All Forum Posts by: Daniel Dietz

I should have clarified that all of my existing properties are own in LLC partnership or SDIRAs, so conventional 30 year fixed rates are out for that.

With that said, as I am looking for more units that I would own individually I AM looking at the conventional 30 year fixed all the way! I am very close to having DTI issues with the conventionals though, and that is one other situation that the Portfolio loans can come in handy for.

Definitely check around. I have heard a lot of what is described by @Bill B. BUT that has not be *our* experience. 

With the local portfolio lender we use we CAN sell of a property as long as our LTV stays at 80% or lower, the Note is amortized over 25 years and is NOT callable early, although the interest is only locked for 10 years and can adjust after that. We can also use 'excess equity' in one loan as collateral for the 20% down on our next one if we want too (we have not done this yet).

With that said, these ARE some of the best terms I have heard of for this type of loan here on BP or elsewhere :-)

There is an owner of a 40 unit complex that a friend of mine just bought a 14 unit from. My understanding is that he use to have hundreds of units but down sized as he got older. The 40 unit is the last one and worth around 2M. His wish is to donate it to his Alma-mater (he just made a multi million cash donation already) but they 'do not take physical gifts'. He is around 80 years old, in great health.

What would be a creative way to buy this with seller financing where most of the value would eventually go to the university as 'step up basis' if set up right in his will/trust?

My initial thought on the simple side was to do a seller finance at say 5% with 30 or more year amortization with just enough down to cover his depreciation tax, if he wanted that. It seems like the more that is financed the more that might pass on as a stepped up basis, if my thinking is correct?

I was not sure of there would be more 'creative ways' to do it such as maybe where he could donate the 'seller carry note' to the university since that would not be physical property? 

Thoughts?

I will throw in a vote for Rentec Direct. We have been using it for a couple years for tenant management side of things and doing accounting in Peach-tree Accounting which we use for our 'day job' business, but it is overkill and not easy to use without an accounting background. We are just this year switching over our accounting to Rentec too, and it seams like from the reports we can give to our accountant it is everything we need. We DO have to use the Property Management version, as we own our 30 unit in 7 different entities. Essentially we treat each entity as a different property owner. 

I am part of 4 different LLCs that hold rentals (cash, retirement funds, mixed partners,etc...) All of our operating agreements have some for of what @Jaysen Medhurst eluded too. Our intended hold period is at least 10 years. If we need to sell before then the funding partner would get all of their down payment back FIRST out of any equity and THEN we would split things 50-50. If their is a loss at that point they loss some funds and we get nothing equity wise. 

We are hoping by the 10 year point, there would be enough appreciation and loan, and that rates are still reasonable, so we could 'cash out' the private money partner if they so choose and we would take over. 

Dan Dietz

We had been using Peachtree Accounting for 30 units across 14 properties and 7 entities! Some of those don't require as much accounting as others since they are in SDIRAs and SOLO401Ks. 

We are in the process of moving everything over to Rentec Direct which we use for all other aspects of PM. From the 'sample reports' we gave our tax guy he thought it would work fine. We do not do our depreciation ourselves, the tax man takes care of that for us. 

What all might we be missing using this program compared to a 'accounting program'? We find the more we can put into ONE program the better in most other aspects.

Also, our tax guy is around $900 for about 20 of those properties spread over 5 entities. We do give him VERY good, clean, accurate numbers to work with along with a written explanation of anything that we did as far as capital improvements so he knows what can be written off sooner etc....

Hello All,
I am well under the income threshold to be able to take the up to 25K in passive losses on my rentals right now. However, I am looking at some larger properties and doing Cost Segregation Studies that would likely put me over that 25K mark. 

My question is what qualifies as passive income that those losses could be used against? I dont think I will ever qualify as a RE professional I retire from my job down the road. 

I am wondering if I sold a property or two that I own as some form of seller financing if that interest income would count? Or, if I invested in other peoples Notes if that would count. 

At this point I have never had much interest income, or capital gains for that matter as I have just been buying and not selling yet, so am unfamiliar with it. 

Thanks, Dan Dietz

We own about 1/3 of our 30 units with retirement funds of some kind, meaning SDIRAs or SOLO401Ks and it has been very good for us.

The main reason that we started down this road is because that is where a very large portion of our assets (>75%) were already. Once we tapped out our cash on hand for down payments for conventional rentals it was the logical next place to turn. 

The UDFI (?) tax *can* be there with a SDIRA but it is typically VERY minor. The condensed version, to my understanding, is that if you leverage say 50% in a SDIRA you *can* write off that interest, *and* 50% of the depreciation too. In the end, it is very similar to traditionally held real estate in that interest and depreciation more or less offset 'profit'. I believe the first $1000 of profit, *after* those deductions is exempt from the UDFI also. One of the Pros in this area, maybe @Brian Eastman ?, has written on this quite a bit. 

When we learned about the SOLO401K we switched to that as there is no UDFI on those. We simply did not know about them when we started the SDIRAs, and also part of our IRAs that we rolled were ROTHs, which is about the only kind of retirement plan that can NOT be rolled into a SOLO401K (although you can roll it into a ROTH SDIRA).

We are able to get better than stock market returns with MUCH less risk in our eyes. We already have the self PM in place for the others so it was easy to add another dozen units on. 

The downfall is that typically you can only leverage at about 50-60% LTV and rates are about 1% higher.

There is a great book that has 'keep it' in the title about SDIRAs, google it.... worth a read. 

We have recently done our first Private Money loan on a SDIRA property too....70% LTV, 5% for 5 years... basically a HELOC to put down on another property.

We are also working on bring in *other* private money partners who would be using *their* SDIRAs to partner with us on our *conventional* investments. We are using Mark Kohler's firm mentioned above to help set that up. 

@Ashish Acharya thanks for the great response. 

I am more than a decade away from retiring, but always thinking ahead :-)

 I assume from what you are saying above, if I had 30k in SSI income and 20K in capital gains, only the first 8K of CG would be 'exempt' of taxes and the other 12K would have CG taxes on it?

My other questions related to this are would any withdraws from a ROTH account not affect the CG tax rates of the SSI taxable income at all?

And finally, if I still hold rentals in retirement that show a 'tax loss' due to depreciation would the cash flow from those not affect the SSI or CG tax rules?

Thanks, Dan Dietz

@Mindy Jensen, do they have to be 'proprietary' blogs/articles meaning that BiggerPockets is the only place than have or can appear?

And, would we get extra consideration for being a Podcast Guest if we did them on a regular basis? :-)

Thanks, Dan Dietz