All Forum Posts by: Account Closed

It would make that decision based on the client base. Do you trust them to schedule the oil? In college, I lived in an oil heat house with 8 other people and we ran out of oil several times.

For the 1099, check if the plumber is incorporated, as payments to corporations are exempt from 1099 reporting (disclosure: some exceptions apply).

Also the City of Philadelphia has some pending legislature related to billboards so be sure to check that out. I just read about it on philly.com

A couple of years ago I did a tax return for some people who lived in a rural area. They leased the billboards to clear channel and received between 8-11k per billboard annually. The only expenses on the return were depreciation on the billboard structure and property taxes.

@Anthony G. I would also include Francisville/Fairmount. I went to college in Philly and I would say many of my peers now live in the Graduate Hospital/Fishtown/Fairmount areas.

Here's a great article on Self-Directed IRA's that was in the Journal of Accountancy this month.

http://www.journalofaccountancy.com/Issues/2013/Oct/20137626.htm#

@Lucas Pfaff I'm a CPA in Philly with an office on Broad St., but I specialize in entrepreneur / small business. There's a CPA office around the block from where I live called Spina & Co. which handles mostly RE related investors. Not sure of their rates.

Is this a Single Member LLC?

Two things to think about:

1.) How many bank account transactions are you going to upload or are you just going to enter manually?

2.) Do you need to / how are you going to differentiate transactions for all the properties?

Quickbooks is a standard for most accountants. You can get Quickbooks Online for something like 9.99 / month. or order the software for something like $350. It is good because it can handle just about any small business. There is a ton of support online from Quickbooks Pros who can help you through just about any problem you encounter.

Another options is freshbooks.com. I think that it is more beginner accountant user friendly. It will basically upload your banking / CC activity and allow you to classify the transactions (note QB has the same feature, just not as user friendly).

I haven't used the asset module to track depreciation for either one of those systems.

@Ned Carey If I knew the future value of everything, then I wouldn't need to do an analysis. You need to assume the final value of the asset or would you assume the final asset is $0.

@bryanhancock you are up late / early for Austin. The discount rate I use is how much I typically make investing my assets elsewhere. Good points on using IRR, but if I'm capital constrained I'm probably not investing.

@Jon Holdman I think were talking about the same thing with PV and NPV. My understanding is that NPV is Current Outflow - PV of Future Cash Flows. So if NPV is positive at the end of the calculation the investment is a win. I like the idea of running different scenarios and then weighting the outcomes (i.e. 25% things go really bad, 50% normal conditions, 25% things go really good) to see how the numbers run.

@Ned Carey Agreed it wouldn't factor into many short term deals, but it will help buy and hold investors get the return they desire instead of just taking anything that will cash flow year one. Instead of figuring an IRR you have your own IRR and you calculate if the deal is above or below the IRR.

When I think about the NPV here's a simplified example with #'s.

So the facts:

1. purchasing a property for 100,000 with $20k down and
2. I want to make 12% on any investment I make (IRR).
3. For simplicity lets say I can rent it for $2,000 and my mortgage and expenses will be $1,000.
4. I plan to hold the property for 15 years when I will own it free and clear and by then I think the property will be worth $150,000.

The first year my cash flow would be -$19k (20K downpayment and $1k net from rent). No Present Value factor would be used.

The second year my cash flow would be $1k. I would need to discount this PV based on the 12% I want to make. You can find PV of $1 tables on the internet and apply that to the cash flow. I see the PV of $1 after one year using a 12% IRR is .8926, so my $1 is only $829.

I keep doing this until the final year where I discount the cash flow from the house the same way I did year one except I use the 15 year factor.

If I add all of the cashflows from year 1-15 that have been discounted to present value dollars, I would get my NPV. If my NPV is positive, I'm making more than 12% and the project is a go.

This is just a simple example, but any finance gurus feel free to add or correct me.