All Forum Posts by: Dan Schwartz

@David Y M. look at the relatively small amount of time you spend recordkeeping as the labor cost of your audit-proof-as-possible tax deduction.  Get MileIQ, which is also included in Microsoft 365 (or whatever they're calling it now) subscriptions.  Get Scannable or ScanBot or whatever app you like best and scan your receipts as soon as you get them.  I have an iPhone and I put them right in a "Receipts" folder in iCloud since iCloud Drive is a standard share destination in all apps.  The Microsoft suite subscription comes with OfficeLens, which I didn't care for, but maybe they've improved it.  That saves easily to a sharepoint in the included OneDrive space.  These tasks take moments, not minutes.  Mentioning "a Home Depot run" and asking "do I need receipts?" suggests that you are being lazy about both what you are buying at HD (whatever interests me vs. exactly what I need) and documenting it for both business analysis and tax preparation purposes.  

It's great that you are trying to maximize you knowledge and implementation of tax breaks available to real estate investors. I personally think that house hacking is less about maximizing tax benefits and more about low capital commitments (for OO conforming loans), forced appreciation, help with principal paydown, and ultimately, unlocked equity on sale or refinance. You'll see that the tax benefits flow much more easily when you have a dedicated rental property.

So, house hack now, ask questions, build good habits, build equity, internalize the great advice many talented accountants have offered free of charge in this thread....and then go crush it when you expand your portfolio.

@Alice Huang the article @Chase Cannon posted suggests to me that it might be common in TX for the operating company to be an LP, with the partners themselves being LLCs. Meaning that you form your own LLC, which becomes a partner in the LP, and your partner is free to structure whatever liability protection he or she desires independent of you. The LP itself doesn't provide liability protection.

@David P. can you not at least get a FaceTime walkthrough of the property to ensure that it's been maintained properly during their lockdown?

More questions for those in the know:

If I have $100,000 available to overfund such a policy immediately, and want that to substantially be the total of what I put into the policy, what sort of policy size am I looking at?  $100,000?

Of which I can withdraw ~85% as a loan at around prime.  

That 85% ($85,000 in this example) reduces my death benefit dollar for dollar, but does not reduce the amount of principal (probably not the right word) on which interest and dividends paid to me are based.

I think I gathered somewhere in the thread that the dividends/interest paid to me can be used to pay the premiums, meaning I could essentially avoid paying any further cash into the policy.  This interest and dividends are tax-free income to me, correct?

In such a case, I’d have 

— 85,000 cash back in my pocket at an interest rate of prime + small margin
— 15,000 death benefit for my heirS

— the majority (?) of the dividends and interest being used to pay future premiums

Am I outlining this correctly? 

Thanks @Mike S..  Seems clear and reasonable.  

Can someone describe the tax treatment of WLI and/or IUL?

- premiums paid to the insurance company are after-tax dollars?

-- can this be altered if a business pays the premium?  If yes, which kind of entity?  If yes, does this affect taxation of distributions?

- loans against cash value are distributed without tax consequences?

-- what if the loan is never paid back?  It is deducted from the death benefit, but is it now taxable?

- death benefit is not taxed?

@Erik Hull The app is horrible.  But it does copy all communications to my email, so I can be reasonably assured that I'm seeing and am able to respond to all requests.....even when I don't see them (and thus can't respond to them) in the app.

I expected my most-recent listing to come with a fee, but it was still free for some reason.   

@Stephen Daniels google the Arizona Landlord-Tenant Act and read through it.  You don’t have to memorize it, but you should be very familiar with its provisions.  

I haven’t followed UA’s moves, but a number of universities are making their dorms single-occupancy only, which is driving some demand to off-campus housing (to the extent that students are deciding to move back to/near campus at all this semester).

A shaky environment for flips does not mean it's a bad environment for "investing."  It indicates a bad environment for flipping, building or developing.  And it won't be the same in every market across the country.  So while every rookie should be cautious, please don't take the OP's advice - which I do believe was given with genuine concern - as admonition to stay on the sidelines.  If opportunity exists in your strategy and in your market, take it.

Just this past weekend, I had 30 showings of a run-of-the-mill rental house for which I would normally have 5-6 showings. Rental inventory is extremely low in the area (I suspect due to Airbnb) and many of the listings that do exist come fully furnished (which I also suspect are Airbnbs trying to pull in some LTR while waiting for the STR market to boom again). Some people wanted it sight-unseen, which we don't allow, and others were offering escalating prices to be put in the front of the line. I wish I had 5-10 more houses to offer in the area. I would have filled them all this weekend alone.

But I'm not flipping, which is what I think OP is really talking about.  Just want to point out to the rookies that it's not horrible in every space.

@Michael Thach chances are, if the CC sided against the PM already, the PM did something wrong.  Perhaps they charged a convenience fee in excess of what is allowed under the merchant services agreement.  A tenant who knows that the issuers only allow surcharges up to the exact amount paid by the merchant could use this against the PM.

A customer in the travel agency I own did a chargeback for a cancelled trip and claimed that the original charge was never authorized.  I provided all of the paperwork proving that he himself made the charge (as a policy, we don't take any CCs over the phone, nor collect any CC information) and the bank still sided with the consumer.  Since I was refunding these customers anyway, it was a nuisance that I didn't pursue further, but it ticked me off as I had never lost a chargeback before.  On the RE side, I've stopped taking rent by ACH for now, as that can be clawed back by the consumer for 60 days or so.  Credit cards allow six months or more after the charge to make the dispute.

If the PM is demanding the money, demand from them the documentation of the chargeback and what they did to fight it.  Doesn't mean you have to pay them back, but at least you'll see their practices and how they represented your funds.  

Good luck!