All Forum Posts by: Thom H.

Ray,
Welcome to the BP nation. You can learn a ton on this site. I found it a few months ago, and can't read enough of it.

Lyall gave some very good advice above, so I won't repeat the two year tax return info. A few years back, I left the self employed world for this very reason. I'm not suggesting you do that, as I'm sure you have a very successful business. But I found it much simpler to return to the corporate world for a few years to enable obtaining a few more loans to meet my objectives. It's amazing how much easier it is to obtain loans because of a corporate job that's often significantly more vulnerable (at least was the case in my former situation) than in self employment. I understand why lenders do it, but it's still painful for the successfully self employed. Look to your smaller local banks and credit unions for your best deals. My favorite tool is finding motivated owner financing. There are many leverage tools to choose from depending on your specific situation. Best of luck, and again welcome to BP.

Vaishal,
Chris Clothier recently posted an interesting article on this subject (hope I got the link right below:

http://biggerpockets.us1.list-manage1.com/track/click?u=9038d68f4b0e0044fb104a6af&id=3505ac96fd&e=f3c3b37f37

You may want to read the many replies to this article for additional thoughts. It's a good thread. Best of luck.

Gary, I'm not a blogger, so it's ironic that I'm trying to give you advice on this topic...but it struck me as I randomly read your forum, that as a landlord I learned a long time ago to stick with what I was good at, and hire experts for the things I didn't do as well. It's been a pretty successful combination for me over the years as a landlord. I guess my point here is, why not find host writers for your blog posts. There must be tons of folks out there willing to sell their ideas and articles on the cheap, that could help supplement your blogging writers block from time to time. Add a link for wanna-be writers to submit ideas to your website. Offer a modest fee writers fee to anyone with ideas or articles you actually use. Just a thought, I hope this helps in some way. (...if not, I'll go back to land lording now and randomly reading the forums!). Best of luck!

Great information Steven. Thank you very much for this additional info. I will definitely check further with my accountant. Much appreciated.

Thanks Steven. A good point. We'd already considered this and intended to go in that direction, if and when the grand babies start showing up (none at this time!) The current option of removing some expenses for rent will help her with saving her earnings for a down payment...a reward for gaining (and maintaining) the scholarship. She is very interested in getting involved in RE, and understands cash flow and the value in starting early. (Wish I'd had the opportunity to finish college with no debt and a duplex in my name! She's well on her way!)

Thanks for the additional information folks. After speaking with my accountant, she reiterated Steven's input that it would be a qualified expense up to the equivalent allowance for R&B for the institution, provided she is at least a half time student. Steven, as always, great input. Thank you for the information. This is a great option for her to save her earned income for her first RE investment, while utiliziing her 529 and Coverdell monies to cover her rent.

Steven and Callum,
Thank you both for the responses. I will be discussing with my tax folks today. My assumption was similar to Steven's, that since the cost of rent is equal to room and board for the university, this cost could qualify. I will verify before any steps are taken, but I have to give my 20 yr old a lot of credit either way for a great idea to enter the RE world. She's already on the right track and thinking outside the box by looking to get ahead and wanting to build equity in her own place. Thanks again for your responses.

Here's a 529 plan question for the tax gurus...

I setup a 529 college savings plan for my youngest years ago. She now is in college and earned a full scholarship, so she doesn't need the 529 plan funds for her undergrad expenses. She recently decided to get an off campus apartment with a room-mate, and works part time to make her half of the rent payment. So, finally to the question... Can the 529 plan fund her off campus apartment rent payments? If so, this would free her earned cash up to save for a down payment on RE. Essentially, providing her a means for swapping the 529 plan money out of the fund (without penalties) so she can invest her earned income. I haven't called my CPA yet due to the holidays, just thought I'd ask for opinions before I call and ask tomorrow. If not, no biggie, she can always wait and use the 529 plan for grad school.

John, without further info it's hard to give much advice, but making some assumptions about your situation, such as low interest student loans, higher interest credit cards, paying rent, etc. You need to reduce your debt level as quickly as possible to be in a better position to invest. Start by focusing on paying down the higher interest credit cards, and then shift to attacking the student loans. In the meantime, learn everything you can from sites like BP, an REI, or a mentor, so when you're in a better financial position, you will be better informed. Are you currently paying rent today or have you already purchased a home? Depending on your student loan rate and if you are paying rent today, I might give slightly different advice. For example, if you have a high rate student loan, I'd advise to pay down quickly, just like the credit card debt. If however, it's a low rate student loan and you are currently paying someone else rent, I might advise to pay the minimum on the student loan, and consider finding a duplex that you can afford to occupy and rent out the other side to start building equity. A lot depends on facts, which aren't readily stated above, so I don't want to point you in a direction without better information. But welcome to BP, and soak up all the info on this site. There is a wealth of information here to wet your appetite, and you're already ahead of most by recognizing the opportunities in RE.

Phil, I guess I would so sum it up by saying when I invest this year, I will continue to favor real estate over more traditional investments. Don't get me wrong, I will invest in other areas (too) for diversification, but a good bulk of my 2013 investments will definitely continue to go into real estate. There are many of factors that will influence that decision, but a large factor for me is the continued opportunities in my preferred locale. I will likely buy both SFR and MF for cash flow (rentals) and longer term appreciation. So definitely yes, I would and will continue to invest in rental properties.

Tenants are what you make them. Do your work up front, select good tenants and minimize the difficulties. If you do this very long, you will have difficult tenants, but it can still be profitable. To this point, understand what your strengths are and utilize them to maximize your business. I decided a long time ago that I was better at recognizing and finding good deals, assessing properties, investing for growth, and decided to leave dealing with tenants to the experts, as such, I now use a good PM company (...and yes, there are reputable one's out there) to manage my tenants. This leaves me much more time to focus on my next acquisition and monitoring the profitability of existing investments. So I spend less than 3-4 hours per month on all of my properties...mostly reviewing incomes and outflows to ensure everything is as I expect it to be. Occasionally, I have a calls with my PM company about repairs or changes, but after several years they begin to understand expectations and it's a matter of monitoring their performance. I wish I'd made that decision sooner in my RE career, and I would've saved a lot of headaches in the early years.

Others have given great advice above, find a mentor, define your long term plan, study and become knowledgeable about your particular investment area, avoid partners (I absolutely agree with Jon on this one), and understand your skills and strengths and focus on them. And lastly, read everything you can on this site! I wish I'd had this kind of forum when I started out years ago. I've only been an active member of BP for a short period, but i read it nearly every day now. There is so much free and valuable info on this site that can help you avoid the start up pitfalls. Welcome to BP and best of luck!