All Forum Posts by: Daria B.

I am new to investing (focused just on flipping right now)and have never run a small business. Through books I've read recommended on Bigger Pockets and researching, I know that you need to have independent contractors fill out a W-9 and then send them a 1099 at the end of the year. I have a couple of questions that for some reason my accountant can't seem to clarify for me.

1.) How do you know which contractors you use need to fill out a W-9? For instance, I know that a couple of my general contractors have their own LLC and are smaller companies and therefore probably need to fill them out. If I use a large company for HVAC or something, I imagine they don't need to fill out a W-9. I was wondering if there is a definitive way to know who to have fill out a W-9 so I don't just throw them at everyone like my accountant suggests.

2.) If I am using a general contractor to manage my whole project and the cost of the subcontractors that he uses are rolled into his lump sum fee that I pay over scheduled increments, do I just have the general contractor fill out a W-9 since I am only issuing checks to him?

3.) When filling out Independent Contractor Agreements, do I literally have each subcontractor fill one out? And again, if my GC is managing everything, do I need to have all of his subs sign an Independent Contractor Agreement or is it covered under the one the GC signs since I am just paying him?

Sorry for questions that I feel are probably very basic, but I've been unsuccessful in searching the forums, searching online, and in talks with my accountant.

Thanks!

I can only answer #1 as I recently went through this.

My painter, flooring, handyman, has an LLC but also accepts payment in his name. I had him fill out a W9 and will issue a 1099 at the end of the year because in total all his work for which I paid was over $600.

Large companies are generally Inc. So they don't apply.

My CPA said the reasoning behind it is to ensure they pay their taxes for this is income to them.

1 Vote

I'm not an agent but would like to hear from Florida agents about this disclaimer I found on an ad in a local Facebook buy/sell page.

They state they do not claim to be licensed real estate agents or brokers and are just a real estate investment firm but are marketing properties for sale. How is this legal?

"Brilliant Home Buyers, LLC does not claim to be the owner of the properties we market for sale. If we are not the owners then we simply have an equitable interest in the property. Brilliant Home Buyers, LLC is a real estate investment firm and does not claim to be licensed real estate agents or brokers."

0 Votes

I'm not an agent but would like to hear from Florida agents about this disclaimer I found on an ad in a local Facebook buy/sell page. They state they do not claim to be licensed real estate agents or brokers and are just a real estate investment firm but are marketing properties for sale. How is this legal? "Brilliant Home Buyers, LLC does not claim to be the owner of the properties we market for sale. If we are not the owners then we simply have an equitable interest in the property. Brilliant Home Buyers, LLC is a real estate investment firm and does not claim to be licensed real estate agents or brokers."

0 Votes

If there are leases in place they have to be abided by, of course it depends the way the lease is written.

Does it have a 30 (whatever period of time) day termination for both sides?

Is there a different termination clause that might favor the tenant?

Does the lease indicate no increase since they may be family members good friends with owner?

Have you approached the owner regarding anything on the property and tenants - you said you recently ran across - what does that mean?

If you have already spoken with the owner how about mentioning having the property sold vacant so you can start with fresh tenants. Or, ask to see the leases to determine your strategy. That may not be something the owner would do if it's not under contract as part of the period of inspection you can ask for all those things.

0 Votes

Originally posted by @John S Lewis:

So I'm looking at a property and the seller wants to evict the tenant because they're not paying. In NJ, does anyone know how much it costs to do an eviction and what the process is?

My experience is through my mom who rented her 2nd floor portion of her house. She lived on the first floor. Both separate metered and separate furnaces.

It took her over 2 years (i can't remember exactly but it was over 2) to get rid of this tenant through the court system that allowed the tenant to continue living there. The tenant would stop paying and they went to court only for the tenant to pay some portion that the court looked at as the tenant acting in good faith and would not evict. This went on for years until finally her lawyer and an act of a higher power finally were able to get this person out. She would lie about any and everything to the court that no one could prove-disprove but somehow was believed and the court system accepted.

My mom made the mistake of doing a kind thing and not doing a background check and whatever lease existed I'm not sure of. I stayed out of it and let her lawyer handle this but after it was all over I asked does she really need to rent out that space. After she got rid of the tenant she asked the neighbor across the street could she rent and she said NO. She saw what my mom went through with her.

So in your case I hope you have all the documentation so it doesn't take that long. This is more story than required but I see a lot of stories on NJ eviction that mirror my moms and it seems like a rather long and difficult process. I guess it's a tenant friendly state.

0 Votes

That's an interesting conundrum I would like to see what answers you get.

I've always worried if locking in was a good thing to do for the sake of dropping rates but then again just knowing IF the rate increases, the lock in secures the Note at a lower rate.

1 Vote

Originally posted by @Heather R.:

Hello,

I am currently evaluating a few markets, Indianapolis and Tacoma WA to purchase a small multi-family in the next few months. I live in Seattle so Tacoma has been on my radar due to its proximity. Appreciation in the Tacoma market will likely outpace Indianapolis and the properties are much more expensive. In Tacoma, competition has skyrocketed and everything is going for asking price or above.

I went to look at a fourplex yesterday in a good area, the building needs some work but nothing major I can see. I have been running the numbers and it just doesn't make any sense to buy based on them - am I missing something? Am I being too conservative? Or is this truly not a good deal?

Building - 4-plex

1-bedrooms, 750ft

Laundry in basement (not coin op)

Storage in basement

Parking

Asking price: $389950

25% down: $97487.50

Amount financed: $292,462.50

At 4.5% interest rate, mortgage payment would be: $1481/mo

Current rents: $650/unit

Based on market, could potentially move to $750-800/unit with some updating

Using $750 (to be optimistic) - $3000/mo in income

Property management @10%: $300

Leasing fees: 1 mos rent: $3000/yr or $250/mo (if all the units needed to be leased during a year @ 1 mos rent per)

Capex reserve @10%: $300/mo

Maintenance/repairs @5%: 150/mo

Vacancy @5%: $150/mo

Property taxes: $452.83/mo

Electricity (for basement, laundry): estimating $100/mo

WSG (currently landlords responsibility): $320/mo (estimated based on Tacoma's pricing)

Insurance: $70/mo

Total monthly expenses: $2092.83

$3000 (income) - $1481 (mortgage) - $2092.83 (expenses) = -572.83/mo

Am I being too conservative in my numbers? There are things that could be done to reduce some of the expenses/increase income, like putting coin-op in and implementing RUBS. But I am also not considering the updating that would need to be done to the building which would be thousands.... I don't think I am going to move forward on this place unless I am just really screwing up some portion of this analysis.

Any feedback is appreciated! Thank you!

Heather

Looks like you have accounted for all expenses. Multi are difficult to buy in my opinion. I've seen quite a few in my area that are grossly overpriced and need immediate repairs or only have a couple of year before needing replacing.

2 Votes

Originally posted by @Karelle Johnson:

I'm new to real estate investing and want to house hack in a duplex for my first deal. I have been researching properties but the problem is my current lease isn't up until July 2018. Do I start making offers on properties now or wait until I get closer to my lease being up? Do I wait until 3 months before it ends or what's the typically timeframe on closing? I will be using a FHA loan so I have to move in within 60 days, correct? Should I go ahead and try to get pre-approved now? Any advice will be greatly appreciated!

Does your lease not allow you to sublet? If there are no restrictions you may be able to get out that way and continue to pursue your property.

0 Votes

Search BP there is recorded discussion from some CPAs.

0 Votes

All Forum Posts by: Daria B.

Daria B. has started 149 posts and replied 1905 times.

Post: When to do W-9/1099 and Independent Contractor Agreement

Post: LLC marketing for sale but are not agents or brokers . How?

Post: LLC marketing for sale but are not agents or brokers? How?

Post: LLC marketing for sale but are not agents or brokers..how?

Post: Buying a house with tenants

Post: How to evict an inherited tenant in NJ?

Post: Mortgage interest rate change

Post: Am I being too conservative in my analyses?

Post: I'm in a current lease but want to house hack!

Post: New tax plan in congress