All Forum Posts by: Teri B.

I'm not quite sure what they are helping with, but I recently had a similar experience.  I had a less common type of off market deal and the title company I selected was not helpful.  At all.  I called around and got the same answers, to varying degrees.  I was scared this deal wouldn't go through.

My last call was to a company here in town and they actually listened.  Realized I was stuck.  And, they came up with a solution.  So, I had the contract amended to reflect this new company and we should close next week.  Even if they are a bit more expensive, they get my business from now on.  Good people are worth the money.  

Glad you found your people.  

It's a great step having the courage to type it all out and put it out there for all to see.  

As someone who has recovered from some financial missteps, I'd say take all the great advice already offered here.  Also, steer clear of anyone that brings negative energy to this.  Find solid, non-judgmental professionals to work with, and just do it.  You aren't the first do be in a dilemma, and you won't be the last.  

I find (a free credit monitoring company) very helpful in just learning how things affect my score.  You can also spend spare time on credit boards looking for help with rebuilding, too.  I thought Dave Ramsey was helpful when I was learning to really squeeze my budget (and save cash).  

I personally would commit to seeing this through so you at least know what funds you'll need to rectify, before I started investing.  Maybe you can work on getting your license (if that fits in your game plan) while you are waiting, so it doesn't feel so much like being on the sidelines?

Best!  

I think that's one of the hardest aspects of being new to REI. It's hard to know when to 'hold them or fold them' and when you realize you should have held, someone else is already there, all on top of the opportunity that you missed.

It can be hard to be careful and fast at the same time, especially when you are new.  This is especially true if you are a perfectionist like me.  It's can be a deterrent to progress.

Kudos to Greg Grant ... for even stopping bye to learn from the deal he missed out on.  Hopefully that's me one day.  Life goals :-)

I don't have any solid feedback besides suggesting that you set up a separate account asap if you haven't done so already to prevent co-mingling of funds, even without having a formal business.  

I've heard of people that rent and own property.  I'd rather do that for a short time rather than making a hasty mistake.  I, personally, would't want to rent long-term though.  

So, without knowing anything about the market where you are, it probably wouldn't be long before I was looking to own if it makes financial sense, even if I couldn't buy outright.  I'd be trying to determine if the market was too hot or had room for growth, how much I would actually cash flow on a rental versus what I'm loosing every month in rent, and if I could get the help of a good realtor to help me identify a distressed property that has room for value add.  But, that's just me.  

You've got a solid foundation.  Good for you!

Hello Tra'Mell

I don't wholesale, but I can relate!

The fact that you failed but are wanting to try again is a good sign.

I'm newer to REI. It took me 6 months before I got my first deal, and another 6 months before that all worked out. I'm a few years in now, but it was rough. Lots of stuff fell through or didn't work out during that time, even recently. But, even the missteps are packed full of lessons. I bet you already know much more than someone who hasn't begun yet. That has value.

What helps me is my 'why'?  If your why is more important than anything else, you have great chances of success.  Also, have you written down a goal?  If not, give that a try.  It helps solidify things so you can come up with a plan.  

I was trying to invest for 6 months before I got my license.  So far, I've only used it for myself.  Your overall plan may help you decide if it has value for you.

If you have the means, maybe a house-hack would be a good starting point? There are ways to purchase without a large down-payment.  

Don't give up.  Don't get overwhelmed with too much information, but keep learning because knowledge is power.   Take action.  And, stay connected to BP.

@Michael Plaks

Indeed, it is complicated.  I didn't have a goal besides trying to understand more.  I did talk with 2 CPAs over the summer.  They had some differing views.  I'm looking forward to having a 'consult' after a professional does our taxes this first time.  

I find it helpful to at least attempt to have a fundamental grasp of basic concepts before I meet with someone, as it can make communication far easier.  And, it tends to make our meetings much more productive.  I agree that Ashish's input was excellent and it was generous of him to comment.

I trust my doctor, but I'm like the vast majority of of patients who reportedly do some 'research' before going to the appointment.  This, was that.  

@Ashish Acharya

I was asking questions by trying to synthesize what I 'think' I understand.  I figured I was missing or misunderstanding some details.  Thank you so much for the clarifications and corrections.  Very helpful.

Hello,

This is my first year having my taxes done by a CPA.  When tax season slows down, I will gladly pay to sit down with him to answer questions

In the meantime, I'm trying go get a grip on a simplified breakdown.  There are lot of  good flip threads but I can't find a synthesis.  

Is this close to correct?

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Flipping in an LLC triggers pass-through income taxes if not set up as an s-corp (or even if set up as an s-corp?). So, your net proceeds (money in hand after all your expenses are paid) in most places (though maybe not CA) are taxed at what your regular ole' tax rate is determined to be. If you use the Federal Tax Brackets it will give you a general idea on rates - those brackets are based on taxable income. So, it's based on (all) income after all the deductions, exemptions, etc. Flipping may or may not change your tax bracket - depends on where you fall with all other income.

If you flip you will have to pay self-employment taxes.  That adds another roughly 15.3% in taxes to your earnings on your flip.  So, you should brace yourself for regular taxes + self employment taxes.  So,does that mean if you netted 100,000 on flips you'd be paying $15,300 + reg tax rate?  If you were taxed at 25% (random number) that would be another $25,000?

If you elect to be an S-corp (or other things but not a C corp), you may now qualify for a 20% deduction on 'combined qualified business income' (I think Brandon Hall called it a 'freebie deduction) . So, if you cleared 100,000 on that flip you can knock off 20,000?   This applies up to the 157k/315k threshold.  Does that mean the 15.3% and the 25% are now on $80k?  The 20% deduction does not remove the need to pay self-employment taxes of 15.3% or AMT if that applies.

Or, another line of thought . . .

The 20% deduction = your top tax rate (x) your deduction?  So, using the example above if you tax rate is 25% and your deduction is 20,000, you save $5000 off your final tax bill as your 'freebie deduction'?  Is that right?  That seems like a lot.

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*You can be taxed as an s-corp by electing to do so with the IRS, but you have to commit to the change for at least 60 months. This doesn't make you a true S corp though. An LLC taxed as an S corp is a handy way to fuse asset protection (debatable) and achieve a certain tax treatment.

*You can also pay salaries and take distributions via your s-corp to adjust the 'combined qualified business income' in the first place and also the self-employment tax.  You would want to be honest and reasonable, or else it may trigger unwanted attention/ reassignments/ penalties.  

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This isn't real financial or legal advice.  Much of it is likely incorrect.  I'll see our new CPA as soon as it slows down.

@Mike Flora

This caught me by surprise.  So, can I ask this?

If a property (SFR) is bought from checking account funds of Spouse 1's single member LLC . . . with the title then put in both spouses' names with the intent that Spouse 2 will delayed finance (because Spouse 1 is currently unemployed and likely unable to get financing) . . . will this be a problem? Based on your story it looks like it could be due to the source of funds not 'belonging' to the financing spouse, and it is not something I considered.

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Does Quit Claiming not break the chain of title and potentially interfere with the Title Insurance policy you may/or may not have purchased upon acquiring?

Thanks.

False.  I was told today that the info was incorrect.  The title insurance will not transfer over.  I'd have to pay for that again.  So, $100 plus cost of policy.