All Forum Posts by: Jon Reed

@Max Maysonet do you own a moving company? What is the reason behind moving furniture to rentals?

Sounds like he doesn't want to sell it. If you have $20K in cash to invest then why use that money to buy a property that you know you will have issues trying to evict the current resident out of? 

If I was in your shoes, I would take my $20K and purchase a home which needs to be renovated that is already vacant. That way my cash investment will start showing a return much quicker than buying a property that will probably not be able to start renovation on for a few months.

Do not let your personal feelings towards your family or the situation drive how you invest your money. Make smart choices not emotional choices. 

It all depends on your learning style and your personal threshold of risk.

I spent a few months listening to biggerpockets and reading online before purchasing our first investment property. However, I learn much quicker by doing something vs reading about something. So, if I never stepped up and bought something then I would never really learn it very well.

**Non-Tax Professional... just my thoughts**

Do you have an LLC or an S-Corp... they are very different entities and handle taxes differently.

I will assume you have an LLC since you said that most. The LLC's income will always be reported up through the personal income of the LLC owners.

For simple math... if an LLC had two owner with a 50/50 split of ownership and the LLC made $50,000 in net income (gross income - expenses) then each owner of the LLC would claim an additional income of $25,000 and pay taxes based on their personal income bracket.

Now... there is a TON more to it than that simple example but that will give you a high level overview. You must pay taxes on the net income of your LLC no matter if you moved it out of your LLC's bank accounts or not.

There are plenty of ways to get a down payment or find a deal that the seller is willing to finance in full (not sure if owner finance is a thing in Canada).

We have done HELOC and private money for down payments so far... but my favorite method was this last home. Decide to sell off our classic 1966 Volvo 1800 (which was only worth about $12K) and then use that money, along with a commercial construction loan, to end up home with a renovated market value of $110K.

Moral of the story is there is always a way to find money... and sometimes it isn't the most obvious or easiest. Review your assets and network and start brainstorming!

This is the downside of renting to people you know... they sometimes feel like they can ask for more things than they would if they didn't know the property manager. 

What I do for my tenants who have a ton of request like this is to tell them YES! They sure can get all of those things they requested! BUT It will be done by my contractor and they must cover the full cost of materials and labor upfront and I must approve all materials before installing.

So if that parent really wants safety lights on all the corners of the house then tell them yep and they must cover all the cost. It usually only takes one or two requests before they get the idea that they better only ask for non-maintenance improvements if they are willing to pay for them. 

1. Inspect your properties quarterly.

2. Do the small maintenance fixes quickly when you discover them during your quarterly walk through. A small drip from a sink drain is an easy fix when you catch it quickly... however... it can turn into a whole new vanity or even a new subfloor if left unchecked.

You can also look into commercial construction/renovation loans. My current deal is financed at 80% of purchase price plus 100% of renovation costs.

So I put down $10K for a $50K home and the bank is financing 100% of the $30K renovation cost. The home appraised for $110K so I was able to purchase the home for only 11% of the home's renovated MV.

The best way to learn for your specific area is to just start talking to contractors in your area. Labor costs are so geographically specific that there is not good general rule of thumb. 

Have you purchased any real estate books and started reading? Have you hopped on google and just searched "Real Estate Investing"? Do you listen to any of the biggerpockets podcasts?

There is TONS of free information out there to get started. You just have to start consuming it.