let's say you buy a re-performing note, is the income you receive taxed as ordinary income or as passive income.if you invest in a fund that invests in notes, is the income you receive taxed as ordinary income or as passive income.

If you call back in a few months and find out the investor incurred additional costs out of the ordinary, perhaps several leaks under slab or other hidden issues that the contractor didn't even pick up, and greatly reduced the profit margin or now the investor is now breaking even.

This is achievable (we've done it with single-family homes) by giving a much higher purchase price. 0% interest is good for the seller because they will get taxed based on the long-term capital gains rate, as opposed to the ordinary income tax rate if they're collecting interest payments.

You'll still have your ordinary maintenance calls for clogged toilets, lack of hot water, and maybe even some unusual ones like a crock pot that didn't properly heat and cook their casserole.Short-term makes more money but takes more time, period.

I am an "Active RE Investor" so I apply all my rental losses to offset my ordinary income as a " RE wholesaler".  

Steven Barros keep in mind that if this is paid lump sum, it will most likely be as ordinary income and you will need to pay income tax on it, so actual income on hand will be much less.Also, depending on how active you want to be, you can either purchase a few flips or participate as a LP in a 200+ unit apartment complex syndication.If this is your first RE investment, it is unlikely the banks will lend you a large amount.

about 220sq ft of living room floor maybe sub floor is ruined...the halway and about half of two bedrooms ...probably about 500sq ft total sub floor and floor will need to be replaced ....Is this out of the ordinary ...or have any of you had to deal with this type of problem.....any suggestions or ideas would be appreciated..thanks the tax value on this house is $91,000+ and they want 40k but are negotiable....so i think i could get it for around 32k -36k...mkt value i estimated to be around 92k -97k does this sound like a decent deal even with the busted pipe issue[/img]

Should I form a LLC and start everything related thru it or should I aquire a few properties first keeping it "ordinary"?

Basically, even if you and the seller specifically agree to a 0% loan, the IRS (under audit if not found out sooner) will come back and decrease the selling price and add in imputed interest, requiring the seller to report interest income at his/her ordinary rate vs capital gains.

Third, they can help you sell your deals.In reference to your taxes, anything that you sell within a year of owning it is taxed as ordinary income, including assignments and double closings.