All Forum Posts by: Shawn Torsitano

I'm looking up CAPEX stuff, and I think I'm starting to get it. I'm still new to the accounting side, and have never really operated as a broker, despite holding the license. So what it looks like, then, is that I could deduct the portion of the property the year I buy it, for that year of depreciation, but overall the amount of the down payment not counted in that would still be taxed as income?

Thanks for the reply, but I'm not 100% sure what you mean by your response.

Of course, I'll talk to a CPA before I actually do anything, but I was saying more that if there is a business that is in the business of real estate investing, which would be the shell corp, would the purchasing of real estate investments be essentially considered a legal business expense? I get that it would be an assest, and the depreciation would be over a period of time, but I'm trying to figure out if the money spent on that would still count towards taxable income.

A friend and I are both starting our own painting contracting companies, and something we were both thinking about doing with our profits, if we are good enough to make high profits, is invest in real estate. But we're trying to find a way to do it with pre-tax money. We both have LLC's electing to be taxed as S Corps as our business structure, to avoid some payroll taxes.

My initial thought was to create another entity, pass ownership of the painting business to that, and use that for buying investments, and then anything remaining gets passed through to me as distributions(we both collect a reasonable salary from the painting businesses).

So it would look something like:

Painting Company makes $250k profit. As an S corp, it's passed through to Investment Company, it's owner. Investment Company makes a $150k investment, and pass the remaining $100k to me as distributions, which are then taxed as income.

Would that be considered tax evasion? 

As an alternative, are there other ways for us to invest in real estate, without paying taxes on the money we use to invest? I'm looking into self directed IRA's, but my initial gut feeling is that, being a retirement account, we won't be able to use the profits from those investments as we please.

Thanks!

@William Baumann  How often do people accept an offer that is low compared to their asking price but much more accurate?

@Carl C. Okay, thank you. If my numbers from the post above are correct, would that be sufficient evidence to bring to the table? Obviously it would  be much more elaborate and formal than just a couple sentences, but should I be trying to use any additional standard? 

@Jason Wagner Thanks for the input. Now, correct me if I'm wrong, but that means that now would be a good time to invest in the area, right? Forced appreciation, rents should go up due to scarcity. 

Having been in the military, my primary advice would be don't join the military.

While irrelevant, given the 6 year contract, I'm assuming you're pursuing something beyond basic enlisted. Are you being enlisted with a special job, or are you being commissioned?

I know a common thing for military members is buying a property in every place they get stationed in, and renting it out when they leave. I WISH I had know about this when I enlisted in the Navy at 17. I would be in a much better position now.

It sounds like you are flipping. While I'm definitely not an expert(just someone who reads a lot), my recommendation would be that you turn some of that money into buy and hold. Military areas are good for rentals, for obvious reasons. Do you know where you're going to be stationed to begin with?

Hey everyone, just hoping for some quick input. 

There is a 4 plex, technically 4 townhouses, near where I live, that I'm looking into. It's something I'm considering as an owner-occupied, using my VA loan(max limit of $417,000, for those not familiar). While I haven't officially run comps, it seems to be way overpriced. They are asking about $625,000. I've looked at about 4 multifamily properties sold in the last six months, 3 were duplexes and 1 was a quad, and they all had GRM's around 10. The quad was actually around 9. At 10, the property would be around $460,000, at 9, it would be around $415,000.

In addition, the single family homes in the area that were similar in size were selling at around $120,000. While I'm no expert, I would bet my car that, in general, a townhouse with no yard is worth less than a similar single family home with a 2 car garage and a small yard.

Some additional information: The property is listed by a company called The Management Group, Inc, under the name of the President of the company. The company seems to be primarily property management, claiming to manage over 14,000 units over Oregon and Washington.

If I'm right in my preliminary estimates, that the property is overpriced by about $200,000, what are my odds of actually being successful offering such a low amount compared to the asking price? It has only been on the market about 30 days, should I wait?

Just a heads up.

I used to live in Oak Harbor, WA, on Whidbey Island. It's about two hours from Seattle, if you're not aware.

From what I've seen, housing prices are pretty standard there, compared to most of the places I've looked at in Washington and Oregon.

But there's a very important thing going on in Oak Harbor.

The Navy is currently transitioning from P-3 Orion's to P-8's. During that process, they intend to move some squadrons that were previously stationed in other places(Hawaii and Florida), to Whidbey. The housing there is pretty well filled. Most places that I looked at when I lived there had low vacancy rates. The condos that overlooked the ocean were fairly pricey.

This move should add, based on my estimates, between 3-5% to the population of Oak Harbor over the next 2-3 years.

Source:

http://www.whidbeynewstimes.com/news/232198231.htm...
And, from experience of being in one, a squadron is usually around 150-200 people.



I realize this wasn't exactly the information you were looking for, but I'm hoping that since you're up that area you may be able to put it to some good use. If not, I apologize for wasting your time.

I'm young, only 22, and have been married for almost two years. I've been interested in investing for almost that entire time. My wife doesn't share the same passion.

It's not a bad thing. She's supportive, but cautious. I unsuccessfully tried to make some things work while I was in the military, and they didn't, and that rightfully has made her more cautious. But she trusts me, which is, in my opinion, the foundation for a good marriage, and she believes that I believe what I'm saying.

She has absolutely zero interest in reading any books about it, but when I tell her that, "We could live in the town house that's 30% bigger than our apartment, and only pay $300 a month instead of $1,400", she tends to listen to what I have to say.

I would suggest you try explaining it from a different perspective than you have done before. Instead of just trying to talk about it, ask her about it.

Ask what her concerns are, ask what she is worried about. This is the easiest way to figure out what to tell her. If you just talk at her, you probably will go nowhere. Try to involve her in the conversation.