All Forum Posts by: James Triano

@Nick Gray

Contribute enough to get the match and put it in the lowest cost/highest return fund you can find. This will likely be an S&P 500 index fund or the like. Save every other dollar that you can toward investing in real estate. I would also recommend you open a Roth IRA and contribute to that as well. You can always pull your initially contributed funds out and can use $10,000 from your Roth IRA to fund the purchase of a home (house hack) if you're a first time home buyer.

@Nick Gray

I wouldn't get too caught up on this.  I usually just throw money into my savings account.  I really don't care that it's a 1% or whatever return on my money.  The last thing I want to do is find a great property to invest in, realize that the CEO of the company I invested in had an affair with his secretary, and the value is down 20% leaving me scrambling.  

Instead of spending time analyzing which funds to park your money in during the downtime, just spend your time looking for new deals and leave it in a simple bond index/money market/savings account .

@Carrie A.

This will depend on your financing. For a Duplex, you likely won't be able to go for a commercial loan. If you're doing conventional financing, the bank will more than likely not allow you to do have the property in a separate entity. This is because the loan underwriting is being done on the property value and your DTI ratio.

However, if you're paying cash or doing some sort of private financing, putting the property in an LLC will be a good way to go. Obviously there are a lot of "if, then" statements in here but it can be a bit complicated.

@Martin Grizzanti

I have not done an S-corp but I have done an LLC. Depending on the circumstances and your needs, one will be better or worse. I've used the below resource in the past on making these decisions. It's not perfect but it will at least point you in the right direction.

https://www.bizfilings.com/toolkit/research-topics...

@Shelby Pracht

Congratulations on your success!

I would be hesitant to hire on a full time employee for something like cleaning initially.  That should be something you can easily contract out - at least initially.  If you find that it makes sense for you to hire someone at another point, then it may make sense but I would 1099 them at least initially.  You should be able to pay them out of your current entity and it shouldn't be that big of a problem.  

Also, I'd recommend you read the "E-Myth" which is a great book that walks you through the steps of scaling and creating systems within your business.  As you said, you're now running a business.  Good luck!

@Martin Grizzanti

I agree with @Huy N. 

I've used LegalZoom in the past and it's worked out fine.  Depending on the assets that you're dealing with, investing in the proper legal structure will save more than the $1,400 you might pay. Also, I'm curious as to why that number is so high. I've never opened an LLC in NY state but am assuming it's due to state fees? I'm in PA and it was about $400.

@Rick Lucette

I depreciate my capital improvements and appliances using the straight line method.  I estimate the useful life of the improvements and then depreciate them accordingly.  So, yes, your new wood floors and appliances would fall in line with those. I believe I used 10 years for the appliances, 15 years for my shed, and 15 years for any major flooring/design upgrades. 

To your other questions:

1) Those items all sounds like normal repairs and maintenance to me and I would simply deduct them as an expense in the current year.

2) You can get an appraisal done, but for tax purposes it won't help you.  Your depreciation is based on either your purchase price (less land value) or current market value, which every is lower. So while it might be nice to know the value of your home, Uncle Sam doesn't care.  Side note:  This is done to prevent fraud so you don't pay off your buddy the appraiser to give you a higher home value and you get to deduct more from your tax return.  

@Rikard Lorén

I would continue working at your day job. This is for two reasons:

1) Your time frame to be completely out of both is, as you said, 3-5 years. With that short of a time frame, getting a business up and running and having solid documentation for getting loans will be difficult. 

2) Starting your own business is going to require a tremendous amount of time and devotion. This will likely take away from your investing. Also, there is the added risk with your own business and what if your income isn't as high as you thought?

Again this is solely basing this off your original post. If you completely hate your day job then definitely quit, don't be miserable. But if you're leaving to pursue the same type of work, you might be wise to stick it out. 

@Account Closed

This site below is an excellent resource for identifying the differences.  An S-corp is more rigid with bylaws, board of directors, offices, etc.  Not saying it isn't doable or a proper structure but just making sure you're aware.  You may want to reach out to an attorney since this situation is a bit technical.

https://www.bizfilings.com/toolkit/research-topics...

@Liwen Gu

Your personal homeowner's insurance is not tax deductible. 

However, if you own a rental property and have a Landlord Policy (which you definitely should have), this is a tax deductible expense.  This is simply a cost of doing business.  Since you reference a Schedule E, I'm assuming it's a rental and you should definitely have this line on your Schedule E.