All Forum Posts by: Nicholas Dennis

@Jim Pellerin

Thank you!!! Totally perfect on my numbers. I’m not as experienced at running the numbers as everyone else but you put it into perfect terms!

Hey all!

I’ve been a local contractor specializing in work with real estate investors. Through my journeys and relationships I’ve came across the opportunity to purchase 33% of an off market

4-plex my most trusted investor and friend just acquired.

Currently the house is pretty rough.. framing issues, pretty chopped up, needs a lot of work. I’m projecting renovation at $60000 paying me and my crew as well as material cost.

Purchase price is $200,000. My share is to pay for labor and materials to get it up to speed and whatever else I need to put down to get me to 33% of equity. All in all I’ll be in about $85,000.

The plus side is it’s in a very desirable location only one block from downtown in our area. Units will rent between $900-1100 per month. Gross rents at about $48000.

After we renovate and get it rented we plan to refinance and pull the money back out. Our mortgage projection is around $1500.

Utilities will be included in rent and will be roughly $400 per month. Adding another $100 or so for service calls our all in expenses are around $2000.

Considering I’m going to be renovating we shouldn’t have any major issues for some time. I will be meticulous with repairs and make sure to go through with a fine tooth comb.

Question I have is this. To more experienced investors.. does this sound like a good deal? By the time property is finished value should be close to $400,000. (At least)

Let me know your thoughts.

@Stephanie P.

Learning is never a waste of time! I appreciate your input and time! The way I worded my post I understand why you misunderstood. However I’ve confirmed with my mortgage company this is the best route one running a separate business and working under 1099. Overall creating sustained income under a 1099 should be converted to some kind of corporation to benefit from protection of personal assets and getting business history.. that was my answer to the question

@Stephanie P.

Also that’s exactly how a GC works.. it’s called a subcontractor for a reason.. any-who

To anyone else in this thread I checked with my mortgage broker and my CPA multiple times on this strategy there’s nothing at all illegal about it or fraudulent. If you decide to use it run it by your own CPA/Loan Officer and attorney if you must.

It’s taught by Mark Kohler, a CPA and Business attorney with his hands in tons of real estate investments. If you want to know more about how to get his info or learn other strategies I’d be happy to share.

@Stephanie P.

Instead of looking at the 1099 income the underwriter is looking at a business with 3 years that pays me a consistent pay check..

That’s not better to a loan office to see a business with history then a 1099 misc?

I AM DISCLOSING THAT I AM 100% OWNER

@Stephanie P.

As far as decreasing my percentage of the ownership I’m not sure as to where that comes to play. I never said I was going to decrease the percentage of my ownership all I was saying is I am going to increase my salary before I get the loan once I get the loan I may decrease my salary and up my business expenses.

Example

My business revenue is $100,000

Before loan my expenses and reinvestments total $50,000

I pay my self a salary of $50,000 taxed as an s-Corp.

I’m approved and move into the home.

Suddenly my business expenses go up to $70,000

But my revenue stays the same. I then pay myself a salary of $30,000....

@Stephanie P.

Let me simplify this. All I am doing is qualifying for a loan as an S corporation the fact that I’m an S corporation and I pay myself a salary is better to a loan officer than trying to show them a 1099.

The 1099 employer is paying my S corporation as a subcontractor. When I go to the loan officer the underwriter will look at my S corporation and see that I’m being paid a salary versus just showing them 1099 bank statements.

@Stephanie P.

It’s fraudulent to pay yourself as an s-Corp? I’m paying my taxes when I put myself on payroll. All I’m doing is putting myself on payroll from my business... giving my self a salary. That salary I will use for the lender.

So your saying don’t leverage business right offs? Vehicle expenses.. phone bill.. gas etc? I’m confused on how any of that is mortgage fraud..

@Jaz McDonald

My solution is as follows..

I've owned an LLC as a retail store for now 3 years. The retail store is not my full time income, (more of a passion project that is growing to become a residual source of income) I have employees that run it throughout the week as I work full time in construction on 1099. I simply created two separate business accounts for my LLC, I've been having my 1099 employer write my checks directly to my LLC. I then formed an S-Corp. With a few months of having my self on the books I can show my W-2 to the lender. Once approved for the property I can Then lower my salary to about 30% of actual 1099 income. This avoids self employment tax... (15%). The majority of my major expenses are ran directly through the business as business expenses. The 30% I'm living off of is the only money I have to pay taxes on. You have to be creative with your structure to make it work. Also depends on the lender.

Hello everyone! I just recently joined renatus with the essentials package. As a new investor, going to their mastermind groups, and starting these classes, is an awesome way to get started. Not only is it easier to hold my self accountable, I’m also gaining an awesome mentor network, and great real estate strategies that I wouldn’t have had an easy time learning otherwise. I was not pressured into paying for the courses by my friend that invited me. Instead he sat down with me and helped guide me to the right path. I think that people that jump into paying for that 20000 do not take time to weigh their options correctly. The essentials package gives you a great toolbox of real estate tools FOR LIFE. And so far I can tell I’ll make that 2000 back in this group no problem. Once I have a stronger portfolio under my belt, im sure I’ll upgrade my package to learn more advanced strategies. I will keep this forum updated!