Getting back into the game --- so many questions!

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Getting back into the game --- so many questions!

Michael Dow
Member since 2025 · 1 post · 4 votes

Mornin' all...

25 years ago I was living in a different city and my (now ex-) wife and I had several rental/rehab properties.  Honestly, we were not going about it the right way (not my choice) and I got out of playing in the real estate game when I moved to a different city, got divorced, and moved on to a different set of careers.

Fast forward to today:  Am in a MUCH different set of circumstances and want to get back into buying/rehab/flipping/renting..  I'm finding that the world is a different place now!

An immediate situation is the following scenario:  I've come across a property that I think would make an excellent rehab with a good profit upside -- what is/are the current method(s) of financing such a property when conventional finance isn't an option?  (Pointers or direct advice is welcome)

A longer term question: What is/are the best scenarios for setting up a legal structure to avoid 1) legal liability and 2) taxes?  I see SO many "do this" and "do that" that my brain is swimming..

I do realize that I have a lot of learning and research to do.  I'm not jumping in face-first before I get my feet underneath me...  But I AM interested in starting things sooner than later...

Yes, this sounds like a big ask... But when you don't know what you don't know, all the questions seem "big"!


 
   

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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
1mo

Michael, for a rehab where conventional financing does not fit, the common options are usually hard money, private money, a local community bank, seller financing, or a bridge loan. The right fit depends on the purchase price, rehab budget, ARV, timeline, and how much cash you can bring in.

I’d compare the full cost of the financing, not just the interest rate. Points, draw fees, appraisal costs, extension fees, required reserves, and a short maturity can change the economics pretty quickly.

Before committing, I'd build a complete project budget that includes the purchase, renovation, financing costs, taxes, insurance, utilities, permits, holding costs, selling costs, and a contingency for surprises. I'd also verify the ARV with recent renovated sales rather than active listings.

On the entity side, I'd separate liability protection from tax savings. An LLC can be useful for holding rental real estate and separating the property from your personal name, but an LLC by itself generally does not save income taxes on a rental. A single-member LLC is typically disregarded for federal tax purposes, so the rental income, expenses, and depreciation generally still flow through to your individual return.

The tax strategy depends much more on what you’re actually doing. A long-term rental, a flip, and a property you rehab and refinance can have very different tax treatment. If you’re regularly buying properties primarily to renovate and resell, those profits may be treated more like active business income than investment gains.

And if you end up holding a property as a rental, I’d also have your CPA evaluate depreciation and whether cost segregation makes sense based on the property and your overall tax situation.

Since this is your first deal back, I’d get the financing, insurance, entity, and tax setup reviewed before closing instead of trying to fix it afterward.

Happy to connect!

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  • Steven GlickBusiness Member
    Lender · Buffalo · Member since 2024 · 115 posts · 33 votes
    1mo

    Welcome back, Michael. A lot has changed over the last 25 years, but the fundamentals haven't - buy right, control your costs, and don't let the deal depend on best-case assumptions.

    For a rehab that doesn't qualify for conventional financing the typical path is hard money or private lending for the purchase and rehab, then refinancing into long-term financing once the property is stabilized. If you decide to keep it as a rental, DSCR loans are worth understanding since qualification is based largely on the property's cash flow rather than personal income.

    On the legal structure, I'd resist trying to solve that from YouTube or forums alone. The right setup depends on your state, tax situation, and long-term goals so it's worth sitting down with a real estate CPA and attorney before your first deal.

    You've already got experience you just need to update your playbook for today's financing options and lending landscape.

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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    1mo

    Michael, for a rehab where conventional financing does not fit, the common options are usually hard money, private money, a local community bank, seller financing, or a bridge loan. The right fit depends on the purchase price, rehab budget, ARV, timeline, and how much cash you can bring in.

    I’d compare the full cost of the financing, not just the interest rate. Points, draw fees, appraisal costs, extension fees, required reserves, and a short maturity can change the economics pretty quickly.

    Before committing, I'd build a complete project budget that includes the purchase, renovation, financing costs, taxes, insurance, utilities, permits, holding costs, selling costs, and a contingency for surprises. I'd also verify the ARV with recent renovated sales rather than active listings.

    On the entity side, I'd separate liability protection from tax savings. An LLC can be useful for holding rental real estate and separating the property from your personal name, but an LLC by itself generally does not save income taxes on a rental. A single-member LLC is typically disregarded for federal tax purposes, so the rental income, expenses, and depreciation generally still flow through to your individual return.

    The tax strategy depends much more on what you’re actually doing. A long-term rental, a flip, and a property you rehab and refinance can have very different tax treatment. If you’re regularly buying properties primarily to renovate and resell, those profits may be treated more like active business income than investment gains.

    And if you end up holding a property as a rental, I’d also have your CPA evaluate depreciation and whether cost segregation makes sense based on the property and your overall tax situation.

    Since this is your first deal back, I’d get the financing, insurance, entity, and tax setup reviewed before closing instead of trying to fix it afterward.

    Happy to connect!

    [email protected]941-914-7779
    INVESTOR FRIENDLY CPA®5242 Reviews
    WebsiteView Page
    TaxMD™ | AI-Powered Tax Planning
    WebsiteView Page
    1Reply
  • G. Brian DavisPro Member
    Investor · Hatboro, PA · Member since 2016 · 2k+ posts · 838 votes
    1mo

    Hey @Michael Dow! The biggest changes you’ll notice are financing and costs. Debt is more expensive, rehab costs have climbed, and there’s less room for error, so conservative underwriting matters more than ever. For a rehab where conventional financing won’t work, start by looking at local portfolio lenders, hard money, and private lenders then work backward from the deal to see what the numbers can actually support.

    On structure, don't over engineer it before you have a deal. An LLC can help with liability, but taxes are a separate question. Once you know whether you're flipping or holding, a good CPA and real estate attorney can help you structure it appropriately.

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  • Wale LawalBusiness Member
    Real Estate Broker · Houston | Dallas | Austin, TX · Member since 2018 · 5k+ posts · 2k+ votes
    1mo

    @Michael Dow

    There have certainly been some changes on the financing side of things, but hard money, private money and bridge loans are all popular choices when it comes to a property that is not able to be financed conventionally. I would definitely meet with a real estate lawyer and CPA before determining an entity structure.

    Good luck!

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