase property C. Using the net leftover from A & B & C (rent - 50% for costs etc) to reduce the finance owing on property C and pay it off as quickly as possible then replicate it again with another & another thereby building a portfolio and gaining an income over time plus building asset wealth with capital growth regardless of how much it may be.

So far everyone has told me I'm crazy as I should be borrowing as much as possible for taxation purposes & to limit liability should the unfortunate happen.

The concern I have for holding then selling with the properties highly financed are: 1. Probably won't get the finance as I'm a non national and hence credit rating will take some time to acquire.
2. When I sell, I'm banking on capital growth that may/may not occur then paying tax on the profit.
3. I'm buying and selling in the same market, ie making say $50k profit only to have to buy the same type of property for $50k more than I paid originally.

I figure, with property A & B, at the very least I can cover all insurance, taxes etc with only one being rented.
I realise there are unknowns with major repairs, tenants trashing the place etc.

Is this idea completely nuts? Is there insurance available to cover the cost of malicious/wilful damage and/or tenants leaving without paying rent (after using up all the bond money).

Any advice would be greatly appreciated.

:mrgreen: