All Forum Posts by: Dan Schwartz

I read the entire thread waiting for Christopher Smith to dramatically remove a mask and say “Fooled you! I really AM Warren Buffett!”

My disappointment is immense.  

@Lynnette E. the wear and tear is exactly why I turn these requests down, and I do tell the inquirer that.

@Kaden Keller it’s now permissible in most states to surcharge the cost of accepting payment electronically.  Check with your states’ laws and especially whether there are any restrictions on surcharging rent payments.  If they want to pay by Venmo, you could ask them to pay the fee.  Many states will allow you to only surcharge the exact amount you pay in fees (or less, of course). 

Quickbooks Desktop has one of the best ACH features.  You can issue and email an invoice and make the only payment method ACH.  Easy for the end user, and it costs $3 per transaction. It used to be $1 grr.  You may be able to sign up for Intuit Payments without Quickbooks Desktop. I don’t know.  QB Online fees are different.  

You can ask your business banking department about accepting ACH.  It’s inexpensive per transaction, but at my bank I need an account that has a $30 monthly fee in order to initiate ACH payments from customers. That isn’t worth it for the small number of ACHs I could potentially have.  

Most of our tenants pay by Zelle, and Zelle has left it up to each participating bank whether or not they want to allow (and charge for, or not) business transactions.  We are lucky that we aren’t charged, so this is a free and easy solution.  

@Ben Morand we did, but we converted it to a long term rental. As a STR it was handled by a property manager and it just wasn't working out between us. We were able to net more as a long term rental than we were as a short term rental. C'est la vie. In hindsight, we would have been very successful on our own, but we didn't think we'd have the time to manage it when we acquired the property. You've certainly drawn the big guns out of the woodwork for this question. These other folks on the thread are probably the three most-successful STR people on BP :-0

@Daniella Steinberg you can try MidFirst Bank. They are based on Oklahoma with a large presence in Phoenix and smaller presences (via acquisition) in Denver and LA.  But I imagine they can open an account for any US citizen.  

Minimum business checking account balance is $500 (may have gone to $750, I can’t remember) to avoid monthly fees.  Wire fees are pretty standard at $30-40.  I’ve never seen a bank consistently come in under that range.  Phone help is great when needed, but they aren’t 24/7. Online and mobile is plenty useful.  They don’t have Chase’s IT budget, but it works fine.

Union Bank, based in CA, has a $1000 minimum balance to avoid fees.  It was difficult to open an account for a business there, and I don’t recommend them as highly as MidFirst.  On the other hand, I think their wire fees might be less.  I was working overseas for about $20 I think?  It’s been more than a year since that, so I’m not sure of the exact number.  

@Ben Morand you certainly have the right attitude going in.  Yes, it’s probably much tougher than it seems.  I know that I have kindly rebuffed any arbitrageur who has called me about my vacancies.  

Only thing I’ll comment on is that I don’t believe business credit (at least in any large amount) is something that institutions are just throwing at you haphazardly.  I have a non real estate business line of credit and it was limited to a portion of my gross receipts and required a personal guarantee.  I was also in business for a number of years before securing it.  Sure, it doesn’t report on my personal credit report, but it’s not like they were willing to disregard me as a person.  I’m not Apple.  If you do have good credit, you might look at the terms of the many institutions lending large sums of money via personal unsecured loans.  I don’t remember any of the names, as I throw those solicitations out when I receive them.  But they are numerous.  Good luck in your new adventure!

@Carlos Ptriawan I misread your reply to me

Wow.  Maybe I'm missing the sarcasm in your statement.  Over nearly 10 years, I haven't transferred a number higher than "0" from my Schedule E Page 1 to my 1040 line-whatever-mess-they-created-with-the-new-forms.  That means I've been able to hold every cent of net profit without paying a dime of tax on it (federal, state, FICA, or even cap gains, since I've done a 1031 as well).  In a year with less non-RE income, I was able (forced) to soak up a lot of suspended passive losses, and it pissed me off.  Since income was significantly lower that year, the losses were taken across a lower tax bracket than where they would have been taken when I eventually disposed of the property.  The net income has funded 529s, which will also grow tax free, provided cushion for extra contributions to non-RE 401ks, which will also grow tax free, and has been funneled into index funds that will be held for quite a while, again growing tax free until sold.  

I'd say the tax advantages of profitable real estate investment are quite spectacular.

@Nitish Gupta learn about the government program, and if it's a) long-term and sustainable and b) you can operate within its rules, go for it.  We had a 4-plex in a low income neighborhood and sold to someone who told me he was going to put all of the tenants on a government program that would pay him double what I was collecting.  A few years later, he sold the 4-plex for about 3 times what he paid us for it.  I don't know what the program is, but it was successful for him!

@Veronica Ivy there are a large number of classes of "rental property" beyond "residential rental property."  When I rent equipment from a store, that equipment is "rental property" on their balance sheet and the rents I pay to use it are "rental property income" to the vendor, who will report it (and depreciate it) on a business tax return (or a Schedule C, if that is the relevant tax form).

The subtitle of Schedule E is literally "From rental real estate...." etc.