All Forum Posts by: Joshuam R.

Are you a self starter? Yes ? Then you just need youtube training and a friend to have coffee with on a weekly basis to hold you accountable. You don't need an expensive program. Although, if you want, I'll take your $30,000 and have coffee with you weekly so you can whine about how hard it is is do real estate investing.

Are you a self starter? No ?
Then get a real job. It doesn't matter how much you spend on a training program if you aren't a self starter. You will  spend all that money and still be a guy who hasn't bought a house.

A nice guy, but still a guy without a house. Don't be misled. Decide you are going to take action and get started.

Lenders aren't going to be too concerned with your tax status or type of corporation. If your going for construction, fix/flip, rehab etc. then experience will matter most. Otherwise an LLC will be fine and previous history will most likely not come into play for a DSCR. More important are credit score, down payment, rent income, property value.

We've had an LLC with 2 different DBA's and changed filing status from LLC to S-corp for one biz. It's doable to change name but a lot easier to run a new DBA that you can use instead.

FYI I send out a lot of DSCR quotes and while experience does make the process smoother, it's not a requirement or anything.

Double taxation for a C-corp only becomes an issue when paying shareholders after the tax year. It can be avoided with issuing bonuses or dividends in the same tax year. 

We have major renovations going so not much left at end of year. When the time does come, I can pay myself a bonus for the taxable profit at end of year to avoid the double tax. Being C-corp is good when adding shareholders or selling company in my opinion.

I like the standard LLC just because you don't have to worry about the double tax or payroll. Any profit flows through to your personal return.

If you go the S-corp route you will have to pay yourself a reasonable wage according to the IRS for your industry. We have our real estate biz in LLC taxed as C-corp mainly because we are growing the business, not making a living on the income. The S-corp is good for established small businesses owners like bars, cafes, restaurants, etc. It helps avoid the big self-employment tax at end of the year really.

Really best thing is to talk with accountant and let them know what your trying to accomplish, short and long term.

Good Luck

@Irvin Nguyen

If you don't think that you qualify for the primary residence exemption than you're best option for avoiding tax is a 1031 exchange. Although, depending on when you moved out you may still qualify.  It doesn't matter when you purchased it.  The question is have you lived in it for 2 out of the 5 years immediately prior to selling it.

 As far as your concerns about the time constraints and the difficulty of finding replacement properties, we are still seeing more than 92% of our clients complete their exchanges . One of the best things you can do if you know that your property will sell fast is to go under contract on your new property before you even close the sale on the house you own now. You are required to close the sale before the purchase, but there are no rules about which has to go under contract first. Here's a link to an article we wrote for BP about mitigating the risks of the 45 day requirement,

 https://www.biggerpockets.com/...

You can avoid property tax by selling it and using a 1031 Exchange. The "2-in-5-Year Rule" doesn't matter.

I would recommend you sell. If you only make $200 a month after paying the mortgage and property management, then you are technically in a negative cashflow. You should be setting aside 10% each month for maintenance, 10% for capex, and 10% for vacancy until you have a healthy reserve established.

You also have to consider Oregon is increasingly unfair to Landlords and that is unlikely to get better. You should move your capital to a state that is more tax friendly, believes in justice for Landlords, and where your money can cashflow better.

once you collect the 10% for each of the 3, what is consider a healthy reserve? The point to where okay I can now stop saving this 10% for this category.

Curious

capex healthy reserve = cost of at least one of the most expensive repair (example roof replacement) 

vacancy healthy reserve = is 3 months worth of your property bank mortgage payment. (thats what im doing)

maintenance healthy reserve = I would stop saving for this area per property once I have 12 months worth of it?

 Really, Racist???? Because I ask the OBVIOUS of would this even be a consideration if the age and gender were different, that's racist? 

So, if I don't like blueberries, let me guess, RACIST? 

I pointed out an OBVIOUS TRUTH, the OP would not give a moments thought if the tenants age and gender were different, that by definition is discrimination. Sorry if that little "police" called reality hurts feelings, it's still the truth none the less. 

And by acting in this discriminatory way for this tenant, ever think about the liability that opens OP too? When other tenants find out and say "hey, WTF, why do I have to pay ___ for the exact same unit and she pays ___???". What's the OP to say "oh, she's an old lady"? Yeah, and those other tenants go straight to authorities, or tenants advocacy group, or attorney, whatever and DONE, OP is up S-creek because of Discriminatory rental practices. 

But no, let me guess, I am racist for stating the reality and laws.