All Forum Posts by: Jacob A.

Congrats @David Lee

Killin it in NC!

@Daniel Cruz

What exactly is your question here? There are a million good resources out there that will give you amazing guidance on how to analyze deals. You don't need a mentor to show you how to analyze a deal. If deal analysis is what your are ultimately after go look on the MLS and do an analysis on every single house you see. Keep doing it over and over again. Look at comps in the area. If you don't know your repair costs yet, which it sounds like you don't, then figure out all the other pieces of the puzzle like the ARV (after repair value) by looking at comps, figure out your financing costs by talking to lenders, and you can back into what your maximum repairs could be. Walk through a few houses with a contractor and get him to give you estimates. After a while you will be able to tell what a 10k rehab looks like versus a 50k rehab and a 100k rehab and so forth. It's just like any other aspect in life. Practice, Practice, Practice. Anyways, I hope this helped. Good luck to you!

Here's a quote from an article written in The CPA Journal:

" IRC section 1221(a)(1) defines a capital asset in a negative fashion. It states that all assets are capital assets except those listed in the statute itself. For our purposes, one asset listed as not a capital asset is “property held by the taxpayer primarily for sale to customers in the ordinary course of business.” Admittedly some of these terms are ambiguous; for example, “primarily for sale” and “the ordinary course of business.” These are subject to interpretation by the IRS and the courts. In the end, whether the taxpayer is an investor or a dealer is a question of the facts in each individual case. There simply is no bright line that, if crossed, moves the taxpayer from one side to the other."

@Dave Toelkes

What if it isn't your ordinary course of business as the tax code states? I think my tax friends argument is that this is a side investment not the "taxpayer's trade or business". Nobody is trying to legitimately cheat the system and "lie" on their tax return as you so eloquently put it. I was simply bringing up a point that if you are completely hands-off and spend a very minimal amount of time that the argument could possibly be made that it is an investment instead of the IRS qualifying you as a dealer. Is the IRS eyeing house flippers more and more? Yes. Am I going to treat it as an investment? Probably not because I'd rather be safe. But the argument can be made. I appreciate the accusations of dishonesty, but I'll just assume you meant them in good faith for the sake of the forums.

@Cyrus Sidhwa

There's more than one way to skin a cat. The 70% rule was meant more as a quick and dirty estimation on the fly to help you determine if you are in the neighborhood of a decent deal or not. If you are at the point in your investing career that you are ready to do a flip I would imagine you have a pretty good handle on what your holding costs will be exactly and you can start factoring that in to the equation but 70% will be an extremely difficult benchmark to hit. For me, if I know what my repair costs will be and my closing costs and holding costs and I factor all of that in I want there to be about 15-20% left on the table. So I guess my rule is more of a 80-85% rule factoring everything into the equation.

Hey @Jessica S.

I have spoken to one of my tax buddies at my old firm and they have said that I would be ok recognizing gains from doing one or two flips a year as investment income and thus avoiding SE tax. However, I know that the resident tax expert on BP here @Steven Hamilton II disagrees. I tend to agree with Steven just to be safe, but what you do or don't do is completely up to you.

As for the double taxation question. This is something that is involved with corporations. S-corps and LLC's are both what are called "passthrough entities" meaning all income made at the partnership level is passed through to your individual tax return via a K-1.

@Ollie Gray IV

If you have the funds to buy a house there are a lot of proponents around this website that like the idea of buying a duplex or a home with a rentable basement or something. You can purchase a personal residence and have someone pay it off for you. Wholesaling is also another good option for someone with limited funds to begin investing. I suggest you browse the site here and just invest in your education and soak up everything you can. Eventually, something will call to you and a light will go off. Then the rest will be history! Good luck.

The MLS is definitely the best but for those of us that don't have access I think the two best options are most definitely Redfin and your county or city tax website. The only issue with both of these however is that they are only offered in certain markets. Some counties don't have websites and Redfin is only available in and around larger markets. If you use Zillow please for the love of God don't use the Zestimate. Search actual sales from around your property and go from there.

Here's an article I found on yahoo news today that I ran across while reading. Some good ways to deter would-be burglars.

http://homes.yahoo.com/news/protect-home-from-burglars-005405786.html

The link button wasn't working sorry for the long script.

Welcome @Forrest Heath III !

You've come to a great place. What kind of investing are you looking into?