All Forum Posts by: Frank B.

I am not a tax accountant nor an attorney:

If LLCs are single-member LLCs, I think the tax obligations just flow through to your personal return. Multi-member LLCs have to file their own returns but the idea is the same, your ownership % of the LLC flows through to your taxes.

We are owners (members) of our LLC, not employees, so we don't get salaries. The LLC can make distributions to its members, but taxes happen at the time the income is generated, not when distributions happen. Taxes are based on income, which is revenue less expenses. You can include fun things like depreciation as an expense, but expenses need to be related to the business you are doing. Income can be negative, which can offset other income you might have on your tax return.

I don't think you can be a W-2 employee of an LLC of which you are a member.

If you want to be an employee you might have to be incorporated as a s-corp/c-corp/etc, of which I know nothing.

Hopefully someone smarter than me will be able to help you with that.

1. What are your expected costs for insurance, property tax, etc?

2. Is your financing on ARV? If so, what is the seasoning period? What are your financing terms?

3. Is cash on cash your only criteria? If your figures are right and you can get the house cheap (like 55k), you could refi on ARV and get almost all of your cash back, depending on your terms. In that case it would be easy to get 20% cash on cash, but that that doesn't mean your cash flow will be good. If your cash in the deal is $2,500, then 20% cash on cash is only ~$40/mo cash flow. If cash flow is your only goal, that is pretty slim. You may also want to set a goal in terms of $.

4. How certain are you about the rehab cost and rents?

@Brice Hall 

If I'm reading your projections right it looks like you are assuming a total CAPEX of $190/mo for 4 houses. That is a little less than $50/mo per house for ~1,000 sqft houses.

You may have already gone through all the details to come up with this figure, but if not, this article gives some ideas of costs you might take into account:

http://www.biggerpockets.com/renewsblog/2015/03/03...

That isn't to say that the numbers in that article are right, but those line items would be things you might want to put into your calculations.

Also, will you be buying these properties with cash or financing?

It looks like you have put alot of time and effort in coming up with this possible plan--keep up the good work!

I have done lots of reading around here about folks using QuickBooks for their rentals. I am interested in doing something similar, but I’m not sure I understand the capabilities of the different versions and how things should be set up in the software.

I am looking for a way to set up a couple companies that have properties. I would like to be able to see all the normal reports (balance sheet, income statement, etc.) by company, and also by property, as well as consolidated reports that include all of the companies and properties.

From what I have read here on BP, some people set up each property as a “customer” and keep track of things that way.

I called and talked to the QuickBooks support and they gave me some good info, but they said if I want to use the online version, I would need to buy a separate subscription for each company, which would be expensive.

I haven’t used the software before, but I’ve read that some people use “classes” to keep track of portions of their business. Could classes be used to separate companies to run reports as described above?

I would love to hear how people here set up the software for rentals--thanks in advance for your feedback!

 Where would one find this kind of info online?

Did I understand your example correctly that your profit on a flip was $40k after taking into account your carrying costs, transaction costs (on both ends), and rehab cost? 

And that if you had rented the house instead of selling it, it would only have created $150 cash flow per month?

Just trying to make sure I understand your story.

One other thing --how confident are you of the $1,000/mo rent figure?

Awesome!

Not sure if I'm reading it right, but I think it says your debt service is $316/mo and your total expenses are ~$480/mo.

How much are your property taxes and landlord insurance?  ($/yr)

How much are you assuming for maintenance cost and turnover cost? ($/yr)

How much are you assuming for avg CAPEX expense? ($/yr)

What % of the time will the property be vacant? (reduce your revenue to account for this)

If you have everything covered and the results meet your criteria then it sounds like it could work for you.

Great question Jeff. Try using the search function on the forums, as lots of this stuff has been discussed to death.