All Forum Posts by: Logan Reinard

@Michael Gansberg I just called the zoning department and waiting to hear back.  The building would essentially bring in another $3000 a month which translated to probably $1k cash flow. I treat this investment completely separate from the coffee shop, however, more tenants in the area would potentially bring in more business.  I've watched tenants in the area move out of near by apartments and a new one moves in literally the next day.  It's nice hearing the chit chat of the town.  People are constantly asking if there are any vacant living spaces downtown.

@Jeremy White & @Tyler Hampton Thank you for the input. That's what i was thinking as well. I've heard that if you pay yourself less than your employees you will get fined if you are set up as an LLC. Not sure if that is true or not... but i've been paying myself less than my employees since the beginning

@Steven Hamilton II Thanks for replying.  The surrounding buildings pay around $1000-$2000 a month.  My pay at the coffee shop is not a high salary, I would still take a pay check but I've heard that tax from a business is much higher than tax from a rental property.

I own a coffee shop in the downtown area of a city near by to where I live.  The landlord just recently approached me about potentially buying the building for $92K.  I know that he purchased it for $42K about 3 years ago.  Since then, we started our coffee shop and invested over $100k into the building with new flooring, electrical, plumbing, commercial kitchen, etc.  

Our Rent is really cheap @ $650/mo (contracted for another 4 years)

The mortgage on a $92K building in this area would be less than $650 on a 30 fixed.

The other interesting part of this deal is that the building has an upstairs that used to be a living space.  Long story short, a jewlery store was in the location before us and the insurance company forced them to remove the tenants, staircase, eletrcial, etc, but it's 2500 sq ft that could probably hold 3 apartments.  Ran down apartments in this area are bringing in $650-$750/mo.  It may be a big endeavor, but the pay out could be amazing.  I'm not entirely sure, but i'd assume it would cost around $100k to turn the upstairs area into living space with up to date components.  

Do you see any holes in this idea?  My initial thought, is that the area is growing and we are already paying rent.  The risks are that the building is old, maybe there are things I just don't know.  What would you do?

Hope to get some input on this.  Thank you for looking!

Logan

I have the opportunity to purchase the (commercial) building that I have a business in.  

We currently pay $650/mo in rent.

Our business is set up as an LLC.

We could purchase the building for $92K which would have a lower mortgage payment than what we are currently paying in rent.

What I'd like to do is no longer take a paycheck (which has higher a tax rate) and just pay myself with rental income by raising the rent that the business would pay.  Is that illegal?

Also, what is the difference in tax rate when you compare rental income to owner's draw payment (or self employment tax)?

@Byron Scott wow. You’re the man. Don’t even know you but I’m proud of you. Hope that’s not weird haha

@Joshua Myers I’m hoping that knowing someone personally to vouch for me will get me somewhere haha. I doubt it will though haha

@Courtney Jones do you bank with chemical? It’s an awful name but someone I know works there and I may put our business banking with them but not sure yet. Thoughts?

@Brian Garrett @Adam Lee

I meant to put that $60k - $70k is on the high end of rehab if I did absolutely everything.

More accurately it’s probably around $40k

Home doesn’t have a/c. Do you think that is a big deal?

I found a seller selling a home that had damage to the front of the house due to a tree following down on it.  This is what I think the numbers will look like

Purchase Price - $20k

Rehab - $60-70k ($27k is fixing the front of the home)

ARV - $90k

Rent in this area goes for $750 - $900/month

It's an older home.  Needs windows, has plaster walls, needs a kitchen update, no ac system and has a boiler

Let me know what you think!