All Forum Posts by: Loc R.

Susan,

Where is the collateral located?

Yes, you can deduct all expenses associated with the car (lease, maintenance, insurance, etc.).

The amount you can deduct is a function of how much you use it for business (i.e., if you use it 50% of the time for business, then you get to deduct 50% of the expenses).

At least that is my understanding after having these types of discussions for years with my CPA.

I have a umbrella policy with Mercury. It's maxed out and my premium is $330 a year.

Joel,

They sell them because they need cash. For gift cards they got them as a gift but would rather have the cash. For store credit it's a similar story: they returned something but HD wouldn't give them the cash.

To verify all you have to do is meet up with them at the store and have a cashier verify that the card has the balance they claim. Just be sure that the PIN is not scratched off.

Here's the ad I run weekly in my local CL:

http://losangeles.craigslist.org/sgv/wan/2513524195.html

Joel,

$2.00 a sq ft for install is pricey, IMO. $1 is about what I'd pay.

0.68 isn't bad. I'm sure Home Depot has a similar product. In either case, you can save a TON of money by buying discounted HD or Lowe's (HD is easier to find) gift cards/store credit off Craigslist (I normally pay 70% of face). In addition, you can buy 10% coupons for $1 off eBay (emailed to you immediately).

In addition, don't fall for the "limited time" offer of a "flooring event". I'm sure the prices aren't that great relative to everyday prices. These companies are typical corporate America: there's a sale for any and every reason.

Pros of selling with seller financing:

1. Typically you can command top dollar and top interest rate.

2. You minimize your tax liability. If you sold a house that represented a $100K profit, you would owe taxes on the entire $100K profit. With financing you are taxed much lower. Of course if you are engaging in a 1031 exchange then you'd like to realize as much capital as possible.

3. You can close quickly (vs. selling to an FHA buyer). If you are flipping houses, it can be the difference between turning over a house (getting it under contract and closed) in 60-90 days vs. 90-120+ days.

4. If you are marketing to an older, DIY-type landlord, you can tell them that by financing the deal, they can essentially collect the same amount of money per month WITHOUT having to be a landlord.

5. If they have an underlying loan, wrapping the mortgage is a great way to make money with OPM.

4. As a car guy, just make sure you're not towing away (sending to get crushed) something that someone else might pay for the privilege of restoring.

5. Improving lighting is paramount! Especially if the neighborhood is so-so. A good combination of motion-detector lights and dusk-to-dawns will make the place feel a lot safer. They are coming out with solar-powered LED versions of the above, so those would be a great way to update the feel of the building, improve safety, and save some money (though the LED stuff is still a tad bit overpriced, IMO).

I am trying to find answers, but they are hard to come by.

Let's imagine the following scenario:

I come across a person who wants to sell his retail store. Let's say he sells widgets.

So, my SD-Roth IRA buys the LLC (Widgets, LLC). I know that in this type of setup, I cannot run the business, so I hire the current store manager to be the required 3rd party manager.

Widgets, LLC makes $1000 in gross sales.
-$500 for rent
-$300 for payroll
-$100 for utilities, inventory, etc.

That leaves $100, which the manager then sends to the SD-Roth IRA.

In this scenario, would that mean that the LLC itself shows 0 profit, and at the end of the year, is only liable for the $800 annual fee and payroll taxes on the one employee/manager?

Or am I missing something?

You're probably OK but at the same time you are walking a fine line...I like to stay away from transactions that raise suspicion with the IRS.

Anthony,

As someone who has owned both apartments & notes I can tell you this:

With apartments you have a "soft" return in that there are so many little costs over time, from maintenance to repairs to getting a vacant unit ready for the next tenant.

Yes, in the end you do end up with a free and clear property, but how "free and clear" is it really?

With paper you have a "hard" return in that whatever yield you buy at, that is your return. No headaches, no landlording, nothing. Worst case scenario is that your payor pays you off on schedule. Best case scenario is that your payor defaults, and you just picked up a house at a nice discount.

There are no "little" expenses that eat away at your return, and you'll have more cash in hand to buy that next note at a great yield.