All Forum Posts by: Account Closed

Originally posted by Jeff Tumbarello:

Passive income is generally a sales pitch.

Yes, this is another area where the guru-sleeze has bastardized a phrase through marketing.

Please name one that requires no work?

good old motivational fluff, great words no substance.....

Let's clear up some confusion.

For the purposes of the tax code, there is passive and active INCOME and it is in your best interest to have as much of your income be PASSIVE as possible. Passive income, as defined by the IRS is only subject to income tax, it is not subject to FICA or Mediscare. As an aside, you want as many of your deductions to be active income related as possible.

But, the way most people talk about passive income is really not passive. The example Harrison gave still requires work on his part. However, it is work that is not manual or menial in nature. The work relates to using his mind instead of his physical labor.

This is true to an extent. But, I look at from the perspective of how much continual motivation one needs. Helping someone push past an obstacle be it fear, lack of knowledge, etc is far different than having to remind them over and over again to do the basic things one must do to succeed. Things like, getting an alarm clock and learning how to use it come to mind.

The tax rates are the same for a single member LLC and a sub-S corp because they both roll up to your personal tax return.

The advantage is if you can justify some of the income is "passive" you are able to avoid having to pay FICA and Medicare on some of it. However, if you are the ONLY employee and the only member/stockholder it gets very iffy.

You need to talk to your lawyer and CPA because, you may find you are better off using a full blown C corp for wholesaling with you as an employee and stockholder.

Yes, you click on the search button and enter #tcot for example and it will group all posts that have #tcot in them.

Originally posted by nationwidepi:

The attorney is most important for this not so much for the PSA as stated above but for the CYA docs you should have in place. Especially if you are going to L/O the sub2.

Exactly.

Which is why we worked very closely with our attorneys and use a document assembly program to make sure the right stuff gets generated based on questions our employee buyer asks of the seller.

The twitter web interface is very lacking.

To get the most from Twitter you need to use something like TweetGrid or TweetDeck. I use TweetDeck and follow the #tcot, #realestate #investing and #investment streams.

It's kind of like a big wide open chatroom and the hash tags like #tcot help group things together.

Feel free to follow me at http://www.twitter.com/The_Anti_Guru I will follow back.

Originally posted by Zainab Ariyibi:

I'm in the process of acquiring more rental investment properties and wanted to know if forming an LLC or S Corp is better? Which has better tax advantages, and which business entity will allow me to transfer the deeds from my name to the company's name faster and easier?

I'm confused as to which route to take, so i'm seeking your recommendations. :D

Thanks to all who respond.

Z

Figuring out which has "better" tax advantages is very dependent upon your particular tax situation.

There is an advantage an LLC has over a sub-S if you have others in the deal.

In a sub-S your percentage of profits follows your percentage of ownership. If you own 50% of the stock, 50% of each years income rolls up to your tax return through a K-1 form.

However, with an LLC the members can decide to disburse profits however they want and change it whenever they want without regard to ownership percentages. So, you and another investor could each own 50% of a deal but to pay them back for their upfront money you two could agree they get 80% of the profits until their capital is returned. Or however you might agree.

I use both sub-Ss and LLCs as well as full blow C corps when the situation indicates the need.

Jon gave you great advice, sit down with an attorney familiar with the type of investing you do or want to do. Do the same with a CPA. If they give conflicting advice then one of two things are true. You shared different information with them or one or both of them are not familiar enough with what you do.

My attorney and CPA are never out-of-sync on large issues they sometimes have different takes on the minute details.

That waiver only applies to properties sold by a mortgagee less than 90 days after getting title through a foreclosure action.

In the case of the double-close flip of a short sale Will describes above the waiver is being used to allow FHA insured financing to the end buyer. There are exceptions to this exception.

This however, should be a lesson to everyone. The people posting here post based on their own experiences and opinions. There is no research staff to rely on to verify or refute anything. It is up to each reader to verify and validate everything the read.

Ours end up being specific because they are constructed by our software at the time of need.

But, just about any standard PSA will have provisions to assume existing financing.

The best advice is to ask your attorney for the standard form they recommend you use for a subject to purchase. They aren't going to have to "draft" one, they have standard ones meeting all state requirements.

Originally posted by Jeff Fairchild:

Ok, so you've just gotten the seller to accept your price and terms. What do you do next? Do you immediately step outside the house and call a traveling notary to have them drive over to the house while you're filling out the contract w/ the seller?

What kinds of questions do the sellers ask when filling out the contract?

What sorts of answers to objections do you have when filling out the contract?

Can you list step by step your process what you do from the time they say yes until you walk out the door?

Our employee buyer completes the PSA and gets the seller to sign it along with escrow instructions.

We do not do kitchen table closings. There is way too much risk.

The seller has seven days to shop the deal and then we usually close one week after the expiration of that.

We do any inspections, title search, etc and the closing attorney gets the title insurance bound and the docs completed.

The closing documents are sent to me and I sign them in front of a notary. Then the docs are sent back to the closing attorney. The money is wired to the closing attorney. Then the seller shows up at the appointed time, signs the paper work and the deal is closed. They get a check for any monies they are owed at closing.

When everyone else is greedy, be scared.

When everyone else is scared, be greedy.

If you have a long term outlook, now is an EXCELLENT time to invest in real estate.

It is also a great time to invest in the stock market but not in the traditional ways. But, that is for a different forum.

There is no point in trying to convince others of the wisdom of buying real estate. They either get it or they don't.

My advice? Just quietly go about your business and acquire your properties. Ten years from now you will be glad you did and they will still be wondering why they can't seem to get ahead.