All Forum Posts by: Jonathan Plant

Rembert,

Can you send me the numbers? Cap rate, comps, asking price, county appraisal, taxes, what expenses does the owner hold, NOI...

What are the responsibilities of partners, how is the profit split? How much are you trying to raise?

Dido what Joshua just posted.  I had to show a property management contract proving that it is a rental.  It was vacant and under rehab, but I quickly put it under a rental contract with a PM.  If I didn't have that, I couldn't get a loan through the bank I was using.  Plus, I had to have held the property for 6 months. 

There are definitely portfolio lenders out there that have different qualifying standards compared to the traditional banks.  You can try and locate a "Portfolio Lender" in your area.  This is typically a small town bank...

Like Kelly said, Dave Ramsey is there to help people get on the right track.  You have to start with your own finances first before you attempt to deal with business finances.  

If you have ever fully researched mutual fund companies, they keep their overhead costs low (consumer expenses) but they leverage (borrow $) and put it with your money to invest.  This leverages your returns as an investor.  Same with real estate.  

Just ensure your numbers are correct before diving in...

Happy hunting:)

So many items come to mind.

- What city are you heading to?

- What source will you use to locate properties?

- What source will you use to research location/properties/property managers?

- Do you have a checklist for acquisition?

- Do you have an exit strategy?

...

Jon

You can as long as you have the required funds plus room in your debt to income ratio to back both at the same time. The required 20% plus the 6 months of expenses required for BOTH. What if your contracts get accepted at both and you DO NOT have the funding to support both? Loss of reputation plus down deposit/earnest money to start. I suggest concentrating on one solid deal if that is all you can technically afford at this time. If done well, you can increase to two solid deals in the future. Remember, there will ALWAYS be opportunity out there. Just be prepared to accept it when it comes.

Thanks Alex for your input.

Jon

Thanks for the reply. The rental just started this month so it'll be on next year's tax filing. My single member LLC is looked at by the IRS as a pass through. Like you suggested, I sat down last week with my CPA to go over what I've done so far and she did suggest getting the TurboTax at the store so I can run various scenarios. The overall time and cost this year would be too much. Looks like I've completed everything good so far on TurboTax. I have a lot of itemized deductions so I don't want to start all over this year with my CPA. Thanks once again.

I’ve been reading Napoleon Hill’s "Laws of Success."  He suggests using a Master Mind group.  Has anyone been successful understanding the philosophy, pursuing people with likeminded goals and having a successful venture with this process?

What was your process to finding such people?  Any tips on the process would help.  Thanks.

Jon

Abou, I am not sure if you had this answered or not but, this is the basics that I use.

• Community:
  • Using google maps, zoom to street level to ensure subject house is what is expected.
  • Using Zillow.com, locate local school ratings.
  • Using city-data.com, find out if the city is decreasing in populous.
• County Records:
  • Using netronline.com, locate the county assessors web site and look up property.Verify that the information on the listing coincides with what the county records say.
  • Call assessor’s number to find out what agency the county uses to ensure title is clear of liens.Every county has their own process specific to them.
• Comparable sales:
  • Using the “Recently Sold” link on Zillow.com, make of list in excel of the properties that have recently sold within the last 12 months using same criteria as subject property.Compare your property with comps.
• Rents:
  • If flipping, you need this information just as an exit strategy.Using apartments.com / rent.com / trulia.com / local real estate agencies (Century21 or similar) to locate comparable property rents.
  • If renting, this will tell you what you need to get the property for in order to profit.
• Run the #s:
  • Using your risk factor, calculate all of the following:
    • Purchase closing costs, utility connection costs, utility hold costs for 6 months if vacant, property insurance for 12 months, initial construction costs after purchase, rehab costs (if any), selling commission (if flipping), selling taxes forward to purchaser upon closing, your expected profit after sale or monthly break even cash if renting.
• Your drive to SUCCEED:
  • You must have a written plan for this property along with two minimum exit strategies.
  • Have your overall goal repeated on a daily basis. This will drive your ambition to stay focused on making good decisions to help you succeed.

I wish you the best on your GREAT REAL ESTATE ADVENTURE!

Jon

Hi Gary,

If your current EIN was filed under "Single-Member or disregarded entity" and you are "acting" like a partnership, you need to file a "Corrected EIN" form with the IRS. My CPA had to do this for me because I did the opposite. I filed for an EIN on my own as a partnership LLC, because this was my original intent, but ended up operating as a "Single-Member" LLC for the tax year. She filed for my corrected EIN as soon as it was caught the summer before filing. It takes a while for the IRS to correct the EIN and send you your new EIN number in the mail. I suggest filing for an extension to have this corrected so that you can file properly and avoid being audited.

If you file using the Partnership LLC Schedule K-1 IRS Form 1065, you and your partner should show your pro-rata income, credits and deduction here.

Check with your state requirements through a CPA just to verify what I said was correct.  I am not a CPA or a tax professional but have learned a thing or two over the years.  It is not wrong to meet up with a different qualified business CPA also, that is familiar with RE Investing, just to inquire.

Good luck and I hope this helps with your next step.

Jon