All Forum Posts by: Andrew Clark

Hello All,

I am experiencing an interesting problem…

I am a new real estate investor in PHX, AZ. I bought my first property a month ago, a 3x2 SFH, with a 5% down owner occupant conventional loan. I just signed 2 tenants on to a 12 month lease to live with me in this home. That monthly income is covering about 80% of the cost of principal, interest, tax, insurance (PITI), but I've still had a load of costs like repairing sewer lines and HVAC. I spoke with an accountant and he said I will be taxed on this rental income as ordinary income because i am collecting the money under my name and not a business entity so I cannot make any deductions or write offs. Overall, i did not make a profit, but I will be still taxed on this rental revenue at my marginal tax rate? Sounds broken to me.

I thought about transferring this property to an LLC, but I read that there becomes problems when transferring an owner occupant property to an LLC.

Any insight or advice would be appreciated! Trying to keep my money out of Uncle Sam’s pockets the best that I can!

Thanks.

I have my eye on a cash flowing rental property. The problem is that this beautiful property is in a neighborhood with no HOA, which allows the immediate neighbor to have boarded up windows, trash all over their front and back yard, and a driveway full of trashed cars— it's not a great sight to look at. I'm afraid the condition of the neighboring house will attract mediocre tenants and/or result in me not being able to obtain market rent for the property. How big of an issue is this?