All Forum Posts by: Dan Cournoyer

@Michael Plaks alright good to know.  Thanks man

@Michael Plaks yeah i was trying to list out a few examples of expenses that may be related to multiple rentals but may not be captured under one specific rental. If i do a deal with Investor A 50/50 for one property and another with Investor B 50/50. Neither of those LLCs are going to pay for half of my phone bill or driving to new deal locators with Investor C. Forming a new LLC would allow someone to open a business checking account and track all of those expenses under one umbrella. I agree they are deductible either way but this will likely lead to someone actually taking the expenses and savings tax down the road.

In addition, if someone is paying $1,000 for their 1040 tax return with 6 K-1 pickups, they could use that same accountant to file a 1065 and 1040 for $1,100 and charge the 1065 (holding LLC) a large portion of that expense. Deducting those fees will go away in 2018 with tax reform so I'd argue there is possibility for tax savings especially with the increasing number of properties.

Hopefully this helps someone track more expenses that they ordinarily would have eaten as a personal expense.

I've found that Grand Rapids, MI is a fantastic market to invest in. I'd do all the research and see if the numbers line up for your goals. I'd be willing to bet you could find some great SFR, duplex, etc that aline with your strategy.

Good luck!

I agree with @Aaron K., using an online bank like Ally or SmartyPig (SallieMae) is probably your best bet.  You can get CD rates at local banks or credit unions at around the same rate too.  CDs are great because you can get high interest rates and the only penalties should be losing the interest.  Throw it in a one year and if you keep it in the CD the entire year you'll make roughly 1k in interest.  If you need it before the maturity of the CD then you can pull it out immediately and you'll just lose the interest you've accrued (or a portion of it).

A more risky approach would be investing a portion (maybe 10k) into a stock fund like SPY.  You can use Robinhood for free trading.  If you don't need this money I'd argue that you should buy some stocks and if they grow then you can use the full amount for real estate in the future.  If the stocks drop just keep it long term and it should eventually recover (it always does) and you still have the other 50k sitting in CDs for your real estate when you want it.  Even if the market goes down 10% which would be a lot, you still have 59k overall.

Hope that helps. Good luck!

I dont think anyone has actually given any tax savings tips yet so here are some initial thoughts. Start a holding LLC that holds all your other interests in rental properties. It can be 99% owned by you and 1% by your wife or parent. It's much better to run expenses through a 1065 return than a 1040 return. Also you'll have K-1 pickups on your 1040 rather than schedule E/schedule C (always a better move). This also gives you the option to flip income to your wife at a later time if you want her to have higher income to qualify for a mortgage when you're tapped out (not tax savings but good to have the holding LLC).

You can also have your tax bill charged to the holding LLC for a portion which is tax deductible while your 1040 tax prep fees are no longer deductible with tax reform. Other random expenses could be included like a portion of your phone, wifi, travel, or other LEGITIMATE expenses related to running your real estate as a whole (and not to specific properties). Training and learning expenses related to real estate as a whole such as subscription to BiggerPockets, books you purchase that you're studying to learn for real estate, failed deal expenses, business cards, and more.

Hope that helps and good luck!

I'm not an insurance expert or a lawyer, but I would imagine the homeowner insurance policies of the current owners would cover a tree falling.  I'd be very surprised if someone could sue a previous owner from over a year ago when a tree falls from a storm.  Again, I don't know from experience but I think you can sleep safe at night.  Sounds like the neighbor was just pissed at you and now you're out of the picture.  Hope you never hear from him again haha

My first reaction is shock that you could buy a place for 25k, put in only 25k of renovations and the value would be 100k. I don't know your specific market, but that's the number I would focus on. Maybe you've done the research on comparables and it does make sense. The rent and expenses seem reasonable, if value is 100k then rent for 1,800 makes sense. I would build in a reserve fund for your cash, instead of 53k I would budget for 60k-70k at least in case you run over on rehab or during the 6 months of rehab you have utilities, property taxes, etc. Looks like the perfect property to BRRR after you rent, pull your original 50k out and lock in a low interest rate so you leverage up and make even more return on your money. If your numbers are right this is an incredible deal. Be sure to get a really good sense of what would need to be done and do as much detail as you can projecting that rehab cost. Good luck!

Real estate taxes are public record, you can call the assessor's office to find out.  I can't post a website link or phone number in this post but the number ends in 3081, you'll see it on their website.  Insurance you can get a quote from an agent, I always call the same person I used on my last policy.  Water is definitely harder, especially if you haven't owned something the same size and tenants can be drastically different.  Will you be passing on the water bill to the tenant? If not, you likely won't be using much water while rehabbing or renovating (couple hundred max for a few months??).  Probably a negligible amount.  If you are eating the cost of water while having tenants then it really depends on the property (baths, efficiency, sprinkler system, etc etc).

Good luck!

Welcome to the BP forums and good luck with your upcoming wedding!! I hope everything goes smoothly with the duplex in Detroit. -dan

Hi everyone, Working on my second rental, currently have an accepted offer. I’m planning on purchasing the condo with my name on the mortgage and title then transferring title to an LLC that I own. I understand the general idea behind “subject to” (I think). There’s a risk that the bank can require full payment since title has changed hands. Everything I read says if I pay every payment on time there’s no reason the bank would call the loan. Has anyone experienced a “subject to” call by a bank? Any tips for me that maybe I’m missing? Thank you everyone!! Dan