All Forum Posts by: Ryan Logsdon

Hey Matt Rothwell, check out the paragraph that starts

It's very open-ended, but it's the IRS' definition of a primary residence.

http://www.gpo.gov/fdsys/pkg/CFR-2007-title26-vol11/xml/CFR-2007-title26-vol11-sec1-1034-1.xml

Good to know :)

Chris Bounds I like the idea of a lease renewal perk. I hadn't heard of that before.

#1. No. That's creative math. Stick to the fundamentals: cash in vs cash out, not what you can recoup.

#2. Yes. Any 2 of the past 5 years works. Great article on the subject from another BP member: http://investfourmore.wordpress.com/2013/06/07/how-to-make-large-profits-from-real-estate-without-paying-taxes/

Good luck Matt Rothwell. 1 thing I'd add to Brandon Turner's 203k suggestion is that if you take this route, make sure your agent has already done one of these. They're a paaaaain, requiring an extra inspection, so it's not as if you freely get a loan for what you'd like to fix. You get a loan for what the inspector mandates that you have to fix. Also, the loaned funds aren't yours to spend freely. They're sent directly to a pre-approved contractor without you ever touching the funds. There is a bright side to this though, if the contractor runs over budget, they can't collect from you, they have to ask the FHA for more money.

Does anyone know if Gregory Hunter could work with the HUD Good Neighbor program, or is that restricted to civilian law enforcement?

There are great benefits to an LLC, and you're in Iowa, so your fees are minimal.

You can pay yourself FIRST in multiple routes. Here are a basic few

* rent from yourself! If you maintain a home office specifically for the LLC's use, your LLC can pay rent to you. Now your LLC's paying part of your own property! This can't be a common area or any area with a secondary use.

* pay for incidentals from company funds, anything "ordinary and necessary" (this says if you made $1000 but had $250 of expenses, Uncle Sam only taxes you on $750 profit)

* reimburse driving mileage (you can't go overboard and call your call a business vehicle until you've reached a large threshold of usage)

* you can use your company's funds to pay your continued educational expenses BEFORE tax (there's a max $, check your state for differences in the law)

* fund your IRA (check your state's laws, also)

* elect when your tax year begins (if you choose to be taxed as a corporation; this loses other benefits; you'll also need a 2nd owner just to exercise this option)

Anyone who dismisses and bemoans an LLC as just a pass-through entity has never stopped to understand its benefits.

As David Beard metioned and as this post shows, control of the tenants' security deposit is yet another issue to confront.

http://www.biggerpockets.com/forums/93/topics/74227-who-pays-back-security-deposit--seller-or-buyer

If Joel Owens' numbers scare you, try this: $1920/mo is a 12.3%. That's less than 1% off of the number I quoted you. And even worse, that's the best return that this property can offer.

Other concerns:

* how far back do the rent rolls go?
* does the seller have a history of tenant evictions?
* have the evictions been drawn out & have the losses in rent been properly reflected in the books?
* how much above 188k will you really be responsible for (closing fees, and also going back to the topic of deferred maintenance)?

Because as it stands, 13% is your max profit, and there's a plethora of items that can chip away at that number.