All Forum Posts by: Bob Norton

@Account Closed You don't need a college degree for real estate investing.  The books published by BP are better than any college degree, so you can learn all you need for real estate by reading, networking, and doing.  Keep in mind that building wealth through rental real estate is a long term strategy.  So, having a good job will help with cash flow in your earlier years and a college degree may help with that.  If you decide to complete your studies, then I would recommend a business/finance/accounting degree, which would help you in running your real estate business.  You could consider getting a real estate license, which you don't need a college degree for, and then you would be working in real estate while building your portfolio.

@Christopher Lane To answer your question about a CPA in each state, you don't have to do that.  A good CPA can prepare tax returns for any state in the US.  So, you should look for a CPA that works with real estate investors, preferably one that also invests in real estate, and that has experience preparing tax returns for other states. 

@Christopher Davis It's all about cashflow.  If you break even in cashflow with your reserves covered, which means you have positive cashflow but have to set it all aside for reserves, then it may work, because you are getting appreciation on the property, amortization on your loan, plus rents will increase in the future.  But, why invest money in a property that is only break even on cash flow initially (no money down with owner financing would be okay)?  I would recommend that you look in other markets within driving distance of Nashville, where you can find better deals.

@David Nacco You should consult with your CPA for your situation. I work with a lot of realtors. I recommend that they setup an LLC and when they expect their net earnings to exceed what a reasonable salary is for agents in their region, then I recommend electing to be taxed as an S-Corp, so that they can set their salary to the reasonable amount and fix their SE tax at that level.

@Trina P. Are you using private lending to refinance in Huntsville or for buying your next property?  Private lending can be any terms that you negotiate.  Some private lenders don't require you to put any money down, that would be your choice.  Hard money lenders, on the other hand, have different requirements and may require you to put money down.

I still think paying that much in closing costs for refinancing for so little doesn't make financial sense.

I like @Shannon Wright's idea to get a line of credit on the house in Huntsville. You could also attend local REIA meetings and network to find private lenders that would be able to lend you $15k (or more) at a much lower rate than you would be paying to refi your AL property. Doing small private lending deals will develop into larger private lending deals as the lenders build a relationship with you and find out that you keep your promises.

@Karoline Ussery Quitclaim the property to yourselves. It would be a non-taxable distribution. When you decide to rent it later, then you can quitclaim it back to an LLC that you own. Your basis will be the cost of the property plus your rehab costs. This is the value of the distribution to you from the LLC. Check with your attorney and CPA to make sure there are no other issues you need to address.

@Trina P. Paying $4k to get $14k is a steep price.  Why are you refinancing?  If you have a low interest rate on the mortgage already, I'd hold off on the refi.  Let the property appreciate more and amortize your loan for a longer period of time.  If you need the funds now, then I'd recommend you look for a cheaper source than refinancing this mortgage.  

@Jake Lord One option, then, is to rehab it and rent it.

Will it cash flow as a rental?

Flood insurance is just part of the cost of the rental.  You can ask your insurance agent to look up the flood claim history on the property.  If the only claim was after Harvey, then it may be worth considering as an investment.  If there have been recurring flood claims, then the flood insurance will be higher and you will have issues in the future.  I would recommend avoiding those properties with multiple claims.