Waiting until the end of the year to consider any tax consequences can be a huge mistake especially if you are buying and selling property, do a 1031 exchange, have involuntary conversions, or need to make any major expenditures.

Here's some numbers:GOI (minus vacancy) = 21240NOI = 10620 (50% rule), however, because everything is new, NOI could actually be near 70% with no cap expenditures in the near future.Cap rate = 11% minimumcash on cash return = 25%I have a side deal with my brother/partner where he would be property manager but would forgo any payment in lieu of earning equity in the property - I can explain more if anyone is interested.

Capital expenditures are evenly split (this seems like it could be problematic to make these determinations).3) Obtain a straight 5-10 year loan from a private investor, and you keep all the profit and risks above the borrowing costs.4) Obtain a 5-10 year loan from a private investor at a lower rate, and you and the investor split the equity (net sales proceeds minus note balance) when the property is sold in the 5-7 year time frame.5) A lot of the big turnkey companies are combining (1) and (3) by selling the rental to an investor and matching the investor with a private lender that they’ve cultivated.Obviously, option 3 is the only that that is just like dealing with a bank.

i live in ca so i know i would have to foreign file here in ca. im sure it will be an extra expense having a foreign llc but am willing to overlook the extra expenditure if it will ultimately protect my assets BETTER than what a california llc can do...looking forward to some words of wisdom. thanks in advance

Also, capital expenditures made after the property is put into service increase your basis.

Depending on the age of the property and deferred maintenance you might be looking at way more than 10k on just the interior.With you at 10k for repair, 3 months lost rent, closing costs and due diligence you are close to 20k expenditures already.

First and foremost I pay all mortgages, taxes and insurance and then any repairs and or maintenance that may be needed next.I then take what is left and split it in half, investing half in the stock market (usually dollar cost averaging into some mutual funds and stocks I like, and the other half goes towards cash reserves for capital expenditures and or savings for another investment.I like to invest a fair part of my rental income into the stock market to diversify and hold hard assets as well as securities that pay dividends to create additional passive income.I am very disciplined have have stuck to this system for about 8 years now andf have created a decent amount of passive income via dicidend paying invesstments as well.Chris

Jon, happy to clarify...so far my plan looks like this:Looking to start by picking up a small multi-family, in order to spread expenditure costs and vacancy hits as opposed to the single-family approach.

@J Scott - was counting on the 4k per year maintenance line item to cover capital expenditures over time.

@Steven Hamilton II - given the nature of lead abatement, it could be considered an improvement rather than a repair, and as such the net expenditure would be depreciable rather than deductible.