All Forum Posts by: David M.

@Vu Le

Not sure what you are asking.  You shouldn't be applying for two loans simultanously.  If its the same loan product, you are looking at the rate terms (interest, points, lock time) and lender fees.  Pretty much everything else is out of their control.  Even the rate terms can change daily, and for example dependent upon the rate lock time.  

To me in the end, I am looking for the loan officer that provides the best service.  Unfortunately, that may require doing a deal or two --- as with many profesionals/trades.

Good luck.

@Sara Habtom

J Scott's book pair about flipping and estimating flips was pretty comprehensive and no upselling.

Amanda Han's two books on tax strategies were also pretty good starters.  Honestly, never read the first I believe as from the ToC it was too basic for me.  The second book didn't have much, and there was one glaring error that's already been talked about too much --- sorry, forgot what it was now.

Good luck.

@Joshua Bailey

You are doing LLC per property for accounting purposes. Actually, you have it backward. Your accounting, really bookkeeping, should done with your accounting/bookkeeping, not your LLC's. This is almost like saying you open a restaurant and need to make separate bank accounts for payroll, utilities, customers, taxes, insurance, repairs, supplies, food, etc....

Learn to do some bookkeeping and it will make your life, and your accountant's/cpa's life much easier.  Its nice that information is electronic nowadays.  However, they still haven't yet removed the bookkeeping aspect.  Maybe with this advent of AI, but not yet.  we had another a short while ago post where OP said their accountant gave them back all their receipts and wanted them to sort it themselves.  It wasn't worth this time.

Look around BP. This LLC comes up many times. Also, some of it only matters with regards with what you are doing. e.g. anonymity maybe nice, but I don't invest in areas where that is necessary...

I've done all my rentals under my personal name. MUCH easier cash management and can leverage conforming loans (remember, legal entities such as LLC's are NOT eligible for conforming residentials loans, so no complaining about having to use commercial lending). Even with a LLC, it still comes back to insurance to protect your assets, especially when it comes to legal fees otherwise you'll go broker defending your LLC.

Note: I keep seeing comments about single member LLC's providing limited protection. Sometimes they'll cite that it is a "disregarded entity." That's a taxation status, nothing to do with its legal status. Beyond that, I've never heard of a valid, legal reason.

Even with anonymity, its pretty hard to maintain.  Somebody has to sign documents.  So, you have to be able to avoid signing a publicly recorded doc, and should really avoid even non-publicly recorded docs.

LLC's have their place. Not saying you shouldn't have them. But, realize there is a cost to them (not just a state filing fee).

I think as mentioned, realize what/how much you are trying to protect with the LLC. A bunch of properties leveraged to the hilt won't have that much equity to protect. You are just protecting the lenders really at that point.

Hope that helps some.  Happy to chat.  Good luck.

@Shannon Conklin

I think some terminology, but this isn't a flip.  It sound like a rental that you sold after ~18mo...

To defer capital gains and depreciation unrecapture, you would use a 1031 exchange.  However, you should really check what is your actual tax liability.  Your reno's should add to the cost basis.  You have very little depreciation.  Also, sounds like you'll have a bunch of Passive Allowed Losses (PAL).  If you have any other capital assets to tax loss harvest that would help, too.

You don't recapture the salary/pay...  You can't get paid for your "sweat equity."  You actually get paid for it via the lack of expense so its more capital gain "profit."  If you got "paid for it," it'd be an expense which would go to adjust your cost basis.  Think of it that way...  At least as capital gain, its more tax efficient than taking a wage.

Sounds like you need a new accountant.  Good luck.

@Steve Smith I know using self-directed retirement accounts is pushed pretty big, but my understanding from accountants including my own is that people tend to get themselves into hot water with them.  My accountants won't even touch them because its not economical for them (even if billing by the hour) nor their clients.

If you want the kid's Roth to grow, consider how to generate earned income for them.  Even better if they already have decent to high salaries already sicne their SE/Fica responsibility will be covered.  Have their earned income be self-employment.  Use something like a self-employed 401k to max out their contributions.  I think the yearly limit now is ~$70k, the initial $20k then the rest at 25% of income.  Pretty much the only way to get funds into a retirement account is via earned income.

Of course, growing it inside an account is a different issue.

With those additional properties you say you are helping your kids buy, are you putting your name on Title?  At least even joint ownership will help partially with basis step up.

I know real estate investors are a huge fans of 1031, but I like my liquidity.  Also, people become spiteful about paying taxes when its sometimes cheaper to pay the tax -- already had a real life example with another person's post.  Also, depending on your situation and asset, sometimes the tax isn't as big as you think, especially if you have decent amount of PAL.  It could be cheaper to sell, then re-leverage.

Hope at least some of this helps.  Maybe you know all this already.  Good luck.

@Olivia Cannizzo

When you say you are moving, are you moving far?  Long distance landlording is a different type of investing.

We've had long threads about "cash flow not being king..." Its fine that you break even a bit. However, do you see the area appreciating? REI is still equity speculation that the area will appreciated, and your rent will keep up with costs. However, it seems as though you will be losing money every month if similar properties are renting for less than your upfront costs. Unless you can handle that shortfall AND you seriously believe the area will appreciate, probably not a good idea.

Check to make sure that the HOA will allow rentals.

What does your rental market look like?  Will the townhouse be desirable as a rental?

How old would this community be?

Even if you purchased this townhome, how are you financially able to purchase the next home?  Have you thought this through?

Hope some of this helps.  Good luck.

@Kristine O. This is where I don't understand the allure of a pm --- yeah I self manage...

The agent will take all the calls and get the screening info..  showings can be done by the tenant's agent...  At least for me, if they can't afford the commission for the agent, then probably they can't afford my place... etc.

I need something repaired??  When i started here, I didn't know anybody.  But a good agent has plenty of trades on speed dial.  If not, the agent can ask other agents, and so forth.

10% pm fee...  Why?  My agent has gotten all the commissions from my transactions, and over 20 years about a couple dozen more transactions from my tenants (many leave to buy something).

@Andrew M. All good, I've posted before (in other threads).  Mix of all of the above.  Its been over 20years..  There are classes of income/dividend producing securities (i.e. 10%+ yields) that are doing really well, so extremely passive and extremely liquid.  Wanted to go more passive.  Don't hae to think about / worry all the various deferred taxation with equity real estate investing.  

Its finally a good time for me to move onto debt investing.  Its funny in that in many ways, even starting in debt investing one can do very well, as well or better than equity investing in real estate.

@Kristine O.

No problem.  Does your market use real estate agents for rentals?  Mine does.  Tenants pay the commission.  That helps cut down on the time involved.  I know there is an "anti-agent" sentiment on the boards, but if you can find a "good one," it can be a real benefit.  I looked around for 2 years until i found mine.

Hope this helps.  Happy to chat.  Good luck.

@Kristine O.

Are you self-listing?

You can do either way.  Find out which works for you.

Pre-screening might be nice with this strong rental market.  Keeps just anybody from showing up and wanting to see the unit.  Saves you time in doing showings.  However, just make sure you either fully screen them ahead of time or be clear that its just some sort of pre-screen.  For example, I'd make it conditional on proof in income/employment, etc.

You MIGHT also see if there is a customary practice in your market area.

Good luck.