All Forum Posts by: Jeff Howard

Hello,

I am trying to figure out the best tax and entity structure and strategy before I start to purchase my first properties.  As a high income earner with my w2 job, will there be limitations in the amount of tax benefits that are available through buy and hold, passive income real estate activities?  I know depreciation is considered the king of all tax benefits in the real estate world, so I don't want to set my self up for disappointment if I cannot take that deduction! Is this somewhat dependent on how I set up my entity structure?  Thanks in advance for any advice.  And, yes I definitely plan on a detailed session with a good real estate savvy tax advisor!

Happy investing,

Jeff

Hi Law,

It sounds like we have a similar set up and goals.  This is an awesome place to learn.  I highly recommend starting with the Ultimate Beginners Guide under the Education>Guides>Ultimate Beginners Guide.  It has great links to other blog articles along the way to drill down on all of the basics.  Be warned, you will be hooked!

Best of luck on your goals

Jeff

Thank you everyone for your responses! Lot's to consider.  I just want to avoid the "too good to be true" scenario that turnkey providers tend to paint.  @Ali Boone maybe you could PM me the turnkey providers you have used and have a great track record with?

@Tom Mole

Hi Tom,

Great post! I like tacos and bad puns, so sounds like we could get along. I generally understand the math and joined the PLUS membership so I could tinker around with the calculators on BP, which has helped me drill down on all the different components of analyzing a deal, but I certainly have A LOT to learn. My one thought on outsourcing is more stacking the statistics in my favor for actually uncovering a deal. If I could teach someone the exact way I like to look at the numbers, they could simply plug the numbers in routinely until they came across something that cash flows with a ROI of 89%, which is the only way I am going to buy something (I kid). You find those in LA all the time right? I dig @Brandon Turner 's videos and learn a lot from them.  My friend lives in North Hollywood and I have crunched some numbers on small multi family units up there.  Can you find anything that works in that arena?  I will PM you for more info on the sheet you use, I am always appreciative of new things to add to my analysis paralysis!

Happy Taco Tuesday

Jeff

Hello,

Has anyone experimented with outsourcing deal analysis and market analysis?  There is something very tempting about having someone smarter than myself doing basic analysis on tons of properties while I am sleeping and waking up to a short list of deals that meet some basic criteria that you define to the assistant.  Being a full time W2 guy, but motivated to find some properties, I wonder if using a virtual assistant might be beneficial.

Thanks!

Jeff

Hello,

Just getting started in my REI education and I realize my first "deal" needs to be to make the best decision with our primary residence! We bought a town home in Ladera Ranch (Orange County, CA) at the PEAK in 2005 for 535K, put 20% down, and took out a 5/1 ARM amortized over 30 years., which adjusted very favorably, and is now at 3.25% and our payment is $1900. We owe 322K on the loan. I talked to my loan agent at BofA (don't worry I will shop around), and he said he could lock me in at 3.75% on a 30 year fixed, $3000 closing costs, which would give me a payment of $1500 per month, a savings of $400. We plan on buying a new home in 1-4 years, depending on what the market does and how long we can keep our sanity in our small home with three growing boys (4,6,and 10)! I plan on renting our town home once we move, with approximate rents for the home at $2500+ (zillow rent estimate $2800). This would make the home only carry a very small negative cash flow, and I would plan on keeping the home as a rental until the home is paid for. I don't see any real downside to re-financing at this point as long as the tenants are paying for the increased length and interest of the new loan. Thanks in advance for any input on the matter!

Happy investing!

Jeff

@Paul Choate

Hi Paul,

Thank you for your reply.  Yes, the turnkey idea sounds great in theory, but almost a too good to be true situation when you poor over the pro-formas.  All of a sudden that B area sure looks like a D if you were to go scout it out yourself!  I will really have to dig deep on finding the right situation if I go turnkey out of state.  When you say 15-20K all in, is that the purchase price of the home, or the down payment on the loan?  A part of me just wants to find something that I know I won't get burned on and jump in and learn, but I don't want to be too eager.

Thanks again!

Hello,

We are trying to stretch staying in our two bedroom town home with our three growing young boys as long as possible to save for a down payment on a SFR once the oldest starts into his teen years. We plan on keeping our current home as a rental, but in the meantime I am considering paying cash for a turnkey rental in the Midwest somewhere (or wherever I could cashflow something) in order to start the two year process of receiving rental income on our taxes, so that once we move and are settled in our home, I can actively buy more properties and not have the debt to income problem. We are blessed with good income, and I am trying to lay the foundation down to potentially own 100+ rental properties over the next 20 years. Once prices cycle here in Southern California I would like to invest locally, learning to buy at a discount during the downturns, rehab and hold until it makes sense to sell again, or just hold forever.

I am having a blast so far learning from all the great posts, podcasts, and books that you all recommend!

Thanks for your help,

Jeff

@Chuck Taylor

I was just crunching some deals in San Antonio looking for a cash flowing SFR, and it seemed with the taxes and current rents levels and home prices that I would have to put nearly 50% down to even cash flow the deal, let alone a 10-15% cap rate, are you speaking of multi units? I am looking for turnkey type properties to potentially invest from out of state (Orange County, CA). I am not opposed to multi's down the road. We will have up to 200K cash to invest.

@Ali Boone

Great comments Ali, I appreciate your response.  I will definitely need a solid referral to a RE CPA in the future.  I have a w2 paying job that puts me in a high tax bracket, and I also have a sole proprietorship buying and selling antiques and collectibles.  We also recently established an Estate plan that contains a revocable trust that we would be putting on the title of any property we bought.  I am trying to figure out how to organize all the pieces to both maximize tax advantages and qualify for multiple loans in the future as we possibly add to our portfolio of homes (I'm talking like I really have a plan, it's just excitement at this point!)