All Forum Posts by: Tony Lin

Hey all. I've been investing in out of state mostly in multifamily syndications. I run a meetup in the south bay sharing my experiences and we bring in guest speakers who are subject experts. Would love to connect and chat. 

@Theodore Rivera I've found penfed credit union to offer some of the best HELOC rates for California. Their 5/5 HELOC program goes up to 400k and current rate is prime -.625 (4.375). The rate only change once every 5 years so it's a pretty good setup.

@Ray Li We actually did this at Arbor. Fannie was looking for ~25% reduction in water usage and they base it off of inspection reports to see how the savings can be achieved. A few examples would be lo-flow toilets (0.8 gallons), low flow shower heads, low flow faucets etc. They also looked into replacing washing machines with energy efficient models to reduce usage. 

Companies like savewaterco will provide an estimate on how much can be saved at what cost, which you can underwrite into your deal assumptions. Agency loans offered green programs but there's a chance they will go away in 2020. 

@Hai G.@Account Closed

I've been investing in Dallas for a while, in both SFH and Multifamily apartments. Nowadays it's hard to find SFH in DFW that's comfortably satisfies the 1% rule of thumb, and I've been focusing on multifamily investments.

I've passively invested in over 3,000 apartment units in Dallas apt units and actively sponsored another 360 units. I'm also invested in self storage and business acquisition deals as well so explored my fair share of options. I have a meetup in the south bay where we talk about current market trends and various types of investments and meetups are a good place to learn. 

If you guys have any questions about out of state investing feel free to get in touch. 

I have a meetup in the South Bay focused on free multifamily education. We regularly invite guest speakers on lending, property management, commercial brokers, and tax sheltered investing. Feel free to drop by if you're interested. 

https://www.meetup.com/Silicon-Valley-Multifamily-Investors-Club

With the new IRS clarification out for for 20% deduction on QBI for pass through entities, I noticed there is a 250 hours requirement in order to qualify for the safe harbor clause. Can anyone further clarify for the multifamily syndication case as well as the SFR rental case?

1) In multifamily syndications where the apartment LLC hire a property management company to manage the property and hire outside contractors to make repairs/improvements on the property, is this enough to qualify for the 250 hours of RE involvement? Or do the syndication asset managers themselves need to be working on this full time to qualify?

2) Similarly for individually owned (let's say sole proprietorship) rental homes. Would hiring an outside agency to handle leasing/rent collection qualify for the 250 hours of RE involvement? 

Sorry I don't mean negative cashflow. I meant negative K-1 even though distribution is received.

I've read that recaptured depreciation is taxed at 25%, is that right? 

How about years where there is positive K-1? Is that taxed at 25% as well? 

From online passage:

"If the property in the syndication was held for at least a year, the gain will be treated as long term capital gain subject to 15%/20% capital gains rate. Any depreciation taken on the property is subject to recapture and taxed at 25%." 

Need some clarification here. Multifamily syndication distributions usually come in three forms, yearly cashflow, refinance, and appreciation. I wanted to make sure I understand how each of these are taxed. Please correct me if I'm wrong in any of these: 

Appreciation: This return on capital is probably most straight forward. For a 5 year hold the appreciation is first reduced by 20% (Trump pass-through deduction), then taxed at long term capital gain

Refinance: Since this is a return of capital it's not taxed. But this in turn increases the amount of return on capital that gets taxed at exit. 

Yearly cashflow: Return on capital. With cost segregation and accelerated depreciation this will likely result in negative cashflow first few years. If there is positive cashflow after depreciation, it would be taxed at individual's tax rate (or another capped rate? I've heard 27% or something). At exit the depreciation is recaptured and the whole amount is taxed at long term capital rate. 

I need the most clarification on the cash flow front. Thanks!

Thanks for the advice here. I've informed him of the possibility of double taxation and to check with his CPA. He decided to move forward with cash instead. 

One of my friends is wanting to use his C-corp entity to invest passively into a multifamily syndication LLC. He is the only share holder and there will never be any external partners. Is this possible and if so, are there a lot of paperwork involved?