All Forum Posts by: Daniel Dietz

I just talked to our local guy here, a small community bank, and they are at 4.875%, locked for 10 years, with a max increase of 1% per year in years 11-25 and a total increase max of 6%. 25 year amortization and 20% down. DSCR has to be 1.2 or better. They only lend in our area, but gives you a great goal of what to shoot for. Most people can not find as good as terms for a long term hold, but you can always have a target to reach!

Dan Dietz

For you tax pros out there, is this how it works are far as 'brackets' go, I very rough numbers?

If we have 40K of ordinary/W2 income, and then have 40k of capital gains that capital gains is 0% since we did not 'go over' the income limits for the 0% CG tax bracket.

But, if we have 40K of ordinary/W2 income and then have 80K of capital gains, HALF of that capital gains would still be taxed at the 0% rate (up to the aprox 80K of total income limit) and THEN the 40K that is ABOVE that threshold would be taxed at 15% capital gains, since IT is the amount over the 0% threshold?

Thanks, Dan Dietz

I think @Lamont Chen has it right. When you use the BRRRR Method,it means, in order, to Buy, Rehab, Rent (subsitute living there yourself) REFINANCE, and THEN Repeat (meaning buying a new owner occupied).

Dan Dietz

@Andrew Postell or others,

An tips on if/how depreciation can be 'added back' when all of my properties are in multi-member LLCs that I get a K-1 for? I am working on refinancing my primary right now and a couple of lenders told me it can't be added back from a multi member LLC. Is that accurate in your experience?

@Derek Dombeck I think hits the nail on the head on all points.

I think where you are getting the wrong balance is counting the interest, which is roughly 2/3 of each payment at the start, as going towards reducing the 'principal', which is incorrect. I come up with the same figure as Derek using a simple loan calculator.

Dan Dietz

I just used my local Community Bank and had no problem. If you have any on your area I would check them out. 

Dan Dietz

One option i remember reading about on here quite a few years ago when you get that "I dont want to pay ANY taxes kind was something like this -

Lets say he wants 100K, and IF he could sell with not paying taxes he would carry for 20 years @ 5% for a total payment of about 160K over those 20 years.  Let's also say his tax bill might be 20K on that. 

Tell him you will write the check for the 20K taxes (as a down payment) if he carries the 100K @ 2.5% instead of 5% for 20 years. Your 20K down and payment over those 20 years is about 150K, instead of 160K. It a win win. He pays no tax, gets all of his money back and a nice income steam as good as CDs for 20 years.

@Brian Eastman or other Pros who would like to chime in - Ffrom what I hear you saying, it sounds like things can be pretty flexible as long as staying clear of Prohibited Transactions.

Under that assumption, in general would a deal like these be doable?

1) I personally (not my SOLO401K) partner with "John" who does use his SDIRA or SOLO401K to fund the down payment. I find the deal, arrange financing, do all management and ongoing PM. His retirement account signs the loan  with NO personal guarantee from him, and I personally sign the loan and a personal guarantee. We split all proceeds 50-50. Summary is that I & his retirement account have "unequal capital contributions" but split proceeds 50-50.

2) Same situation but reversed - *I* use my SOLO401K as a 50% partner, "John" uses his personal cash for down payment. I do the finding of property and book-keeping etc... Is this different that #1?

Thanks, Dan Dietz

I know there are lots of thread on here about 'software based' CSS that are MUCH cheaper. If you search you will find them. If I remember right a couple I looked at were under 1K and carried a 'guarantee' I believe in the form of the company coming and doing a full blown CSS for you if needed in an audit. @Lee Ripma I think is who might be able to point you in the right direction, as I think she uses those type. Might be a good fit for you.

Dan Dietz

@Quinton Bogle they are all set up as what is referred to as "pass through entities". What this means is that the LLC pays NO taxes on income/profit, but that income "flow through" to each of our Personal Taxes.

For example in one of the 3 way LLCs, where we each own 33% (that does NOT have to be even parts, we just chose to do it that way) if the LLC makes 30K in profit, 10K flows through to each of our personal taxes. The same applies to paper losses which are common with rentals.

I have heard that some people set them up with flow through distributions that are NOT even to % of ownership. An example might be where one person puts in all the funds and another does all the work on a flip. They might see it up to return something to the equity, something to the labor, and THEN split what is left. 

This is very similar to how a Single Memebr LLC I believe.