All Forum Posts by: Arif Siddiqi

@Vinh Huynh Although I am not a fan of negative cash flow but I guess CA market is a bit of exception. However, even with CA market, I want to be at least breakeven after accounting for depreciation and other tax write-offs. Remember, appreciation should only be accounted as a bonus and should never be part of your cash flow spreadsheet

@Ashish Acharya Thanks a lot Ashish for the tips. I am using Stessa to do the bookkeeping and keeping record of every business transaction happening through my business or personal bank accounts and credit cards. I found it to be a good online alternative of quickbooks and it’s free. I am in the process of phasing out my personal account/credit cards usage for biz transactions and eventually will transition to only biz accounts and credit cards. I was worried that I may need to write a physical check each time I am making distribution from LLCs to personal account and may need to pay tax on that at year end but as you mentioned I should be ok.

I have rental income that is being deposited to my personal bank account. After establishing legal entities, I have created a business bank account and planning to divert all my rental income to new business account including from newly established single family rental LLCs formed under DST. My question is that can I use my online business account to transfer rental income to my personal account without any tax or legal implications. I am planning to use this rental income money to start paying off my personal heloc balance that I used to finance 20% down payment for all my investment properties and eventually use heloc again to buy new rental properties

@Arlan Potter you guys are really lucky, personally I don't believe in having luck when Murphy's law is also there. The first action I did after buying multiple properties was to contact a RE attorney firm, recommended by BP, and they helped me create legal structure for my present and all future properties. Yes, it cost money, actually a lot of money initially, but I never wanted to start my RE career just to lose my sleep. Now every time, I have a new rental property, I forward the deed info to them and they create another LLC under DST (I am based in CA and that's works best for me)

Just had my 2018 taxes done, it was my first year as real estate investor and for better part of the year, I was working to increase my real estate knowledge base by attending both paid and unpaid seminars, reading real estate books and blogs; subscribing to tools and obviously getting BP pro membership. I am fairly good in bookkeeping and recorded most of my real estate biz expenses in my tax spreadsheet. I am also running a online distribution biz and that’s how I learned to keep track of my biz expenses and mileage. I didn’t buy any properties in 2018 but now I have 5 cash flow rental properties that I brought during last couple of months. To my utter surprise, my CPA didn’t allow me to deduct any of my real estate expenses from my W2 income although he deducted expenses from my online distribution biz without any issue. His assertion was that as I am not a licensed RE agent, I can’t deduct any training or tools expenses in 2018 considering I don’t have any RE based income in 2018, however once I have rental income to report in 2019 taxes, then all these expenses can be deducted. My question is if my CPA got it right as it caused me about $1000 of additional Fed taxes in 2018 that I could have saved otherwise.

Thanks a lot guys, it was really helpful 

@Kevin Hunter great tips, will try them too to get a desirable result

@Dave DeMarco Thanks a lot, will definitely give it a try, are your properties under legal entity too.

@Kyle J. Thanks for the valuable input, it’s a great point and I will definitely look around to see what are my options

@Sami Gren these are midwest properties and the purchase price was lower than the threshold for mortgage to be feasible