All Forum Posts by: Tom Makinen

You have to set up the LLC taxed as a corporation in order to sell stocks. To sell membership in a partnership, you have to draft a whole bunch of documents. It's doable but complicated after you set it up. There are also a lot of tax consequences that I don't think you are factoring in. Also house flipping and holding should be separate as one is active income the other is passive income, they carry different types of tax consequences. You are looking at a few thousand dollars to set it up and a thousand or two in annual maintenance. This is not as simple if you want to do it right.

Yeah Indiana seems to have even better numbers than Buffalo.  $1300-1500 in rent for $100K-$120K.  You can't beat that.  Appreciation will be small, but it's so cheap.  

On the SFH front, I think Atlanta, Houston and Orlando area are what I am looking into now. $150K-175K houses with about $1200-1400 in rent. Obviously I am worried about vacancy as they have so much housing available that it makes it tough to find good tenants. OKC have even better numbers, but their weak rental demand and relatively flat appreciation worries me. I would love to get one in state with Bakersfield, but at $200K with only $1200-$1500 in rent, I am very cautious as I promise myself not to get a property that is top of the market since the vacancy rate is so high (I had a luxury condo before).

I located condos in Seattle and Denver, but condos have limited appreciation and there are a lot of extra fees that makes Seattle less attractive.  Their market is also showing some alarming decline too.  The cost of entry to Denver is tough to swallow too.

I ruled commercial unit out of my running, too much risk for not enough return.  

I don't think they are worth it, but I do have it for the absolute emergency such as hospital visits overseas.  I do two international trips a year, so I bought an annual plan for like $200.   

Would it be wise to look for an area like Fisher where they have good schools. The rent/cost seems to be a little on the low side. Would a townhouse be a better investment or just go big and get a big SFH? I am just afraid there aren't many people that cant support a $1500-$2000 rent payment. If they have it, they would likely buy their own house.

Can you make money on it?  Absolutely.  Is it worth it, I think that depends on your risk tolerance and what you are taking home from your day job.  

Is cash out refi tax deductible?  

I am in professional corporate world.  A lot of times where they went to school is a good indicator if they have a chance at a phone screen.  Let’s think about it.  You have two person with same job experience.  One graduated from a real 4 year college and one from university of phoenix.  Who would you likely to call first.  Now a days you can’t even get a good job without a masters, so you better hope the self employed route works for you.  

This is the reason why I just got a living trust.  I made sure my kids can’t have any of my money until they graduate from college. 

@Sanjeev Advani Great info and I agree with a lot of things you say. I agree Bakersfield would be a place I want to invest in if I stay in California. The issue with investing in a single family home in Bakersfield is that I am not sure if I will get any positive cash flow from it, which would be useful to ride any downturn. Correct me if I am wrong, but the good part of town is the southwestern part, which carries a price of about $200K for a SFH. If I get lucky, I might get $1500 per month. At those numbers, my cash flow would be barely positive after accounting for a small reserve. Ideally, I want my rent price to be about 1% of the property price. It will make me sleep happier.

@Ross Denman Definitely a good strategy. I will keep an eye on those SFH in Indiana.

@James Carlson I am looking at one right now, but the ROI seems a little low on this condo. Conservatively, I am only getting about 3%. I would have to get a place inside the heart of the city, but the ROI might not be much better given they are another 50-100K more than the one I am seeing.

@Alyssa Dyer I am peeking at OKC, I expanded my search into that area.  

Are you on a LLC or just a SP? If you are a LLC, be careful as you really should not mix your money together. Once you do, you will be treated like the same person