All Forum Posts by: Brendan M.

There's a very good chance youre paying more than you have to for your internet, phone, or cable bill, and it only takes a few minutes on the phone with your provider to reduce it. Story time: 

I just signed up for Comcast internet a few days ago and the guy on the phone quoted me at $39/mo for 12 months. Got my first bill and paid it without taking too close of a look, then later realized I was being charged $59/mo for internet. So I just called Comcast and they tried to convince me that I was paying the correct rate, but I told them I had a screenshot of their promotional rate at $39, which is what I signed up for. The guy on the phone either pretended to or actually had no idea what I was taking about but after I insisted it be fixed, he transferred me to Customer Retention. She was much nicer, and willing to work with me, but also clever in that she tried to pretend like she was unaware what the advertised rates were, or that maybe I signed up for a slower service for that price. After further insisting that was the service and price I signed up for, she conceded that she could give me service at that rate. Further, I made sure to request a bill credit for the difference for the month I already paid, and somewhat surprisingly she obliged.

Best part about this whole process is that you don't have to be a new customer or have a bill error to lower your rate this way. Cable, internet, and phone bills are all negotiable, and your provider will try to get away with as much as possible until you call. If you see a lower advertised rate either from your provider or a competitor, or if you just feel like you're paying too much, call and ask them to match the rate or lower you bill. They'll probably initially push back saying that rate is for new customers only or some other BS, but some variation of the line "I'm either going to have a lower rate or your going to disconnect my service before I hang up this phone" is a pretty effective tactic. Keep in mind if you stay with your provider for a long time you might have to make this phone call every few months if you see your rates have been hiked up. By extension, if you haven't called your provider to request your rates be lowered in the last 6 months, you're almost certainly overpaying for your service.

Lastly, be firm but remember to be nice. You're talking to a human on the other end of the phone who probably gets paid a fraction of what you do just to get yelled at by disgruntled customers. It's not their fault their employer has predatory policies. Not only will being nice keep it a low stress experience for both of you, but your more likely to get the person on the other end to empathize with your concerns. 

Remember, cash flow is cash flow, whether it comes in the form of saving $50 on your monthly bills with a phone call or squeezing another $50/mo out of your rental. Don't get too hung up on increasing profits that you forget to consider your own expenses! Even if all this fails, at least you got out of out some good, low stress practice in negotiation, which goes a long way in real estate investing! Has anyone else employed this tactic with much success? What other expenses have you found are negotiable?

Thanks, @Jon Holdman. I wanted to confirm what you said both for myself and for other people who read this with the same question, so I did a bit of research to come up with the below example:

If I make $10,000 a year from my property, do not pay myself to property manage, and I'm taxed on income at a rate of 25%, I'll owe $2500 in taxes on that, and keep $7500.

If I instead pay myself through an LLC to property manage at a standard rate of 10%, I'll pay tax on $9000 at 25% ($2250). My LLC for PM would be taxed as a sole proprietorship unless I had other employees, which would equate to being considered just another source of regular income for me, meaning the $1000 I paid would be taxed at my individual income rate (25%) for a total of $250, meaning I would still only keep $7500.

However, if I had more than just myself employed by the LLC and made less than $50k/year, I would only be taxed at 15% on the money I allocated for PM, or in this case, $150. So effectively I would gain a 10% tax advantage by paying my LLC to property manage vs just taking the profits as personal income.

I'm sure things get much more complicated than this, but could anyone confirm is this basically the gist of it?

At this point I don't have an entity, but I was thinking of setting one up, specifically for the PM side of things if I could manage tax benefits that way. But if there's not going to be any tax advantage I'm not sure i'd see the point. Is there a way to do this legally that would provide a tax benefit?

I just bought my first multifamily property and I have been thinking about how to maximize my tax benefits on it. If i can write off property management fees as an expense, can I pay myself (either as a sole proprietor or LLC) then write that off as an expense as well? Would the tax benefits of writing it off as an expense just be balanced out by having to pay tax on it on the receiving (PM) side? Thanks!

Welcome to BP! I'm just a jump away in Colorado Springs, feel free to message me if you want to connect or have any questions.

@Cory Barfuss, I would definitely recommend expanding your search if you want to increase your odds of finding a solid deal. That said, no matter what method you use, you'll probably have to sort through mountains of crap deals just to find a good one.

@David Hoult- Insurance (2160/yr), taxes (970/yr), and water (2400/yr) were wrapped up in my total operating expenses but didn't specifically itemize them there on the first page. Vacancy assumption was 5% - for every year of occupancy per unit, if I can fill turnovers in under 18 days, I meet my vacancy threshold. And I agree with you that it's not the best deal in the world, however for my first deal the numbers worked well enough that I'm making a small bit of cash and at low risk of getting burned. Everyone has their own metrics for what is good enough to go in on - for me this was good enough to bite.

@Rich Ferradino - That's good to know with the disability and funding fee, though I don't think I have anything at this point I could claim as a disability. For the zoning, I didn't expressly look into that with regards to the water, but after reading a bit on Colorado submetering legality I should be in the clear legally. Financial viability will depend on a number of variables, and I think there are a number of options here.

@Caleb Charles, I don't 100% understand the ins and outs of what numbers were pushed around to allow me to end up so far in the positive on this. I do know it was primarily the result of both having the seller contracted into paying $XXXX in closing fees and my mortgage broker providing significant cost reduction and concessions (as a result of allowing two mortgage brokers to compete against each other). There were no actual funds given to me (you can't technically do that), at closing I was given four checks: One was my earnest money back, the other three were checks from the title company written to my banks to pay off my loans, credit cards, etc. I had to then mail them in myself to get my debt paid off.

@Jay Hinrichs - I do what I can, but sometimes people just hear "Free home, free income!" when they think of the VA loan and it's hard to convince them there's more nuance than that. I had a conversation with someone earlier today (military) who had bought a second SFH a few months ago and was renting out his first. He proceeded to explain to me how amazing his property was cash flowing since his mortgage was only $950 a month and rent was $1100. He then told me his property manager was taking care of everything for him for only 10%. I tried to explain to him budgeting for maintenance, and his response was "That's what security deposits are for!" Unfortunately REI just isn't for everyone...

@Jared Wilson - Thanks! You certainly can take out more than 1 VA loan at once. There are a few caveats though. First, you're limited to the max VA guarantee limit, which is determined why the cost of living in your area - this ranges from $417k (normal) to over $1M (SF Bay). You can buy as many homes as you want for 0% down up to that limit - if you go over you have to make up the difference with your down payment (or a secondary means of financing). Second, you have to live in your house for a full year after purchase before you're eligible to move or take on another VA loan. Third, VA will not lend on homes over 4 units.