All Forum Posts by: Martinis Jackson

Greetings BP Network: I am working with a lender who will refinance as I continue to BRRR throughout the year. The loans are in the name of my LLC; however, I will be a personal guarantor on each loan. Since my LLC does not currently have established credit and income, this appears to be my only means of securing refinancing. Obviously, I don't want to be on the hook for dozens of loans. How are people navigating this issue? How are you establishing a FICO score of sorts for your LLC? Thanks in advance! Best regards, MJ

Josh Bauerle who on this thread specified that we were only speaking about rental businesses?

Josh Bauerle it's good to hear that you are a CPA. I have a question, can a sole proprietor elect to be taxed as a corporation? Is a corporation taxed at the same rate as a sole proprietorship under the new tax plan?

@Josh Bauerle I disagree. 1) pass-through entities are referenced in the New Tax plan, you can read the article for references (http://www.dontmesswithtaxes.com/2017/12/how-taxes-on-pass-through-businesses-would-work-under-the-gop-tax-plan.html) 2) An LLC changes quite a bit about how you file, because you can elect how you want to be taxed when you create an LLC, you cannot do this a sole proprietor. Obviously, if you elect to be taxed as a C-corporation that will change your tax liability given the new tax rates for corporations, the same is true for other tax elections as well. The LLC allows you to elect how you're taxed, so to say it has no impact on your taxes or does not change your benefits under the tax plan does not make a lot of sense to me.

Also, the IRS states "An LLC with only one member is treated as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes), unless it files Form 8832 and affirmatively elects to be treated as a corporation." Not all LLCs have only one member, in fact, mine does not. The ones that do not can be pass-through entities and will have tax advantages under the new plan.

I hope this helps.

@Davidson Francois as @Anthony Dooley mentioned, due on sale clauses are standard in most mortgage agreements, but does not necessarily mean it will be exercised (though it is still a risk). Also, you may be required to pay taxes on the transfer. 

@Davidson Francois There are a number of benefits to establishing an LLC in real estate:

1) It will protect your personal assets from attack when you are doing business. For example, if you enter into an agreement under your own name, you are personally liable for any legal issues that arise from that transaction.

2) There are tax advantages to operating as an LLC as opposed to a sole proprietorship, specifically under the new tax plan.

3) It makes it much easier for you to partner with other investors on a deal. Usually, the investor will want to create an LLC for each project with an operating agreement governing the partnership.

I hope this helps.

Thanks @Lance Lvovsky very helpful!

Greetings BP Family

I am seeking advice on establishing an efficient process for keeping tabs on accounting. Our business is anticipating doing about 3-4 flips this year, so we are not expecting overly complex books. How are people handling keeping up with revenue, expenses and the like? I have heard quickbooks is a great resource or are we at the stage where we should be hiring an accountant? Looking forward to hearing ideas.

Best regards,

Martinis

Greetings BP Network: I am looking for best practices for hiring a virtual assistant to assist with filtering through probate lists for wholesaling. Does anyone have an effective system for 1) finding VAs, 2) training them, 3) monitoring their work, and 4) creating a system for them. Look forward to hearing from anyone with ideas. Best regards, Martinis

@Shawn Clark I agree, things definitely need to go as planned, especially with the rehab. We are using a line of credit for the rehab costs. No hard money involved. There is a solid comp two doors down that sold for 160k, we are trying our best to bring our property up to par with that renovation.