All Forum Posts by: Derek Smith

@Derek Faller

great info! I'll be checking this out tonight!

Great question!

I'm also curious if there are any sites and if you know if those sites have state restrictions in which you may only test for.

My friends and I have recently talked about going in together on a 4-plex. There are 4 of us, so it would be a purchase in which we all live in each of the units. I have two questions:

1. Has anyone else gone through an experience similar to this? If so, what are your thoughts looking back on it?

2. We plan on holding meetings to begin initiating the process, however, we are not doing any of this thru a company. Is this a bad idea to not have a LLC formed for our first purchase? Also, because we are not planning on forming a company, do we still receive business deductions? If so, how are those expenses tracked/validated?

This is probably an amateur question, but I'm going to ask for my clarification.

Say I own/manage my own 4-plex. When it comes to pay bills, what's left over is technically mine as income. Now my question is this, when it comes time to withdraw the money, how do you differentiate that its passive and shouldn't be taxed or that its active income and must abide by tax laws? In the end I'm "managing" the property, so I want to make sure I stay within the legal limits and understand the difference.

Thanks to everyone leaving comments, this is really excellent information!

oh wow that'll make a big difference.

are there other tax advantages that are lost thru using an LLC management company?

What are the differences vs paying yourself or paying yourself through a management fee?

@Mary B. thanks again Mary! I've been plugging different numbers in and seeing what it comes back with. love the new tool!

@Mary B. neat calculator! Follow up question, if this is a multi-family property I'm looking at, would I still get a close estimate by matching up bed /baths/sq ft. there is on the single family?

The calculator spit back $8,100 to close on a 4-plex, 3 one bedroom units and one two bed one bath with a total of 2400 square feet, anyone think this sounds accurate?

Are closing costs based on the purchase price? Or simply the rates at which each fee costs? Because 5% estimated closing costs on 150k property versus a 300k property differs substantially.

I've been playing around with some numbers on a couple different properties and now that I feel comfortable calculating some of them I'd like to share what I found to see what everyone has to say about them. The purchase is hypothetical, since I haven't bought anything...yet!

I hope everyone can see this, also a question I had was the cap rate is rather low, yet the cash on cash is much higher, is this possible?