BiggerPockets Podcast 244: “Unfair” Taxes and Unfair Advantages with Linda Weygant, CPA

by | BiggerPockets.com

There are a lot of reasons to love being a real estate investor. One of the most impressive is the “unfair” tax treatment investors get by the US Government – and we mean that in a good way! On today’s episode of The BiggerPockets Podcast, we sit down with CPA Linda Weygant to learn more about those incredible tax benefits. You’ll also hear how she discovered the power of real estate through her clients, and how that led her to begin her own investing journey. Linda shares how she navigates the messy world of investing in properties that have HOAs, as well as how she uses her “unfair advantages” to succeed where others fail. Finally, as a CPA, we have a special “tax-focused-Fire-Round” where we talk about LLCs, deductions, and much more!

Click here to listen on iTunes.

Listen to the Podcast Here

Watch the Podcast Here

Help Us Out!

Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here. Thanks! We really appreciate it!

This Show Sponsored By

Freddie Mac LogoCheck out Freddie Mac, the leader of multi-family financing, they make homeownership and rental housing more accessible and affordable.

Get a quote today by visiting: freddiemac.com/smallloan

Fire Round Sponsor

simplisafeCheck out SimpliSafe Security’s DIY home security systems; an affordable, wireless, cellular, and customizable system that doesn’t require a contract!

Try it today with a discount: simplisafepockets.com

In This Episode We Cover:

  • How Linda got into real estate
  • Why the government likes real estate investors
  • What her first deal looked like
  • What to look out for when using credit cards for rehabs
  • Should you be debt free before investing?
  • Debt to income ratio
  • Why she chose a townhouse as a first investment
  • Her HOA story
  • The landlord vs HOA mentality
  • How she got her positions in the HOA boards
  • Rent-By-The-Room apartments
  • How to manage Rent-By-The-Room
  • Investing with family and getting an LLC
  • How one should handle their business
  • Where she’s headed in the next 10 years
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Fire Round Questions

Tweetable Topics:

  • “The costs to maintain a property go up every year.” (Tweet This!)
  • “Always be open for something new.” (Tweet This!)
  • “Always treat your tenants with respect.” (Tweet This!)

Connect with Linda

About Author

Thanks for checking out the BiggerPockets Real Estate Investing & Wealth Building Podcast. Hosts Joshua Dorkin & Brandon Turner strive to bring top-notch educational content and interviews to our listeners -- without the non-stop pitch prevalent around the industry. With over 1500,000 listeners per show, the BiggerPockets Podcast has become the biggest real estate podcast in the world. But don’t take our word for it. We’re the top-rated and reviewed real estate show on iTunes — check it out, read the reviews on iTunes, and get busy listening and learning!

28 Comments

  1. Jd Martin

    I love this podcast! Listened to it this morning on the way in. From @Scott Trench’s “I don’t think the other guy even knew he hit me” – hilarious – to Linda’s approach to slow & steady (even with 3 offers accepted at once!) – this was a great episode. Some of what she talked about I heard in the same way I approached investing. These kinds of podcasts really resonate with me! And Brandon & Josh are great, but look out for this Scott Trench dude – he’s a pretty good substitute host – great job all of you!

  2. Don Spafford

    Very inspiring for those of us just getting started. I totally agree with Linda with showing respect. Everyone wants to get treated with respect. I always say that integrity is the most important thing to maintain because it reflects who you are and how people will remember you. Very good random 6 questions as well.

  3. Christopher Smith

    I’ve been a pretty successful securities market investor for most of my life, but as a result of the financial crises I took the opportunity to buy heavily into the rental real estate market in the 2010 to 2012 time frame. I can attest to the really compelling tax benefits that I guess I knew always existed but didn’t really fully appreciate.

    Specifically in my real estate activities I have had huge capital appreciation (well over 100% in less than 5 years), plus significant rental income. I pay nothing currently on the enormous capital appreciation I have had, and roughly half of my annual rental income is offset by depreciation. Last year I probably paid tax on 15% to 20% of my total rental real estate income (i.e., capital appreciation + rental income). Since I have a regular job that already puts me in the higher tax brackets before I even start reporting investment income sources, the rental real estate has turned out to be hugely beneficial in allowing me to keep the lion’s share of what I make. A very nice net worth accelerator.

  4. Zoeimy Floyd

    Linda –
    Loved the answer to your famous four+ ?#4…. I agree that it knocks the wind out of the sail to see those strong statements. I’m focusing on something that you exactly mentioned “place in life”. I’m in a place in life where I think it’s a benefit that I don’t need to have HUGE returns right now.

    I’m in the education phase of my plan right now. When I move to my “start up” phase, I just really need to not have a loss… beyond that “Who cares if it’s not THE BEST DEAL”, at least I’m doing it.

    Great advice for the big loss property – Having enough reserves for the unexpected.

    Scott – Unless I missed it somewhere, Amanda’s book about Tax Strategies didn’t make the show notes list. By the way, always love the quality of your questions! Thank you! Not a knock on Brandon & Josh’s questions… you are all great!!! Thanks for this phenomenal resource. Getting a ton out of it!

    ~Zoeimy

  5. Tracey Geary

    Linda, I loved you concept of renting out the rooms instead of the house. In NJ, with our very high RE taxes, it is hard to make the numbers work on single families. This could be a great alternative! I totally identify with it because way back when I first moved out of my parent’s house, I lived in a rental to share. It was a 3/2 condo that was much nicer than what I could afford on my own. Definitely will be doing some research on this.
    I also liked your comment on #4. I may not be making the absolute best investments, but I am investing and seeing better returns than I was getting in my money market and I can move my way up the food chain.
    Love the podcasts as always! I made sure it was downloaded before I left for work yesterday so I could listen on my drive in.

    • Linda Weygant

      Room rentals can be lucrative. In my experience, only a little more work nets higher returns.

      And I’m so glad you agree with me on getting started. Who cares if you don’t have “THE BEST” deal. You’ve still got a deal and if it gets you better results than the .001 you’re getting from a savings account or the 4%-8% average return from mutual funds, then go for it!!! You’re still ahead!

  6. Meghan McCallum

    LINDA!!!!! You did it! I love when someone I know does something they find “scary” and then KILLS IT!!!!!!!

    Great Podcast! The REI Club members all say THANK YOU for the shout out! We loved having you take ” The Midwest Tour” though, Grand Rapids missed out!

    This podcast was great and I hope it opens the eyes of SO MANY INVESTORS not getting the most out of their investments.

    LOVE LOVE LOVE!!!!!

  7. Kim Stofan

    Linda, I really enjoyed your podcast and got so much out of it. It’s awesome to see intelligent, well spoken women out there investing and making things happen. It’s very inspiring for me. I appreciated hearing your thoughts and experiences dealing with HOAs. Also loved your comments about conducting yourself in a calm manner and being respectful to everyone. Great, great show!

  8. George Bittar

    Hello Linda, great podcast thank you for sharing your experiences and wisdom!

    This podcast was very timely for me and hoping you can provide some guidance or recommendations as someone who is a HOA subject matter expert :). My unit in Chicago is an HOA where rentals are prohibited. I am looking for any creative ways around this covenant in the bylaws. It is currently listed on the MLS right now and was acquired as an REO over the summer for the purposes of flipping to an end buyer. My last buyer fell through and I am just thinking ahead in order to consider other strategies as this deal will get more and more marginal while we wait to close and just want to have a plan b. I own the property in an LLC and in some of my research I came across a strategy of adding a tenant with a very minor stake to the operating agreement of the LLC as a work around was proposed, but this seems to carry high risk and other circumstances that can add further complexity. I can also make a formal request to the HOA, but since this is prohibited I don’t see why they would approve unless hardship was present. Thank you for taking the time to review this I really appreciate it.

    George

    • Linda Weygant

      I wish I had some great advice for you on this, but I don’t. Once an HOA goes down the path of prohibiting or seriously discouraging rentals, it is VERY hard to turn that ship around. As I mentioned in the podcast, the “Us Vs Them” mentality that seems to come from owner occupiers is incredibly strong and difficult to combat, even when you come fully armed with facts, articles and statistics.

      My first advice would be to get a position on the board and see if you can influence from there, but odds are good that the rest of the board would be highly resistant to changing this rule. You would have to slowly recruit other like-minded folks onto the board over time in order to be able to get a majority vote. ANd even if you could get these individuals on the board, depending on where the restriction is (by-laws, covenants or rules), it may take a vote from all homeowners to change the restriction, which may still make it impossible despite having a favorable board.

      Having your tenant owning a small sliver of the LLC feels dangerous to me because they are now, in effect, “in business” with you and their actions might be able to increase liability on your part. It’s also an obvious ploy to get around the rules and I am always loathe to engage in such shenanigans. A lawyer would be able to advise you better on the downsides of such a ploy.

      • George Bittar

        Thanks for responding on this. I definitely want to do things on the up and up, but just want to make sure I don’t leave any stones unturned when it comes to any potential loopholes or creativity. WIth this condo being out of state I don’t think serving on the board is an option and the time it would take to make a case would just continue to add to my deficit while it sits empty waiting for it to sell. I actually received a new offer tonight so need to try to work some magic here and just get this one closed even if it requires taking a loss depending on final #s. This is all part of the education and how to better approach future deals and consider all challenges and work around them if I get into another where an HOA is involved.

  9. Chris Long

    This was far and away my favorite BiggerPockets Podcast . Linda doesn’t have the self importance of alot of successful investors and seems as knowledgable as anyone I have heard on the podcast. I also invest in primariliy condominium units so it was nice to hear someone else is have luck in that area.

    I am also an insurance agent specializing in condo associaitons and in my area have actually never seen an HOA that totally restricts rentals. Particularly after the financial crisis many associations had to choose between allowing rentals or allowing a significant number of owners to be foreclosed on losing a significant portion of their operating budget. Thta being said if an association restricts rentals they are likely very serious about the rule and even sneaking by on a technicality can be dangerous since the Board can fine you for almost anything and make your life completely miserable.

  10. Nathan G.

    My favorite shows are the small-time investors (no offense) that are slowly (not too slow!) and deliberately building wealth. I do wish there had been more questions only a CPA could answer…even if they start with, “It depends…” like most real estate questions. Great job, Linda!

Leave A Reply

Pair a profile with your post!

Create a Free Account

Or,


Log In Here