Hello Bigger Pockets Community,
I hope everyone is doing well. I’m reaching out to this knowledgeable community for some guidance as my partner and I embark on our real estate investment journey.
Our Situation:
- Partnership: We are a partnership of two individuals.
- Current Income: Both of us have W-2 income, which we carry a tax burden.
- Goals: Our primary goal is to replace our W-2 income within the next 5 years through strategic real estate investments. We plan to create a diverse portfolio that includes:
- Long-term rental properties
- Short-term rentals (e.g., Airbnb)
- Potentially acquiring and operating small businesses
Questions and Areas for Advice:
- Business Structure: We're debating between forming an S-Corp or an LLC. Our understanding is that the right structure could help us manage and potentially reduce our W-2 tax burden. However, we're unsure of the implications, especially when it comes to writing off our W-2 income through business expenses. What are your experiences and recommendations on this? Are there other structures we should consider?
- Tax Strategy: We are keen on implementing a tax strategy that allows us to maximize our deductions and reinvest in the business. How have others in a similar situation approached this? What are the common pitfalls we should be aware of?
- Accounting and Bookkeeping: Since we plan to build a diverse portfolio, we want to ensure we’re setting up our accounting systems correctly from the start. What are the best practices for managing the financials of such a varied investment portfolio? Any software or professionals you’d recommend?
- General Advice: For those who have successfully transitioned from a W-2 income to full-time real estate investing, what were your key steps? What would you have done differently in hindsight?
We’re eager to learn and would greatly appreciate any advice, resources, or connections you can offer. Thank you in advance for your help!
Best regards,
Nick
