All Forum Posts by: Ryan Stuckey

@Luke Tetreault get a new CPA and start an S-Corp. I am a flipper and an S-Corp. On my bookkeeping I don't claim ANY flip expenses until I claim flip income. If I bought a house in 2022 and sold in 2023 then all that income and expenses is recorded in my 2023 taxes and this is acceptable to the IRS. As an S-Corp the net income is pass through to my personal taxes via a K-1. But I don't let a lot of income pass through. My S-Corp has W-2 employees (me and my husband). My S-Corp pays us a salary, and has an employee medical reimbursement plan, and a SEP plan for retirement benefits, and is allowed to write all that off before it reaches the bottom line. Yes, as a W-2 employee I do pay some taxes on my salary. But I don't pay as much and those other "benefits" offered by my employer (me) makes it worth it. Also, as @Mike Dymski mentions, you can live in a flip and pay zero taxes on the profit as long as it is your primary residence for 2 of the past 5 years. However, the improvements made are out of pocket personal expenses - not deductible. And you don't have to live in the house during the construction mess - just for 2 years after moving in. So maybe you own it for 2 1/2 or 3 years.

This is very good advice to flippers to 1) file as S corp status on your LLC and 2) contribute to a retirement plan to offset a lot of your profits from flipping. Pay yourself a "reasonable" salary on a W-2 and use a big chunk of that to contribute to a solo 401(k) (no other LLC employees except a spouse allowed) or a SEP IRA (other W-2 employees allowed) plan.

The allowable contributions are in two parts:

1) employee salary deferral (just like any other 401k) - of your "reasonable" salary, contribute up to $22.5k in 2023 (more if over age 50)
2) employer profit-sharing contribution (the LLC directly contributes lump sum as much as 25% of the of the employee salary)....

The limit of parts 1 + 2 here is max $66,000 in 2023 (more if over age 50)....meaning this amount can go into a properly set up retirement account tax-free instead of being added to your ordinary income and taxed.

I am not a CPA so be sure to consult one accordingly, but from my experience not too many flippers are taking advantage of this great opportunity. You will need to get the right advice to set this up properly and then you will need to maintain good records and file proper tax forms on this structure.

2 Votes

Upstate New York, New York

Welcome!

1 Vote

Toledo, Ohio

Quote from @V.G Jason:

How are you getting such low loans for properties?

It's not difficult to find $75k loan sizes if the cash flow is sufficient (1.20+)....

0 Votes

Congrats on getting this done here in Cincy!

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Quote from @Chris Kendrick:

Quote from @Eliott Elias:

My DSCR loans are requiring a 6 month seasoning, if you're stuck at a 12 month seasoning there is nothing you can do about it.

What is your rate on that dscr loan, probably like 10 percent?

Par rate on DSCR loans (with solid credit, not max LTV, and sufficient cash flow) is now low to mid 7s.

1 Vote

"You can get a DSCR loan with bad credit"

Not really. Most lenders have a DSCR minimum credit score of 660 and at that level the interest rate is higher and makes the property even more difficult to meet DSCR/cash flow minimums at this time. So 700 is typically the target to get a solid rate.

DSCR underwriting is MAINLY based on the property, but not ENTIRELY. The personal credit of the borrower is still an important factor.

While one may qualify at 660, I'd recommend to anyone getting credit to 700 before considering a DSCR rental loan, in order to get your rates down and profits up.

1 Vote

FYI, 80% LTV on a mixed-use property purchase is not likely to be available out there right now.

1 Vote

Junk King Cincinnati for junk removal

0 Votes

All Forum Posts by: Ryan Stuckey

Ryan Stuckey has started 13 posts and replied 169 times.

Post: Commercial - Mixed Use Financing Cleveland Ohio

Post: Financing deals in the 70-80k, range.

Post: Flip house options

Post: Beginner in Ohio

Post: Buy and Hold Cash flowing Investment!

Post: Fix and Flip - Cincinnati, OH

Post: Cash out refi seasonal period

Post: New to real-estate?

Post: Good deal or am I missing something?

Post: Contacts for Junk Haulers, Roofing, Painters, and more needed for Erlanger Kentucky