All Forum Posts by: Account Closed

I'm late on this one but had to comment.

OMG Zillow (and all AVM's) is horrible in terms of valuation. The old saying, "even a blind squirrel finds a nut once in a while" applies. That said, there may be a few markets where the Zestimate is close. These would be areas where there is little to no diversity among properties, maybe in a very large and new development or, as another poster pointed out, where location is the only factor.

Not all, but the vast majority of markets in the US are diverse. This occurs in brand new developments and old neighborhoods too. Developers produce various properties at different price points on purpose, to appeal to as many buyers as possible. Older neighborhoods deteriorate, and owners repair/upgrade at various rates along the way. All Zillow does is take the sale prices of properties in a close proximity and generate a value based on the mean (average) or mode (most commonly occurring). It does not, nor will it ever be able to, account for the diversity within. Even if the programmers were to get better at refining the formula, a computer can not see the interior condition of the property, nor can it be programmed to make a human judgement concerning physical condition, quality or appeal, which we all know are driving factors in the majority of markets. For these reasons, AVM's will always be subject to significant "error".

What Zillow is good for is general sales data. If you ignore the valuation and just look at the sale prices, you can get an idea of the market spread, or general range of value, found in the area. You will quickly observe the difference in value between property is often in the hundreds of thousands. Zillow does show the sale price and address of each property, so it can serve as a starting point for research. From there you may be able to source assessor records, view a street or aerial photo or even get lucky and find an active MLS listing where you can view interior photos. Most MLS systems allow public users to view active listings, including interior photos. You can use the list price as a starting point for value, but be careful there too, as a list price only reflects the desire of the seller, not the final sales price - many sellers think their property is worth more than it is and list too high, despite sound advice from their realtor!!! Therefore, simply applying the sale to list ratio to a list price is dangerous.

If you cant figure out value, I would advise an appraiser. Not any appraiser, but one that understands REI and one that is willing to do research for you. You do/may not need to get a "full" appraisal and plenty of appraisers are willing and happy to do limited valuations or preliminary research or even just supply you with better data for your own analysis. Suggest to offer the appraiser a retainer and/or a service contract by the hour. That way you will always get what you pay for and never pay for more than you need. If the appraiser thinks/states they will violate USPAP by providing a limited valuation and tells you they can only do a "full" appraisal or the like, they don't know what they're doing or are just trying to milk your money. Unfortunately, many licensed appraisers are scared to death (who can blame them, being the scapegoats of all real estate problems) and wont want to engage in anything less than a "full" appraisal, so you might have to make several calls before you find one suitable.

A realtor can be an excellent source as well, however they often have a different perspective and/or motivation than an appraiser, so beware of that. In most states, it is illegal for a realtor to offer an opinion of value if they are not also a licensed appraiser. In some states, a realtor may legally offer an opinion of value (which by definition is an appraisal), however they are limited to providing these only for properties where they have a clear possibility of obtaining the listing. So, a realtor should not be throwing out values to REI investors who don't plan on using their services for the property. Conversely, if you have a realtor who gets all your listings and you are a flipper and not a buy and hold, they can do that legally in some states. They call these BPO's - Broker Price Opinions.

Last but not least, while the general public are restricted from gaining full access to the MLS (Multiple Listing Service - you must be a licensed real estate professional to purchase access), there are some other data subscriptions available out there. One that I think is very decent is RealQuest. This is most often used by lending underwriters, who also do not have access to the MLS, but need to verify appraised values. RealQuest is a great source for property data, sale prices and sale histories. You can do custom comp searches too. However, RealQuest does not provide photos and as we all know, a picture says a thousand words. Good luck!

With all due respect, I think you are being short-sighted here. Not only are you engaging in willful evasion of tax law, probably state as well as federal, but also LLC law. Your choice to ignore tax law could be viewed as misconduct, more than likely a criminal offense under your state LLC law. It appears to me you have elected to go LLC to reduce risk in one area, only to open yourself to other risks.

The IRS will most likely "clearly see" that you either failed to file an initial return or will suppose you made an error on your 2016 return, when you stated it was not the initial return. I don't know how the IRS operates, but I would think it a reasonable assumption the initial return for a business is something they pay close attention to.

PS - I see another poster has advised you start your initial tax return for your LLC in 2016 and forget about 2015. I suppose that is one strategy, considering the IRS will waive the first time offense, but it is still technically failing to file and could create accounting issues for you down the line. A more serious offense in my view, is if you do that, you are committing fraud, as you sign the 2016 return stating all is true and correct, when you in fact know it is not (meaning the business started in 2016, when in fact it started in 2015). I would not take this advice, unless the CPAs and lawyers know something about penalties for fraud that I don't.

Danger Danger Danger!!! I made the same mistake and it is not a trivial matter to the IRS! #1 - The IRS treats an LLC as a partnership unless you elect otherwise. #2 - All partnerships are required to file yearly tax returns, form 1065. In addition to form 1065, you must file a k1 to each partner. Form 1065 is due on the 15th of the 4th month of your tax year (so April 15th if your tax year starts on Jan 1). K1 needs to go out to each partner (I believe) by Jan 31.

The penalty for not filing a 1065 return, is $195 per month, per partner for the duration you do not file, per tax year. So year number 1 of no file starts to accrue, then in addition and simultaneously, year #2 of no file starts to accrue and so on. The IRS, if you ask them-they wont just offer, will/may grant a first-time-offender waiver, however this will only apply to the initial tax year you failed to file and not to subsequent years.

I made the same mistake. I corrected the mistake by filing the corrected forms late. Despite my honest efforts to do the right thing, I received a bill from the IRS for roughly $4500 for tax year #1 and about $400 for tax year #2. I was able to get the $4500 waived, but had to pay the $400. Do not let this slide.

And yes, you will technically have to also file an amended personal return, as schedule E pertains to the 1040. You need a K1 for your 1040 to replace the schedule E, then you need form 8825 filed with your 1065 (8825 is essentially a schedule E for the 1065).

Sounds like you caught this early, so you should only have one year of failure to file, which the IRS should allow a waiver on, but again, you'll need to ask for it!!!

irs.gov has all the forms, schedules, instructions and publications available for easy access.

LOL. You are from New York so you are used to land scarcity, which leads to high land value. Neither Indianapolis or Kansas City (or Milwaukee) have land scarcity issues, so yes, land value can be quite low. Some land value in Milwaukee is less than $1 right now! You would think people would flock to this low value right? Wrong! You could build a brand new house on free land in some parts of Milwaukee and not get your money back on the sale, which of course explains why no one does it.

The other posters are correct, you are not allowed depreciation on land, but you are allowed depreciation on buildings. You have to spread these out over 27.5 years however (suspiciously similar to a common mortgage term). While it may seem unfair, many business are not allowed to depreciate capital expenses at all, rather gains/losses are figured at sale. So in that perspective, 27.5 years aint so bad.

I am here looking for similar types of answers, only to end up answering yours!!!

Assessments are done per market value, not cost. Just because you spent $100k, doesn't mean your property increased in value by $100k. Both you and your assessor agree that your property is worth more than it was prior to the rehab, so no issue there. The next question is, do you think they got the value right? In WI, the assessor value is considered "accurate" if it is within 10% of the contested value and within 5% of the re-sale value. Most everywhere there is a process to appeal if you choose, but there are timelines and procedures to be followed - call your assessor or local municipality to find out what and when these are.

Many people contest their assessments successfully on their own. This can be done through simple conversation with the assessor or by going through the appeal process, where you would present relevant data to back your case. Thing is, the assessor has access to tons of data, so you need good ammo to fire back. If you struggle to acquire the data, an appraiser/appraisal can help. Good luck!

Consult a lawyer. They should be able to tell you what your options are in less than an hour.

I think it's a bit unrealistic to expect to purchase a property with credit and then make enough profit off of that to live on. If it were that easy, everyone with credit would do it.

Follow up. So the FB staff has followed up with me about enrolling in smaller programs. My situation and strategy is the same, I am not willing to put a high priced education system on a credit card (which they suggested).

That said, I am not convinced it would not be worth it. I am going to keep an open mind and do more research on FB. I am also going to pursue some other resources (BP, for one) as part of my research.

I think there are different strokes for different folks. Each one of us has different goals. I am not going to come on here and bash FB just because I didn't sign up or because many on here are convinced they are hooligans. To note, I have not read one persons post who called them hooligans who had data to back up their claim; they only generically lumped them into all the other ones and left it at that. I find posts like that potentially misleading. I did find the very few posters on here who did sign up, have had positive things to say about the program. As an appraiser, I am trained to always consider the source of the data. LOL. Which in this case, the positive feedback could certainly be coming from FB staff.

My two cents and advice, is always think twice before making ANY purchase, especially a large one and especially one on credit.

I just finished the 3-Day this weekend and will share my experience. Background? I am pretty open minded. I am just getting started in REI, I own one rental and am working on my first flip.

So it all started with those late night commercials. I have seen guru after guru promote them over the years. The commercials always annoy me because they are filled with teaser content and FB was no different. That said, for whatever reason (well the reason is I am sponging all I can learn about REI), I signed up for the free 2-hour seminar.

I went to the free seminar expecting to be disappointed. I told myself the guy would get 30 minutes of my time to provide the content promised on tv before I walked out. He had me convinced in less than 5 minutes that I would be spending the next 2 hours of my life listening to him and it turned out to be worth every minute. I signed up for the $197 3-day class, thinking if the content was half as good, it would be worth the time and money. I knew full-well much of the 3-day would be spent trying to sell me the "next level". I am an appraiser and spend about $100-150 on each 8 hour CE class I take, usually 4 every two years. In that perspective, I though the $197 could be a fair deal and worth the risk.

So I go to the 3 day. I could write a lot about it here, so I will try to be as brief as possible and still get the story in. The first segment almost made me walk out. It was full-on conditioning. That said, while it is certainly true the conditioning served FB in terms of selling their product, it was also a necessary and effective method to make sure every person took the most out of the weekend as possible. So on that score, frankly it was a win-win for everyone. I was impressed that they were smart enough to do that, even if the motives could be questioned.

After the initial "conditioning", the presenter started to get into the meat of things (Jeremy). True, the REI content was salted with sales pitch and conditioning every step of the way, however an intelligent person ought see through that and be able to separate the REI content from pitch. While it was corny to participate in the group interactions and reaffirmations, the truth is the method is a highly effective way of learning and frankly I was glad they did it that way. Its tough to learn from a bore.

I found the over-all content was well worth the $197 and 3 days of my time. No, they could not dive deep into every aspect of everything. However, the did a very good job of giving a general and comprehensive overview and offered many, many, many very useful specific pieces of information. Not a single person got a bad deal on their $197 as far as I am concerned. For instance (this is for all you haters of FB and lovers of BP), I searched BP a year ago to get advice on the best way to structure an REI business in terms of taxes. I got tons of people who chimed in, yet never got a straight answer besides "go ask a tax accountant when it comes to that stuff". So I did ask a tax accountant, who told me I would be better off asking people who already have an REI business. Hmm. FB spent a short time going over how they do it and why. What they said made perfect sense and I will now be modifying my tax structure because of it. Score: FB 1, BP 0. Just sayin. That information alone was worth the $197 and maybe the $35k over the length of my business career. Keep an open mind folks.

While I thoroughly enjoyed and benefitted from the FB 3-day, and truth be told might have laid down the $35k right there and then if I had it in DISPOSABLE CASH to spend, I did not like the high-pressure sales tactics. The value I see in the $35k is not in the education or coaching (though there is certainly value in that), but the turn-key access to their systems. However, now that I am at the point of not being able to afford the $35k and FB is trying to squeeze me for anything they can (which is coaching), I question whether or not I would have ever received the access I expected anyways. That would have been my gamble had I had the money and pulled the trigger. This issue is also the crux of my current decision and why I ended up here to investigate. Unfortunately I've found exactly zero posts about their systems, which leads me to believe the access does not exist. Score on that one; FB 0, BP 1.

I am grateful to and love BP. I refer everyone I know here. That said, I think there are some guru haters here who offer too many opinions with a very closed mind. I have the information I now need to make an informed, rational and most importantly thought-out decision about FB, however I had to weed through the haters bull and uninformed opinions to get it. Not too different from the FB 3-day as far as I am concerned. Just sayin. I think something great about FB is that after the sale is done and the content comes, it comes in a neat little package. That has got to be worth something, no? You get what you pay for comes to mind.

To end, I would recommend the 3-day seminar to anyone, with a word of caution, don't bring your checkbook because while you will get the high quality info from some of the best in the business, you will also get sold by the best in the business! Beware!!!

I don't know if the FB Mastery is worth it or not. I know I will not put money on a credit card to find out. If FB is reading and they are legit, and they want to improve, my advice is tone down the high pressure sales closing tactics (pitch level is fine, just have some ethics about closing it) and provide better transparency to what you are selling. I am not giving you money because I don't have enough information on the part of your offerings that I am most interested in (systems access). I also think the written return policy is weak.

I could say much more, but goodness, how many of you even made it this far?!?!?!?

I say don't hate FB because they want to make money. Than Merrill is certainly one of the most successful REI investors anyone could ever hope to sponge from. I also say be aware of your risk anytime you pull out your wallet. I wish my feelings were not so mixed. I would prefer to write a review that said, "I think FB is the bomb and worth every cent". Truth is I don't know if it is or isn't. If they deliver, its worth more than $35k by a long shot. That's on FB no matter what perspective you take. Too few Mastery Students telling their story on BP, which I think says a lot and is unfortunate.

I will end with this. My life is forever changed after attending the FB 3-day. Bravo and thank you FB for that.