All Forum Posts by: Marty Sprong

First of all, you should always be reaching out to your CPA/tax preparer for this kind of advice. You never know if you are getting correct advice online. Having said that, your LLC is required to be set up as "foreign entity" and it, not you, is paying the $800. It's a bummer, I know. Being taxed as an S-Corp means you technically should be receiving a W2 as well as distributions. There are some tax advantages to being taxed as an S-corp, so make sure you understand them. As far as your estimated taxes, you can either do that, or just make sure you have enough taken out of your payroll (either your current W2, or through payroll through your new LLC). Any withholding through payroll is treated as being withheld prorata through the year. Yes you will be getting a K1 (whether it is taxed as partnership or S-corp) whereby taxable income/loss with "flow through" to your individual tax return. Be sure someone is maintaining your books for the LLC!!!! I suggest you both of online access to the bank accounts and of course will both be as signers. Is this guy your friend? The easiest way to lose a friend is to become business partners. Of course, that's not always the case, but just be careful. Make sure everything is spelled out in the LLC agreement. Document, Document, Document. Make sure you get a real estate attorney to draft the LLC agreement and not go to Legal Zoom. Do it right the first time. I can go on and on. Best of luck! Happy for you!

@Jessyca Tyler - Care to share with us what you ended up doing?

I am looking for an investor friendly escrow/title company for a subto deal in Arizona. Appreciate your help.

Best,

Marty Sprong

@Ken Breeze Hi Ken, did you find an investor friendly escrow company in Arizona? I have a subto deal I will need to close Thanks. Marty

You asked for Creative Financing....

Another option is to bring in an equity partner to come in with that 15% (or more down).  You can also right in the agreement that you would be be able to buy them out after a period of time. 

I believe bank may not take your rental income into account until you actually have it under a lease and they have been paying for some time. Call a bank or mortgage broker and find out. If you do have to have your tenants in there for a bit to make bank happy, then maybe think of using private money again for your next house, wait the necessary time to show rental income and then refinance your new house loan. There is plenty of people out there who will lend. You can use your “rental” and new primary as collateral to make them more comfortable to lend to you.

How much equity do you have in your “rental”? Can you us that in some way to help? Get another loan using a wrap loan?

Hello, I am looking for an estimated per square foot number I can use for construction on a new home in Roseville/Citrus Heights area. Potential investment opportunity and want to see if it makes any sense to tear down old houses and rebuild as it has a small footprint on a decent lot.

@Esteban Jimenez

Not enough. Your post made me realize I should take FB app off my phone and maybe even IG. Time suck and add little value to my life. I do like the Real Estate IG I follow and think those as educational at times. If I spent the time I spend on FB and IG on Bigger Pockets (including podcasts), I would be better off.

What I have been doing is listening to podcasts in the background while I am working. Not getting it all, but hopefully I am getting some nuggets here and there. Note to self.

I suggest you set aside 30min or an hour doing something with BP a day. When I can, I like to go on a long walk with a podcast or audiobook playing in my ear.

By the way, this stuff is important, but make sure you have insurance on the building. I would talk to your broker and explain what's going on to make sure the policy is correct. Right now the property is not titled in your LLCs name, so I assume it's under both of your names, as is the policy? Once the property is in the LLC name, you may have to get a new policy, or they'll keep it as is and add your LLC as an additional insured. Or vice versa. Either way, call them today if you haven't already had a discussion with them.

Once the LLC is formed, you're just going to make an entry on the books for all the costs that you put into the buidling. These costs are capitalized, not expensed until you sell it. Or if you are going to rent it out, then you'll depreciate the non-land costs over the appropriate time frame once it's put into service. If you spent $100K on the property, you'll have an asset on the books for $100K, and contribution from the partners of $50k each (plus any cash you put into the bank. You'll have a cash balance of $100 for example and total $100,100 in equity). Make sense?