All Forum Posts by: Brian Schmelzlen

I think a cash out refi can be a good idea IF you carefully analyze the deal to make sure you can cover everything in the worst case scenario. However, I am not a fan of ARMs. I think you should lock in a rate since they are likely going to be much higher in the future.

While you can set up a retirement plan through the S corporation, your total contributions to it are capped by your contributions to other retirement plans. You cannot max out 2 401(k)s.

Hi KJ, It depends on your timeframe. If your real estate investment will be more than 5 years off, then you should consider index funds. As a general rule (as I have been told by financial advisors), you should not put money into the stock market unless you are planning on leaving f it there for 5 years. If your investment is 3 years off, I would consider investment in a note fund that has a 3 year maturity. Obviously this can be risky, but good returns. For anything shorter, I would use savings accounts with high interest rates (for savings accounts). My online bank now pays 1.5% which isn’t great for an investment but is good for savings accounts.

I would refinance it so that you have the option to positively cash flow. Of course this does not stop you from choosing to make the same mortgage payments you have been making in order to get the property paid off.

In terms of structuring the deal, I would suggest contacting a local business attorney. This person will be able to help you identify potential issues in the agreement, and would have useful connections to other professionals for you.

Michele provided good information about how to generally determine whether it is a repair or capital improvement. However, there are 3 safe harbors in the IRC Regulations to be confident that you can classify certain expenditures as a repair. I am going to over generalize these below (talk to your CPA): 1) De Minimis Safe Harbor. If an expenditure is under $2,500 it can be deducted as a repair. An election must be made to qualify. 2) Small Taxpayer Safe Harbor. Qualifying small taxpayers can deduct all improvements and repairs as repairs if they make this election. This is basically a threshold test (if total expenditures are under the threshold you may qualify). 3) Routine Maintenance Safe Harbor. If you reasonably expect to perform the same repair again within the useful life of the property (but not greater than 10 years) it is a repair.

Personally, I would create an amortization table and figure out at what interest rates and amortization periods you can handle the debt service. Figuring that out will go a long way to determining how to structure things.

Apartments (5+ residential units are considered commercial), office buildings, retail (strip malls), etc.

Hi John,

I like the Hemet area; I have family there.

With your plan of purchasing a duplex, are you planning on house hacking it (living in one side) or is it a pure investment?

Welcome to BiggerPockets.

@Ethan Aycock

All the suggestions so far have been good, but I would consider finding a local investor and trying to work for him/her (as an independent contractor).  Let the investor tell you what you can do that would create value for him/her, and do it (for an agreed upon amount).  Whether its painting houses, or finding deals, or anything else if you work for a local investor you will quickly learn a lot that will help you in your real estate career.

If you are not going to college, I would at least consider taking relevant community college classes.