All Forum Posts by: Patsy Waldron

First, let me say that I think it's a terrible idea to go into business long-term with family and friends. Things usually turn sour sooner or later and it's way more awkward and painful to walk away from family and long-time friendships than a business partner. So think very carefully about the risks involved for all.

Second, I think you are going about calculating the returns for your investors wrong, and that's why you are stuck. If you are partnering with them (rather than them investing in your projects), then you should be thinking in terms of percentages from the get-go: they own/ get a certain % of whatever gains (or losses!) the company makes. Choose a split that seems fair (50-50, 70-30) and divide up the proceeds from any project accordingly.

If you want to do it with them as investors rather than partnersn, then you would just agree on an interest rate return on their money (here it's just what they consider acceptable and won't break your bank- 6, 7, 8%? Any of these figures is better than they would get elsewhere) and pay that out. It would be like a loan. Sounds like you are already doing that with an investor, so you know how it works.

@Dave Toelkes

Thanks for replying to my question. I should have clarified that I didn't think the purchase price itself was deductible, but driving here and there to look at properties! It's helpful to know that none of the actual repair expenses are deductible- what about mileage, though? Is this not a business-related expense, even though the house is not yet rented?

@Dave Holland @Daniel Hyman @Scott Vance

What if you are just starting out in REI, and haven't made any income yet? Are expenses incurred in visiting, purchasing and repairing/rehabbing property deductible as business expenses? The property isn't rented yet, and won't be until next year, but the expenses are incurred this year. How do I account for that in my 2016 taxes? Thanks for your help!

Personally, I think the talk about paying back with post-tax dollars is pretty silly. ANY loan you take out will be repaid post-tax! It's actually one of the most economical loans you can take out, since you are paying YOURSELF the interest as well as the principal. The only thing to keep in mind when you take a loan from your 401K is that, should you separate from your employer for whatever reason, the loan is due within 60 days, or it will be considered a distribution and be taxed. And also- make sure that you DO pay it back within the allowed timeframe (5 years is common), otherwise it is taxable.

@Jennifer W.

Check SimpliSafe again, they have rolled out their camera. I know, as I just bought a system from them 2 days ago and debated getting the camera.

@Gail K. @Michael Karl @Ryan Benson

I have looked at Allure (at Home Depot) and couldn't figure out if it is water-proof. The sample I got didn't mention water proof, and I am looking to install this in the kitchen and bathroom. Do you guys know?

I saw another brand, Repel (also at HD), which IS water-proof and seems thicker and better quality (and prettier!). Any opinions on which one is better?

Even though it makes sense given the repair estimates, I kind of doubt he will go with the revised offer.... That's 25% of your original offer! 

 If/when you register your company with your state's Secretary of State, they specify on the documentation what is and is not okay to use in the name of new companies. For example, in Ohio it is not okay to use "realty," "realtor," and a variety of other professional designations if they do not apply to you- and I only know that because I read the instructions that came with the filing forms. 

$10,000 EMD on a $50,000 purchase prices is certainly pretty big (20%!). I usually put $500-$1,000 down... But apparently this depends on where you are buying. I have heard of places (usually high-priced metro areas) where 3%-10% is the norm. I think in the Midwest 20% EMD is pretty impressive.

I am not sure I understand your second question. Are you asking if the EMD will reduce the purchase price? If so, no it won't. The title company will just count it towards your down payment and closing costs with the original agreed-upon purchase price. I.e. Purchase price = $50,000, EMD = $10,000, down payment= $10,000 (20%), closing costs= $1,000. Assuming you are financing this and have a 20% down payment, you would need to show up at closing with a check for $1,000, as your EMD would cover the DP.

There are many ways to add a "WOW" factor to an offer. They all revolve around knowing what the seller needs. If they need the money quickly, your WOW factor could be a 2-week close (not gonna happen if you are financing through a bank, though). If they need time to find another dwelling or they can't move into their new place until 2 months later (sometimes happens with residential RE), then offer them to stay until they have to move (paying rent, or free- whatever it takes). If they don't want to make any repairs, offer to buy as-is, regardless of what the inspection turns up. You get the idea.... The key is to find out, through their agent if they have one, or from themselves, what they need/want, and to find a way to give it to them that doesn't cost you too much. Good luck!

I have found SimpliSafe to be the most affordable option with very good service. They recently added security cameras to their lineup, which work much the same as other systems I have seen. What I like most about SimpliSafe is that you can take it to your next property when you are done with one project. It is cellular, so doesn't rely on Wi-Fi or phone line.