All Forum Posts by: Ben Skove

Great advice, Deborah. The test kits that the EPA has approved are found here: http://www2.epa.gov/lead/epa-recognition-lead-test-kits

One thing my RRP instructor told me is that if you're planning on doing a whole house gut rehab is that there is a very narrow exemption from the RRP rules:

http://www2.epa.gov/sites/production/files/documents/full_rrp_fqs_-_december_19_2012_with_metadata_2.pdf

Search for "gut" in the article.

From a moral, ethical, and heath-related basis, though, you need to comply with EPA regulations. It was eye-opening to see just how little lead dust can lead to significant lead poisoning problems in children. The rules for containing the dust aren't particularly complicated, nor is it horribly expensive to comply with them.

Thanks to Manuel and everyone else on this thread. I've found the information to be very useful. Manuel, if you pick this one up, let us know how theory and reality collide!

That seems to be the case, which is why I felt it to be unethical. It seemed to be a case of shell partnerships set up in an attempt to circumvent detection. Needless to say, I'd rather pay my fair share and abide by the rules.

Pat L. My buy and holds are in a LLC - I was looking into a S-corp for several potential upcoming flips. I want to keep it reasonably simple, particularly at this point, so that all the profits don't flow to my CPA and lawyer....

J Scott My CPA touched on the dealer status issue as well, describing how to set up multiple entities in order to treat flips as capital gains, rather than ordinary income.

He stated that it's not a clear dividing line, and that the IRS uses both the number of properties flipped and the time that they're held. Evidently he has arranged for people to structure a number of partnerships, with each one responsible for one or two properties, so that when the income is reported it isn't all coming from one entity. Supposedly, because the number of properties are spread out between different entities, it's less likely to trigger IRS interest. I didn't really feel this was ethical, nor something that fits in with my strategy, but there are people pursuing this setup. YMMV.

More here: http://www.nuwireinvestor.com/articles/real-estate-dealer-or-investor-51401.aspx

Brook, I live in Clifton, and I've been surprised at where UC students will choose to live - some don't mind sketchy neighborhoods (much to their parents chagrin, no doubt.) That being said, with the number of new and rehabbed apartment buildings (the large student-oriented properties on Jefferson, U-Square, and on short Vine, along with the properties that Gaslight has rehabbed), competition for students is very fierce. I agree with you about Spring Grove Village; it's a lovely little place, though I really wish someone would occupy the little "commercial" area!

Pat L. It'd most likely be a sole-employee S-Corp. However, depending on the outcomes, I may modify it.

J Scott I think that's sound non-advice. :) I suspect that the percentage in my case may need to be higher, as I'll (initially, hopefully) be having fewer "non-shareholder employees".

My CPA also insinuated that the current IRS troubles make it less likely of an audit occurring; this seems like wishful thinking, and not a risk I'm interested in taking.

I appreciate the responses!

After meeting with my CPA today, and going through a number of back posts from the BP forums, I'm interested in hearing more about how the IRS oversees the balance between S-Corporation compensation versus flow-through shareholder income.

Perusing the IRS information, they state:

It seems to me that if you use a S-corp, pay yourself only a small salary, and are very actively involved in your flips, the IRS can step in and reclassify most of your pass-through as wages. My CPA didn't seem to think this was much of a problem, and stated that it was very seldom that he'd seen this occur. I'd much rather be conservative and avoid potential (and costly) pitfalls down the road.

While the rule seems to be plain, I'd like to know how it's actually implemented in real life. Has anyone had this happen to them?

I wonder how long they've been in possession of these homes and if they're as far along as Blackstone in terms of renovation. If they're around the same figure - 85% renovated - it ought to be interesting to see what happens next.

I think the consensus is right; I'm just curious if there'll be any trend towards more shelving than is typical now. If people want cabinets, I'll give 'em what they want. :)

David Beard Thanks for the link! I think that's true for most of Hamilton County. I'm zeroing in on the Clifton area, because that and Northside tend to be a little funkier and arty. However, I really don't have much interest in trying to be on the leading edge, so I'm sure I'll stick with the tried and true cabinetry.