All Forum Posts by: Mike D.

I have a single member LLC that I established to conduct all rental business under. The LLC is a pass through entitiy and I pay taxes on my personal 1040.

Now I am interested in setting up another entity to flip houses with. Ie properties that are fixed and sold with the intent of a profit.

My concern is keeping the flipping business separate from the rental business in the eyes of the IRS. What is the best way to do this? Set up another LLC and/or a corporation?

Also what if my plans change and instead of a flipping a property, I decide to keep it as a long term rental. Do you just transfer the property deed to the rental LLC?

Anybody out of eastern Iowa area?

Has anybody been to the REIExpo events? There was one held in Chicago this year and now in Los Angeles on Nov. 2.

Any first hand experience? Was it worth it? Did you learn anything practical or was it all a bunch of rah rah rah. BS? Any vendors that you like?

I would have to travel accross the country and spend around $700 so just wondering if it's worth the price.

Thanks

Most banks want at least 20% of the appraised value in equity, but do you prefer to keep some extra equity available? What percentage are you comfortable with?

I imagine the risk building a new 4 plex in a developed location would be much less than taking over a 50 year old building. Less money spent on repairs, it would attract the highest rents in the area and have the lowest vacancies. Who doesn't want to live in a new, modern building? The lower risk tends to push the return down and therefore the price up.

Does anybody have a ballpark figure of what a 4 plex would cost to build new in the midwest? Any price/sqft. figures? I've seen some new 4 plexes going up in my area lately. I think the key is getting the land at a low price.

Yes I realized that is a bad example. The point I was trying to make is even small repairs that you would normally expence, like a leaky faucet, you would have to capitalize if it's part of the improvement area. Thats the part Im trying to avoid.

I rehabbed a 4 plex last year, and defined the "improvement project" as only the unit that I was currently working on. So if I was rehabbing Unit 4 and the water heater went out in the common area, I would expense the water heater.

It boils down to how strong do you think your case would be when explaining it to the IRS auditor.

Actually most of the windows have broken seals or some are even cracked. Problem is, if the window is replaced (ie repaired) while I am updating the unit, then the window must be capitalized because it becomes part of the improvement project.

I will be closing on a 4 plex apartment building this month. Each unit in the building needs new windows and could use some updates to the kitchen and needs new carpet. IRS rules require that repairs, when done as part of a capital improvement project must be amortized over their useful lives instead of being expensed the current year.

Are there ways to piece-meal the improvements and report them as repairs? For example replace the refrigerator while the tenant is still there.

Where does the IRS draw the line between an overall improvement of the unit, and miscellaneous repairs from a previous tenant?