All Forum Posts by: Shane H.

 why is it hard to keep them full?

 I understand that - just pointing out finding owners of businesses registered in KS if fairly easy - I have not needed to track down owners of a business in other states so not sure how each state works and if regulation of business entities is different from state to state like insurance regulations....well you get the picture. Ha

I would check with an atty like others have said - but in researching properties Ive seen more than my fair share that were titled to an out of state LLC.

If you do it that way it makes it very difficult to track down the owners - KS has this little gem to look up KS based entities.

https://www.kansas.gov/bess/flow/main?execution=e1s1

 Linda would you agree that ideally the right business entity really is an answer of "it depends" on the persons situation?  I'd guess there are times when an S-Corp structure is more advantageous as I pointed out above if I was correct in my scenarios/assumptions and as you pointed out an Scorp is not the best solution for your example scenario.

Good info on point #1 - something I was not aware of.

I could be wrong but I'm thinking since it's an assumption and the original borrower has already fulfilled his obligation to live in it, you'd be fine. But that would probably be a good question for a lender who specializes in VA loans. If my buddy passes I'll message you the details and you can decide if it'd be a good deal for you. No better way to get experience than to jump in - this would be pretty easy to jump in per your military credentials.

Online only through Buildium's platform.  If someone wants to pay with cash/money order or check they will pay $25-50 extra in rent to do so.

Best selling feature to get tenants to pay online through PM software is to charge more if they want to pay any other way.  It's part of the lease agreement.  So far have not had anyone pay me directly in a few years - granted I have a small sample size but it works and something I will carry forward.  Waste of time and effort to have to collect money - payments online are completely transparent so no arguments over the check is in the mail and I don't have to go to the bank.  Paying the ACH fees is worth the time/headache savings.  Don't know why you'd take payments any other way.

@Jeff Bell  as @Jason V. stated I think it's all negotiable.  I'm still looking for my first owner finance deal that makes sense.

That being said I've done a lot of homework on the issue - someone can correct me if I'm wrong or going down the wrong path, but I think one thing someone needs to keep in mind when pursuing an owner finance is if the owner has depreciated the property and owned it for some time/has a sizeable amount of taxable recoverable depreciation - that is the one thing they can not spread out in an installment sale/owner finance.  The tax on recoverable depreciation is due the year the installment sale takes place.  The benefit to the owner of owner financing is the ability to get mailbox money and spread out the tax on their gain over time.

So with that knowledge - unless the seller has a lot of losses they have carried over from somewhere else to offset the recoverable depreciation tax they may have to pay, I'd guess it will usually be a given you'll need a decent downpayment so the owner has some cash to pay the tax and then a little walking money.  

I'm of the opinion a complete owner finance deal if you are wanting to get in with low or no money down may not always be the best option if you are dealing with the sale of someone's depreciable asset.  If you get the owner to carry back a partial second after the bank loan or private money etc that could be the best bet typically for getting in with little cash.  Now an owner occupy residence that's a different story.   Or possibly I'm missing some strategies here to help the seller with his possible tax hit on the recoverable depreciation in an installment sale/owner finance.

I've not had a chance to execute on my above thoughts but after pursuing a few things I'm thinking not pursuing a full blown owner finance on depreciable property is the best way to go if you want to get in for little to no money down.

@Steven Hamilton II  looking forward to the article.  Will you post it here and is there a way to sign up for an alert of some sort when you publish it?  Would love to read it.

@Jared Viernes

Welcome Jared - went to WSU myself - take all the RE classes they offer while you're there - many of them will/should count as part of your core classes needed for your MBA - think a couple should be cross listed as Finance classes too.  Take the lower level ones as well - worth the time/money.  Dr Longhofer who heads the RE dept is good people.

If you're looking for a house I stumbled across a deal that won't work for me since I'm not a vet and do not qualify for a VA loan - if you're interested message me - I can put you in contact with the owner. He needs someone in the military to assume his VA loan on his house. I'd like to do it however since I do not qualify for VA benefits the owner would not be able to get another VA loan where he's moving - however if he has another military person who qualifies for a VA loan he can win and you can win. Should be able to get into the deal for virtually no cash. Just assume the existing loan.

Sent this deal to a buddy of mine - if he doesn't want it I can connect you if you're looking to get your feet wet here.  Could either live in the house or rent it.  Decent area.

@Roger Laughary

That is a good question.  The only advantage I could think to choosing to be taxed as an S-Corp here in KS is the tax loophole Brownback passed earlier in his term.  However I think that typically would have a greater affect on higher income earners or those who are fully self employed.

My understanding of the advantage of the S-corp taxation now (I think you can set up an LLC and choose to have it taxed as an Scorp here) - is the tax benefits.

So say you are a self employed house flipper or self employed contractor.  You will make $200k in profit.

If you elected to be taxed as an S-Corp here you can say pay yourself what the taxing authorities would call a "reasonable" salary let's say $50k for simplicity sake.  That salary is taxed at the full slave rate of someone who exchanges their time for money in lieu of earning it by investing.  You could take the remaining $150k as a distribution which would be taxed at a far lower rate and per my understanding Im thinking with the KS tax law change you were even allowed to pass that distribution through with no taxation on it at the state level.  (Many who were reaping the benefits of this KS tax law change were complaining that they weren't paying enough believe it or not -- if you read the Wichita Business Journal or the Eagle you've likely seen articles to that effect)

You can get a better understanding of it if you find the article the Eagle had a year or so ago relating to KU basketball coach Bill Self taking full advantage of the tax code change. I dont think Gregg Marshall at WSU took advantage until recently - I noticed in the Bus Journal he transferred the deed to his house to an LLC he set up so I'm assuming his accountant finally got with it and he set up an LLC taxed as an Scorp to take the payments from the school in lieu of them paying him directly.

Disclaimer - I'm not a tax professional - simply a guy who likes to read and attempt to understand the nuances of the tax code.  So do your own homework but that's the gist per my understanding.

As for the KS tax issue - I'd look for that to change with the next administration unless Charles Koch is able to get his own puppet elected which is very well possible.  He and his shell companies masquerading as non profits have the money/power to do it.   Brownback vetoed a bill to override the changes just recently - I dont think the House/Senate have enough votes to override the veto to raise the rates back up at the moment.