Skip to content
×
Pro Members Get
Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
ANNUAL Save 16%
$32.50 /mo
$390 billed annualy
MONTHLY
$39 /mo
billed monthly
7 day free trial. Cancel anytime
×
Try Pro Features for Free
Start your 7 day free trial. Pick markets, find deals, analyze and manage properties.
All Forum Categories
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

All Forum Posts by: Jake Wiley

Jake Wiley has started 4 posts and replied 227 times.

Post: House Hacking & Taxes

Jake WileyPosted
  • Investor
  • Charleston, SC
  • Posts 233
  • Votes 198

It would be a business, however, you need to treat it as one. Written lease agreements, separate bank accounts, possibly an LLC, etc to keep the activities separate. This will help you ensure that you can support that you are running a business if and when the time is needed, as well as make it easier for your CPA or tax preparer.

As for CPA/tax preparer, I'd ask around locally, the local REIA should have some good options for you too. It's not complicated, you just want to make sure you get it right and set the assets up correctly from the start from a depreciation schedule perspective, so you shouldn't have to spend an arm and a leg or get anyone, in particular, that is overly specialized in real estate. .

Post: House Hacking & Taxes

Jake WileyPosted
  • Investor
  • Charleston, SC
  • Posts 233
  • Votes 198

The short answer to your question is that you should "capitalize" the assets that have a larger dollar value, such as appliances.   There are safe harbor rules that generally allow you to write off assets up to $2,500 per invoice and up to $5,000.   However, it sounds like you will likely have more costs than that and it would be safer to capitalize and depreciate separately.    Same goes for the gym equipment if it is used for the business.   

https://www.irs.gov/businesses...

With that said, you could likely apply a Section 179 deduction to take the depreciation all in one year.  

https://www.nolo.com/legal-enc...

Since you are talking about some pretty significant deductions and you'll want to get this right.   If you are very well organized with receipts etc, it would be ideal to have a CPA or certified tax preparer do this for you, so you know it is done right.    It's not complicated, thus shouldn't cost you very much in exchange for the deductions/benefits you will get.   

Post: Hire this attorney or move on with next?

Jake WileyPosted
  • Investor
  • Charleston, SC
  • Posts 233
  • Votes 198

I know this is frustrating because you want to work with someone you can trust and this has created a question on integrity.   I am sure that history has proven out that its a lot of work and much harder to get paid on eviction work, thus probably why it is so hard to find someone to help, and when you do they are looking to get paid up front.   

The other issue and I am not exactly clear on the point being communicated about "( while all other 4 mention I can’t not renewal with a good cause)", is that it sounds like the other 4 attorneys said that you couldn't do what this last one proposed.   That would be more worrisome than the fee. 

With all of that said, if you think he can get the job done, and it's a $50 issue it's probably the best use of your time to make it happen and move on.    

On the other hand, if you are looking for a longer-term relationship and someone that will support you when you need to execute on the terms of the agreement that is being drawn up, it is worth the time up-front to make sure you are really comfortable.   

Post: Building high end rental in S Seattle

Jake WileyPosted
  • Investor
  • Charleston, SC
  • Posts 233
  • Votes 198

@Vadim Babets - This topic came up at the BEC several weeks ago and the general consensus by the expert panel was that the only known quantity is what is now, inflation is not going to disappear in the very near future and even if it does back off, it's not expected that prices go back down, thus there is no time like the present to get started.    Waiting incurs opportunity costs, and that is generally the biggest cost out there.    

To be fair, none of the experts had a crystal ball and could predict the future, and with the war starting up it's really up in the air.    

It looks like a great project.  Good luck!

Post: LLC or S Corp or Umbrella insurance?

Jake WileyPosted
  • Investor
  • Charleston, SC
  • Posts 233
  • Votes 198

@Josh Edelson - California is a beast when it comes to LLCs and the $800 fee per entity.   

You don't see many folks using an S Corp with Real Estate, possibly with a management company where a salary would be paid, but not at the property level.    

In terms of mitigating costs, a well-strategized insurance policy and aggregation of several properties per LLC that have similar risk characteristics and equity is likely the best way strategy in California.

Other states can utilize a Series LLC structure, but it appears that California would still consider each series LLC another entity and thus charge the $800 for it.

Post: Chicago: Loan Origination Charges

Jake WileyPosted
  • Investor
  • Charleston, SC
  • Posts 233
  • Votes 198

Agreed with @Tom Shallcross - You'll generally see this as a percentage.    I wouldn't be completely turned off by an origination fee as it still may be competitive with another lender that does not have them.   

It's always a good idea to have a good relationship with the local community banks, as it is in their charter to lend in the community.   They may not always be the best in terms of overall costs/interest rates but being in the community they can get the job done where online or out of market lenders might not be able to.   

Post: Buying Townhome Mixed Development

Jake WileyPosted
  • Investor
  • Charleston, SC
  • Posts 233
  • Votes 198

@Kul Gobach - Is this a new construction project, or do they already exist?    There is a lot to the question, but you'd need to know or have a really good idea of the projected rents so you could calculate whether its a good opportunity for you.    

Atlanta in its entirety is growing and theoretically has a housing shortage, but that's on a macro level, does the same thing hold true for the micro-market you are considering?   If there is a new development going in, then someone has made the bet that it is, which is good, but you need to verify that as well.  You'll want to look at population growth and job growth numbers in the area as your leading indicators.     In a rising and hot market, there are a lot of speculators out there and sometimes they go where the land is cheap vs. where the path of progress is.       

If the rental numbers support the investment, then it could be great.  However, if its a new construction project, and it could be several years of building, you might have to take a discount on rents until the construction is over or feel your way to what the market rents will be as there is no real precedent.    There are a lot of things to consider, but with some good diligence, you should be able to prove whether it will work or not.  

Post: Purchasing a family home

Jake WileyPosted
  • Investor
  • Charleston, SC
  • Posts 233
  • Votes 198

@Ally Dolence - You can use the equity you have in your current home for a down payment, however, you will need to qualify to do so, meaning that you will have the increased debt load that the lender will look at to determine if they will lend.    You will be paying the mortgage on two properties and the mortgage on your primary will be going up by your down payment amount too, so it will be a large jump to your Debt to Income ratio.   I'd start having conversations with several lenders now to understand what is possible for your situation.    

From a mortgage perspective, there is generally something like a 10% cap on cash/repairs/closing costs proceeds that a conventional loan would allow for, so likely not enough for a renovation like you are suggesting, leaving you with a renovation and refi into a permanent or a loan that converts to permanent once the renovations are done.   

In the first option, you have a renovation loan with a relatively short term, likely higher interest rate, and once the renovations are complete you will then have a refinance into a permanent loan, so two closings.    

In the second option, the loan converts to permanent once the renovations are done and avoid the second closing.  The lender has priced in some risk into the loan, and it may result in a higher interest rate than option one assuming all things are equal today once the renovation is complete because the lender is taking that risk as it really is like two loans for them, even though it seems like one to you.    

However, in a rising interest rate environment like today, avoiding the hassle of the refi and the potential for increased rates down the road it may be a great option.  

Most importantly, talk to several lenders and understand what might work for you and your financial situation first so you can make a good decision.   

Post: Buy a rental property or private lend?

Jake WileyPosted
  • Investor
  • Charleston, SC
  • Posts 233
  • Votes 198

I believe it would make sense to determine what is possible and be open to options.     

When you pull cash out you are increasing your DTI and it is harder to acquire additional properties, so you need to know what you could qualify for and that would be property dependent.

As far as private lending, I'd caution you that the rates you mention seem a bit high to me and that if you had takers it might be a bit on the riskier side.    

I'd be on the lookout for good deals, the opportunity to lend or to simply keep your powder dry.   

Post: What are the tools or people you need to manage our of state?

Jake WileyPosted
  • Investor
  • Charleston, SC
  • Posts 233
  • Votes 198

I've found that the key to success out of state, or greater than an hour away is a great property manager.    All of the things you mentioned above fits squarely in their wheelhouse.     The properties we owned the longest were all out of state and it was because we had a property manager taking care of all these things, keeping the urgency stress out of our hair.     

Prospective tenants reschedule showings, things break, contractors no-show.    Yes, you pay for the assistance, but the peace of mind of knowing that it's being taken care of is absolutely worth it.    

Good luck!