All Forum Posts by: David M.

@Kirk Roberts

In addition to whats been said.. LLC's generally don't provide any tax benefits for rentals... I think you need a new accoutant, or else your financial situation is more complicated..

A STR to me is still a rental....

The nature of flipping is that it will be part of your ordinary income.  No easy around that.  If you have sufficient income to max out your fica/se tax, then its really not "hurting" you.  You might look at a S Corp election so that only the "reasonable salary" that you pay yourself is subject to SE tax.  But, there are more filings and usually more accoutant costs.  So, its not always cost effective, especially if you have a year where you make no to little flips --- the corp-like filings are still there...

1031's are only for investment properties.  So, you need to actually rent it out and show that you intended to hold it for investment.  Also, for example if it takes you 2 years to flip a property, its still a flip and NOT an investment property.

Honestly, if you are paying taxes you are making money.  That'd be like saying you don't want to pay tax on your regular income --- so, you decide to stop working??

With flipping, its a high risk /high reward thing... and the downside as well..

That's fine if you don't want to be a landlord (other than str).  Just make your money flipping.

@Michael Moreno Stop the additional payments since you can't afford it.  Your financial freedom plan might need some tweaking if it relies on such a repayment scheme.  Also, there is much that can happen in the next 12 years.  You have a good rate rate, so don't be in such a hurry to pay it off and de-leverage.

Save up your funds and continue to invest.  Putting your funds into an illiquid asset that won't be providing additional returns/gains isn't investing.

I suggest using your plan as a general direction.  Hopefully, you will learn more about investing and develop additional / alterative plans.  You might even find that at some point you should actual sell that property and/or adjust your portfolio for your retirement.

Hope that helps.  Happy to chat.  Good luck.

@Steve Smith I just use the street numbers.  Its much faster to communicate/discuss with others, e.g. my realtor and supporting trades.  

@Seana Yates There you go!!!  Try to get as many different examples, especially from different attorneys.  See WHAT and HOW they address the situations.  I'm sure you'll be able to piece together a solid set of risks to manage.

@Wendy H..

I'm kinda minimal.  I walk through make sure that there is no obvious signs of damage, anything beyond wear and tear.  For my units, the main issue is whether I need to re-paint and/or replace the carpet.  I also check the furnace air filter.  For better or worse, either exiting tenant has the place cleaned or the incoming will do it (I never ask the incoming tenant, it just works it way into the conversation).  So, I've only had to get my cleaner in a few times.

My tenants tend to either be too nice or too scared to bother me with small repairs.  So, they are generally caught by the new tenant.  They understand that since i never lived there i never knew about them.  These are usually small things, like a slow leaky toilet, some loose handles in the kitchen, maybe the shower diverter isn't working well (we have very hard water here so its common).

While this is rather/sort of embarrassing, I THINK bBy getting them fixed quickly it actually shows that I a landlord that intends to maintain my properties and provide at least a decent place for my tenants to live.

To save a bit of money, I change out the locksets on the door myself.  I keep a spare set handy to just swap it out.  To provide a bit of extra safety, I then later get the lockset rekeyed.

Hope that helps.  Happy to chat.  Good luck.

@Seana Yates FYI, these issues/conditions should be covered in the Operating Agreement of the partnership.  Its the attorney's function to prepare the document well.

@Michael Hill Yeah, I know what you mean.  You need to have one of the cold weather heat pumps that operate below freezing.  Not very common until this new green revolution.  Previously, the idea was to use the mini-splits for A/C and some heat in the fall.  You were supposed to switch over to your main heating when it reached 40F-50F for the exact reason you stated.

https://www.canarymedia.com/articles/heat-pumps/window-heat-... according to this article, they say these are good to 0F

Sure, they won't be nearly as efficient, but at least they aren't using backup heating.  That's why I think the heat pump thing isn't the greatest idea for heating in really cold environments right now.

Good luck.

@Samantha Schiabor Will the property not qual for a conventional loan?  Will you close on the sale (after reno) within 6months?

A fix n flip type loan may be the "easiest" but a conventional loan will still be cheaper.  Better rate and usually no points.

Bunch of factors to consider honestly.  Happy to chat.  Good luck.

@Steve Smith Passive Allowed Losses

@Nicole Austin

Oh yeah, you might try AAPL https://aaplonline.com/ and NPLA https://nplaonline.com/ associations  There are the two that I know about.  However, I have had to hire attorneys to get my money back from a lender that was a member of an association.

Yeah, my attorneys didn't have answer to that one when they found out...  That association was useless in my situation since there isn't any enforcement/recourse --- honestly, to be expected.  Lets face it, bad apples can still join trade associations...

You just have to be very cautious...  Good luck.