All Forum Posts by: Jake Hottenrott

@Justin Sellers - It sounds like you've got a good start to your real estate investing with the partner, marketing and lender already set up.

I'd recommend a conversation with an attorney and a CPA in order to figure out the best entity structure for you.  It sounds like not only will you have a lot going on but that you may have multiple real estate strategies in play as well.

As far as the accounting system, the best system is one that you will use.  Whether that is paying someone to set it up so you can use it in the day to day or hiring someone to do it so you review the reports.  Quickbooks will typically be a good starting software as well.

I hope that helps and keep up updated on your projects!

@Connor J. Miller - Congrats on working towards taking the first step! From a quick read on the FundRise account, it looks like they will provide a 1099-DIV each year through their REIT. This will break out down by what type of payout your received, ordinary dividends, qualified dividends or a return of capital. This will help you track your basis in the investment for when you eventually sell (similar to a stock).

What in particular sounded complicated to you?  (genuine curiosity and I'd love to help if I could.0

A self directed IRA is an investment vehicle that uses retirement funds to invest in a multitude of options outside of the typical stocks, bonds and mutual funds. Here's a great article on it:

https://www.nerdwallet.com/blog/investing/self-directed-ira-right/

I don't have a local recommendation for you, but I would recommend looking around BP for a tax pro/tax adviser. There are many great tax pros out there who work virtually with clients from coast to coast and work mainly with real estate investors. Most do their work through email, document sharing, client calls and skype/video if you want face to face communications. In the end it saves you time because you aren't traveling to an office for a meeting and the added bonus of a technologically advanced tax pro makes the process more efficient.

The best way would be to schedule consultations and get a feel for if their communication style works with yours.

Best of luck!

@Josh LaRose - congrats on the beginning to hopefully a long and successful real estate career!

To cut right to it, many of these big name firms/gurus sell ridiculously complicated structures that cost money in compliance and fees each year. I've seen situations where there were 4 shell companies set up just to house a single SFR and the tax compliance was costing thousands per year on this. The client wasn't even getting any strategy and planning with it.

For the most part, people should start simply and grow into an entity choice instead of picking an entity and trying to grow into it.  This growth should be with a real estate knowledgeable professional and should be guided by touch points through the year and your career, not by a 30 min sales pitch on the phone.

Best of luck and i know you’ll end up with the right choice for yourself!

@Venkat Dabri - I’m sorry to hear that you’ve had a hard year with some unforeseen circumstances.  Reach out to a CPA, there are a few ideas that I can think of that may help you, but without knowing your full situation tax-wise I’m not sure would apply.  

What type of penalty?

Best of luck!  

@Stan Johnson - I'm 100% going to second @Eamonn McElroy's recommendation of @Natalie Kolodij.  She's in your backyard and she's great at what she does (check her posts on here).  Reach out to her to see if she's accepting any new clients or if she's already booked out for the year.

I don't have a local recommendation for you, but I would recommend looking around BP for a tax pro/tax adviser. There are many great tax pros out there who work virtually with clients from coast to coast and work mainly with real estate investors. Most do their work through email, document sharing, client calls and skype/video if you want face to face communications. In the end it saves you time because you aren't traveling to an office for a meeting and the added bonus of a technologically advanced tax pro makes the process more efficient.

The best way would be to schedule consultations and get a feel for if their communication style works with yours.

Best of luck!

@Bryan Mitchell - I haven't heard many out right complaints about the service or noticed many errors in their past returns.  I do typically pick up at least a few clients each year who have use 1800Accountants in the past.  Typically because they felt their tax professional was fine, but not in tune or up to date with the real estate investing portion of their return.  They also felt it was good for tax compliance but not necessarily that they had a proactive working relationship with their accountant.

I would recommend searching the forums here on BP as well as asking for recommendations.  There are tax pros here that do nothing but real estate investing tax planning and strategy and are worth it to work with.

Best of luck!

I've been expecting a downturn for years (not that I'm a great predictor or anything), but if you continued to work your investments and numbers and buy when the deal presents itself, you'll never miss out.  Recessions are great for investing, but if you wait to time it, you'll miss out on all the deals you could have had in the meantime.  

I just sent a fellow tax pro and investor the article about the real estate company giving the $10 million in bonuses and said "looks like its around the corner".

@Robert Tinker Congrats on you real estate journey!- As @Michael Plaks says, there is no tax advantage to the LLC.

I'm sure your attorney went over this, but as a fellow Series LLC owner, I'd kick myself for not at least mentioning these things.

- Did you cover a possible due on sale clause on a mortgage (however remote the possibility) if the properties were transferred from your personal name to the LLC.

- Potential higher loan rates from a commercial loan (LLC) vs in your personal name.

- How an umbrella insurance policy could provide adequate protection as you grow your portfolio to a point where the LLC is a better fit.

Here's a short read I authored on my BP blog a while back.  

https://www.biggerpockets.com/member-blogs/5926/53215-questions-as-common-as-the-cold---llc

Best of luck!!