All Forum Posts by: William Morrison

@Brandon Hall I think in the way your considering it, it is not the state but the trip or trips that need to be looked at.  Example if I came into our area and looked at Fairfax, Silver Spring and Arlington, I would not have to separate them by state.  There are so many cities like DC that are wrapped by other states, like the area in South Carolina south of Charlotte, NC.  Thus the Silver Spring portion can be used against a Fairfax purchase if that's where the final decision landed.
That's with no entity involvement.
An entity setup to provide evaluation services to investors can do research via travel, bill and pay
 pay employees.  It does not have to wait for a purchase by those billed to expense.  Those billed can be entities with all or some common partners.  And yes it wont work if investment properties are not being purchased.  The evaluation entity has to be viable and have income.  A property would not have to be purchased after every trip.   The purchasing entity may have to capitalize, but multi trips could be involved.
Now it could be thought that this thread is about a first property purchased in a persons name which is different than I've described.

So Brandon if you travel under an entity like a LLC or S-Corp, it's non-deductible?

Shop for a rental first.  The numbers should work as if you're renting from day one.
Then do you want to live there, schools (about 5s or better), transportation etc.  Better schools and neighborhood will be easier if you are an out of town landlord later.
Numbers, what are the expected rents and work backwards.
Take 25% of the expect rent as a minimum and add it to all expenses, loan, taxes, HOAs, etc.  The 25% will give you an approximation for vacancies and major repairs (roof, HVAC, etc).
Your expenses should include 8 to 10% for a property manager.  You'll need it when you transfer.

While doing that, interview property mangers even though you wont need one yet.  They know good neighborhoods or should.  They may manage across all types of neighborhoods and can be a great source.  Finding a good one in some areas of the country is tougher than others.

You'll get a better interest rate and down payment as an occupant.  My daughter is renting hers now.  Don't expect your numbers to be exact.  You just don't want to be taking money out of your pocket so your tenant can liver there.  <Grin>

The 401k has the UBIT advantage and you're the Trustee without IRA custodian issues and fees. Either way they both work great.
Two books that lay it out wells are:
Leverage Your IRA
by Matthew M. Allen
Best price is on the NASB site.  It has UBIT tables that do a great job of showing how works even with UBIT.
and
Live Tax Free Forever (through Your Solo 401k)
by Michael J. McDermott
It is like a lot of real estate and financial books that really have an important message but limited scope. So some fluff to justify a book, but worth it.

Mike great link back to the three methods.
The insurance replacement cost may not be what your looking for.  I asking my agent why the replacement cost in my policies are higher than my purchase costs in most cases, knowing it's not just buying right <Grin>.  The insurance replacement assumes a fire or some other reason requiring replacement.  So the replacement cost includes the demolition and associated environmental clean up and the rebuild.

Doesn't lease become binding on you when you close.  How can you close without knowing what you signing up for.
I have closed with tenants.  I get the lease.  You should also know how the security deposit is going to be transferred at closing, not after. 

 Sheri there an other thread I've seen today on just this subject, how many or how much.  I think the idea is to separate your assets.  So it might be two in one and two in another with a dollar limit, say $1mil.  Too small and you may have a 1031 exchange issue if you wanted to do that later.

 I agree Mindy do not use the security deposit.
Identity theft is the jurisdiction of the Secret Service although they don't investigate individual cases.  You might be able to get a copy of their submission to them or the FBI.
To those above that are skeptical, I get it.  I worked with a guy whose grandmother died three times, different supervisors but some of the same co-workers.  But it still could be true.
We are in the day of the hack.  We have tenant that had their bank account hacked three months ago.  They've been good tenants four or five years.  The bank account is indeed empty.  We worked a payment plan out over time.  The bank believes no one, meaning they are checking on it, but they look at family and friends first. 

Trevor that was an interesting blog.
I use REITs to allow myself access to some commercial markets I couldn't otherwise diversify into. The returns can range up or down based on risk. A healthcare REIT maybe different than a U-Store It REIT. An apartment REIT will be different than a strip mall REIT. The most common quick valuation is the Book Value. And that is not a liquidation valuation. All stocks have it. Two or less is good. Higher than 2 and your buying optimism.
Some have defined the REIT investor as someone between the lender and one of the partners.  You don't have the collateral like the lender and you don't get the pay check of the deal makers ie partners.  The returns to you are regulated by the SEC.
It's a true passive investor <Grin>.