All Forum Posts by: Costin I.

@Luis Astudillo - I understand and I'm clear on the prepayment concept in the context of refinancing the loan or selling the property and squashing the entire loan balance. My question is: do you get penalized with the prepayment fee if you pay extra, like instead of just paying your monthly payment, let's say $1000, you add extra to the principal and pay $1,500 or more? 

@Derek Tuohy - here are my 2¢:

1. Get Quicken, learn to use it (set up categories and subcategories) and start tracking your incoming and outgoing, for both personal expenses and rentals. You'll be able to track everything, run various reports, and track your assets, liabilities, and net worth down to the dollar.  Or Quickbooks, but that is more for serious business, larger than a few rentals.

2. Get Nolo Landlord Deduction Guide book, learn how to use and track every deduction available to you.

3. If you are good with Excel, set up a spreadsheet to track expenses for rental properties, with filtering per property, date, note, account, etc. with columns matching the tax forms. PM me if you want a copy of the one I use.

 4. If you are not handy with spreadsheets, find a bookkeeper/accountant and prepare your checkbook/wallet for some serious deflation. 

Lenders, when we are talking about pre-payment, is that as in paying down the loan completely before the 5/4/3/2/1 period (zero balance), or any pre-payment (as in extra principal payments, monthly or periodically)?

@Saravanan Varadan - Here is a CSS Decision Diagram flowchart intended to bring together all the various questions when assessing the benefits of a CSS (via a professional or DIY). Hope it will give you some guidance in your quest.

@Chelsie Hall - I just finished a CSS Decision Diagram flowchart intended to bring together all the various questions when assessing the benefits of a CSS (via a professional or DIY). Hope it will give you some guidance.

@Max Couper- here is a nice collection on the same subject: Any-help-for-a-newbie-wanting-to-start-off-a-real-estate-adventure

Thanks @Michael Plaks. The IRS one is mind-bending, I hope mine is still digestible. 

I made a few tweaks - here is version 1.1 - please PM and let me know if you see any major mistakes, or misplacements or have any improvement feedback.

@Chris Dawson - I just finished a CSS Decision Diagram flowchart intended to bring together all the various questions when assessing the benefits of a CSS (via a professional or DIY). Hope it will give you some guidance.

@Melanie P. - CSS makes sense for smaller 1-4 properties too (150K-1.5Mil) and one can do it using KBKG.com or DIYCostSeg.com for ~$500. At that price is feasible and good enough for the small investor needs.

@Anthony Dupre - I completely agree with you. I often say the "specialists" will give you the answer/path with the least risk/effort and highest revenue for them, and not necessarily for you. Even from the good ones, the quality of their answer is dependent on the quality of your question (so educate yourself to ask the right questions in the right form...which is what I think @Max Bellino is trying to do here).

I don't know if Max can benefit from my notes and diagrams, or if they apply to his situation and plans, but since you mentioned them, here they are - just be advised this is from a lot of sleeping at Holiday Inn Express many years ago so take them with a big grain of salt and don't construe them as legal or tax advice:

If you are new to REI you should be primarily concerned with finding good deals and growing your business first. I would not suggest looking into establishing LLCs and asset protection strategies till you have at least $100-300K in equity (!) and only after you covered properly the "other" aspects of risk management (insurance, umbrella insurance, proper property management, etc.).

Unless you are doing flipping (or AirBnb), in which case I suggest you look into Series-LLC and you operate each flip in its own child-series (if not clear why, ask for more details).

Anyway, a lot of this is covered in my notes, and that should save you hours of research and hopefully clear some confusion as to why you want it and when and how. I spent numerous hours researching from multiple sources the whole LLC question and asset protection matter and all the rabbit holes it opens. I gathered all my notes in a 50+ pages document touching on the formation and maintenance of LLC and business structures, transferring assets, protection strategies, trusts, anonymity, insurance, levels of protection, etc. including when you should do it, how many properties per LLC, due on sale clause, selecting an attorney, fees, checklists and resource materials.

Doc: https://www.biggerpockets.com/files/user/CosIorg/file/tritoriam-file

Asset Protection Decision Diagram - to help assess the need for asset protection, and what to implement : https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-decision-diagram

Asset Protection Onion Diagram - what, when and at what cost one should implement in terms of asset protection - https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-onion-diagram-v2

What is needed for complete asset protection OR the domains that need to be intersected to find asset protection - https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-spectrum-diagram (this is more of a joke depicting the nebulosity of asspro rabbit holes).

How a fully implemented asset protection layout might look. - https://www.biggerpockets.com/files/user/CosIorg/file/asset-protection-structures (overwhelming and overkill for a newbie in REI)

PS. Read this book first - https://www.amazon.com/Every-Landlords-Property-Protection-Guide/dp/1413307000 - before getting into more complicated and expensive measures of protection.

Let me know if have questions or want to chat further - I can give you my investor perspective.

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