All Forum Posts by: Jeff V.

I realize this post is 2 years old but someone may have the same question.
I use Microsoft One Note for Desktops, it's free and stores your notes in notebooks with tags that are easily searchable for reference later.

I have notebooks for Note Investing, Real Estate Investing, Information Technology, and Digital Marketing.

Usually, something that I'm studying falls into one of those categories and each notebook has subcategories.  For Example, my Note Investing notebook has Sub Categories for Consolidated Note Resources, Goals, Note Buying Criteria, Foreclosure Timelines and Costs, State Specific Notes, Systems for The Note Business, Collection Time Tables, Note Conferences, Bankruptcy in Notes..  etc.

Each of those subcategories can be broken down further into Pages or combined subcategories into sections such as Courses and Webinar Notes and have sub-sections for each course or webinar you attend and their associated notes.

As you can see this structure can be very organized and scale well.  You can also share the notebooks and collaborate on them through Office 365 if you so desire.  One final tip is to store the Notebook files on your OneDrive and make them accessible and synced across devices while still keeping them private.

"It depends if you have a trade or business"

What is the determinating factor to be considered a trade vs business?

I did 4 BRRRR deals on a long-term JV.

We each put up capital, and split profits based on % of capital each of us put up.  Neither of us got paid for time contribution and we split the workload.  I did the books, helped manage the rehab projects, and analyzed all new deals.  He managed the rentals, provided a personal asset as collateral for a Line of Credit, and helped manage the rehabs.  This kept us on the same goal maximizing profit.

I had other partnerships where they tried to expense their time before the profit split, but that puts you on different sides of the coin.  As their revenue increases, your profit decreases.  This is not a good way to do things in my opinion.  We had to ultimately have a unanimous agreement to only get paid via profit split.  This way everything was fair and we are all working towards the same goal.

Hope this helps, I know this post is a few months old.

Question for a CPA, Lets say I have an LLC in Louisiana that owns performing/non-performing notes in other states.

Is the income from those notes subject to Louisiana State Taxes, or the state in which the note was originated, or where the collateral is?

Is it generally okay to have one entity investing in notes from multiple states?  I'm pretty sure I'll have to register the entity in the remote state as a foreign entity the year I start doing business in that state.

Perhaps an example is in order to clarify.. I have an LLC in Louisiana, but hold a note in TX that gave me 7k in profit this year. Is TX going to want some tax money for the 7k in profit or is LA, looking for that tax money on the 7k? I realize most taxes will be paid to Fed, but curious how to handle the state side of things. For example, will I need to hold an escrow of sorts for taxes on revenues made in each state, or only for the state where my entity is formed?

I hope I've been clear on my question, simple question but hard to explain what I'm asking...

I will be setting up my LLC in Louisiana, in Jan 2024 and I have a few questions for any CPAs in the group that would be willing to provide some assistance.

1) What is the preferred taxation type for a single member LLC, in which I will be buying Performing notes for passive cashflow, and re-investing a percentage of that cash flow into buying Non-Performing Notes? Taxed as a C Corp, S Corp, or disregarded entity?

I'm aware taxed as C Corp pays taxes at the entity level, but there are some double taxation issues... 

I believe taxed as S Corp, requires member to draw a salary and remaining profit is passed through as a dividend with a preferred tax rate I believe to the personal tax return.  Usually for more active type businesses.

Disregarded Entity, just passes through all profits to the personal tax return on schedule C I think...

So that's, what I think I know, so please advise if I'm off on any of my assumptions.

2) Should those activities, one being more passive and the other being more active, be done in the same entity?  I think the income type will be the same as ordinary income, but not sure.  Please advise if this is generally okay to do or will I run into some tax consequences that I'm not aware of?

Thanks @Brian Ellwood, I have been learning the terms business for the past year in hopes to do just that and take a few extra down per year with Lease Options and/or Seller Financing.  I'm getting better at it, but it requires much more sales skills to educate a seller that there are other viable ways to structure the deal other than a traditional purchase or cash.

@Todd Pultz  thanks for the advice.  I have been studying some of Walter Woffords material on structuring private money for the purchase and renovation and then wrapping the private money and seller financing to the end buyer.  I like the concept and may do a proof of concept deal to get all of the moving parts down before pitching it to a private lender.

Jeff

So far we have used a portfolio based HELOC to fund our acquisitions and rehabs. This has limited us to typically 1 BRRRR deal, 1 Fix and Flip deal per year, or 1 note deal.

With this model I'm limited to the equity I already have as a limit and have to free up the line to use it again. This typically takes 6 months to a year of seasoning to refinance our capital back out based on ARV instead of purchase plus rehab cost. (BRRR Strategy)

Another issue is we generally stop our lead gen once our line is deployed because we don't have the capital to buy another deal while one is going on and that takes more lead time to get rolling again.  With alternate acquisition funds like an asset-based line based on the deal or something similar, we may be able to scale up to multiple deals simultaneously.

Looking for advice on what others have done to increase their acquisition velocity where it isn't dependant on how much equity we have in our portfolio, but based on the deal itself.

For example, if 3 deals cross my desk that are solid, I would prefer not to be reliant on whether my HELOC is tapped at the moment the deal crosses my desk. I have missed more deals from the stop and go, ebb and flow of capital availability than any other thing.

Does anyone have any advice on how you were able to overcome any of these stumbling blocks in the beginning of your investor journey?

Thanks,

Jeff V

@Michael Sauls Yes they will even allow you to open one against someone else's collateral provided they are aware and sign off on it.

Jeff

@Dustin Lee Cotliar

Interest rates look good, but closing costs are high.

The highest we have paid on closing costs for a mortgaged property was 1800. Our attorney has a standard 1500 retainer for closing and usually pays us for any left over funds in escrow after closing.

Jeff

Larry,

Were you able to make progress on finding sellers who are open to creative deals?

Jeff V