All Forum Posts by: Joe Smith

To phrase it another way, if each month your LLC makes $5000 net profit, and each month you transfer $4000 to a personal account of you, the owner, which you use as a "salary (since you can't pay yourself a salary out of an LLC) is that acceptable or not? It sounds like as long as it's a regular, "payroll type" amount that stays more or less the same, then it's OK, right?

I assume problems ensue when it's $159.33 today, $4032 next Friday, $332 the next week, then the following week, throw $4392.99 back in...etc. etc...

I'm guessing the best option is find a good commercial mortgage broker, right?

In theory, a property in an HOA would be correspondingly more "desirable" and possibly generate a bit more rent. It would depend on:

A. Just how much the HOA fee is
B. How good of an HOA it is (do they keep things nice, do they do too little, or, worse, are they overbearing Nazis?)
C. How desirable the area/neighborhood is overall

In some markets, yes, you're right...but then there's that other problem, which was that incomes weren't keeping up with appreciation, which was one of several reasons for the bubble bursting to begin with.

My duplexes are all newish (post-1980) builds, and overall I average 43 - 48% expense ratios for the lifetime of the time I've owned them, but since putting more money in them at the time I purchased them, my annual the last few years has been closer to 40%, simply because almost anything that can break has already been replaced. Still, being conservative, I use 50% as an initial guideline.

Good point, I keep forgetting about Vegas.

I will also say that the "appreciation" potential with buying right and rehabbing is of course still there, I was simply saying that the "buy at market, do nothing, and wait" method won't work for a while, with the few exceptions such as you mentioned.

They were in at the right time. Appreciation WILL NOT AND CAN NOT return to pre-bust levels for a VERY long time, the financing isn't there, the supply is too great, there are too many delinquent properties that banks just haven't foreclosed on yet, there are too many that banks haven't put on the market, and, in many markets, prices were so far out of line with incomes, it just can't do it again without Option ARMS, etc.

It will be a good 10 years before appreciation in most markets exceeds maybe 3 - 5% annually for more than a year or two (there will be short, sharp blips upward but not sustained, IMHO).

True dat. Actually the property in question isn't that great a deal IMHO, not a horrible one, but i've seen better.

I *have* heard of some zero down type commercial deals when there was a VERY motivated seller willing to carry the WHOLE note, but that's rare.

OK, this is a situation that I saw on another board and it got me thinking about it...just my brain working here.

It's a 9 acre single parcel of land, that has 2 single-family homes on it, and a fourplex. He lives in one of the houses and has for 8 years. He bought the property in 1999 for $330,000 and has lived in one of the SFR's ever since.

Here's the question...since it will be far easier financing-wise to split off the property into three seperate deeds/parcels and sell each individually, how would the capital gains tax issue be solved if he did so?

If he could sell each SFR for $110,000, and the fourplex for $220,000 (for example), how would the tax issue be dealt with?

I presume if he sold the WHOLE thing, he'd pay no tax as it would be his primary residence (except for depreciation recapture on the rented portions). However, if he split them up, and sold the one he lived in, how would he document that tax-wise?

For the other two, would the capital gains tax be determined by taking their portion of the value of the original purchase?

Good luck.

However, it's better to say it "It's going to be legen-----------wait for it---------
---------------------------------dary!!"