All Forum Posts by: Mark S.

 Any update on your experience with Conventus?

Hey everyone - first post here but have done a lot of research and reading. Hoping I can get some guidance with my question!

I own a 3 unit commercial building that generates about $50K/year in net revenue. I'm self employed making about $1.2M/year in net revenue to me. Thankfully I have bought businesses so have massive deductions, book depreciations, and write offs. Even so, you can imagine my taxes are pretty outrageous so I'm considering buying some properties with 100% financing to offset my commercial building and reduce my taxes. I don't see me ever qualifying for REPS due to my other businesses and I'm not really concerned at all about cash flow so if I bought a few of these properties in an up and coming area it's for the appreciation long game...so here's my question. If my net revenue is say, negative $10K/year per property, I could theoretically buy 5 of these which would fully offset the $50K I'm making on my cash flowing property, thus resulting in a zero tax liability for my real estate portfolio, right?

Secondly, if you aren't a real estate professional and you had a negative cash flow property, do you still get to deduct the interest, property taxes, property management, and depreciation or would that only be deductible from my passive real estate income?

The idea is to expand my portfolio with some appreciation properties without much skin in the game so I can preserve my capital to add cash flowing properties as I see fit. $10K/year feels like a small price to pay for the long game. Plus even if I can't deduct it this year, it'll carry forward. Hope that makes sense. Thanks in advance! 

So I'm currently looking at a deal for new construction in Alabama. It is a Turnkey company that specializes in new construction. They are the builder, the listing agent, the title company, and the property managers (they have four companies). However, you are not obligated to use their title company or property manager.

If you use their title company, they will cover 2% of the purchase price for closing costs, and if you use their property management, they will provide a 12-month builders warranty plus an up to 12-month lease back if they can't find you a tenant.

They are partnered with a credit union offering a portfolio loan with 0% down (interest rate will probably be 8-10%). It is a 10-year term amortized over 30 years.

Essentially instead of putting a chunk of money down, you are negatively cash-flowing for several years while your equity is building. They increase rents by about 5% each year, so at some point, you will stop negatively cash flowing. When rates improve and you have some equity, you can refinance.

The contract seems pretty aggressive, though, and not many ways that you can back out and recover your earnest money deposit.

@Mark S. great post to follow. What was the time frame on initial purchase to refi. I know this was during a huge boom era, but feel like it shows REI work they just take time and require thoughtful action.

Keep up the good work!

Hi I hope you see this. How do you get an LLC structure? How do I apply for that?

@Kerry Baird, yes, I did. 3.75% fixed for 30-years at 70% LTV. Pulled 100%+ of my cash out.