[Taxman]

I like rentals! There are very few investments where you can invest 10,000.00 to 20,000.00 and turn it into 150,000.00.

An investment in stocks or bonds that earns 10% will double in 7.2 years. (the rule of 72) or @ 7.2% your money will double 10 years

example invest in stocks [email protected]% in 10 years = 20000.00, 10 more years = 40,000.00

invest in a 100,000.00 home, 10,000.00 down, 15 years = 150,000.00 home! (And yearly tax benifits)

Sounds Good!, but I have three rules to follow!
RULE # 1) The rental has to be close!
.....This is like a second job! You have to meet people, repairmen, renters.... if it is to far, it will take to much of your time!!!
RULE # 2) If your life takes a $hit you could live there.
.....This is a nice way of saying "If I wouldn't live there!" DO NOT BUY IT!
RULE # 3) The numbers have to work.
.....A three bedroom ranch in St Clair Shores @ 180,000.00 rents for 1300.00 per month or so, BUT a three bedroom Warren alum. ranch @ 90,000.00 will rent for 900.00.

As far as what form should I hold my asset?
Choices;
Personal
Corporate
S Corporation
Partnership
LLC

To hard to type why for each T.M.I., each has a use.

Personal is the best. Any other way means a tax return and 300.00 min. per year in fees. If you hold it in your personal name the activity is easy to file on your tax return on 4/15 and is inexpensive. (one of the best ways to deduct on 1040) The savings can be spent on great insurance to C.Y.A. It is also best to own it alone, that way YOUR work is rewarded.

So much more to say if.....partners....high risk....commercial....low income.....bla bla bla.

Hope this helps
Taxman

Last words of advise. If someone tells you that you need an enity such as an LLC be caucious of the taxes!!!!!! Alot of people hear good things about one type of company over another, ALWAYS ASK IS THIS THE CHEAPEST TAX WAY TO GO!

 

[Shandog]

Excellent advice for all Joe! I say invest in real estate/homes as well!

Hey ~ I just saw your brother Jim @ GWillies - said hey to him & introduced him to the kids. I told them that he was Joe Simasko's brother - yes they remember you and want you to come over and play again sometime

Good post from an expert - thanks again. Have a good weekend, I'm off to watch movies w/the kids!

 

[jetski]

More good info. I am thinking this sounds like the best way to go into business, if you have good renters. What are some of the things not to do or things to watch out for?

 

[Taxman]

QUOTE(jetski @ Feb 7 2003, 09:49 PM)More good info. I am thinking this sounds like the best way to go into business, if you have good renters. What are some of the things not to do or things to watch out for?
Biggest mistake! Renting to family

Second....Hmmmm not checking the credit reports, some people can lie very well!
Third....thinking that 20 miles is not to far!

 

[jetski]

OK, Thanks

Someone once told me Corporation is always best way to have your business setup. This way no one could come after you personally. Do you see any cases where people have had renters that sue or something and it would have been better to be incorporated? is going person and renters insurance just as good?

 

[Adios]

THANKS TAXMAN,...

LOOKED INTO THIS A WHILE BACK, YOU CLEARED MORE UP FOR ME THAN
I DID READING A COUPLE TOP 10 BOOKS DID

 

[Taxman]

QUOTE(jetski @ Feb 7 2003, 10:06 PM)OK, Thanks

Someone once told me Corporation is always best way to have your business setup. This way no one could come after you personally. Do you see any cases where people have had renters that sue or something and it would have been better to be incorporated? is going person and renters insurance just as good?
I was waiting for this one!
Yes a corporation will save your assets if your sued, this is true BUT! you lose the house or assets of the corporation!

So to protect yourself and your asset you need good insurance! It is much better to have the person get paid $$$ for the injury and not lose the house.

Also in a regular corporation the yearly losses are not deductable!

Min 300.00 for a corporate return accounting fees.

When you do a "personal rental" the irs asks "what was the income and expenses?...easy

When you do a corporate return they ask how much did you start the year off in your bank account, how much in and out as well as income and expenses. MUCH harder bookkeeping!...=$$$

I'm sure instagator would quote a 1,000,000.00 umbrella for a few $$$
you just can't rip the red tag off the furnace, and kill people!

Also "Personal 1040 rental Theory" applies to homes that meet the above three rules! Go low income.... poor repair.....different story!

thanks
Taxman

 

[delsolcruz]

The Taxman is so full of valuable information!

 

[MrsSunbum]

Do you have an opinion about duplexs vs. single family homes? We are planning to buy rental property in Fl.
We are debating between a duplex and 2 single family homes.
Any thoughts would be greatly appreciated!

 

[GaryDebs]

I firmly believe that real-estate is the best money return. My master plan was to keep my home in EP and rent it. But due to financial reasons (pay cuts and possibly facing head count reduction) it was better for us to dump it. Both were good decision cause we bought it back in 89 when I was 21(the best decision I made instead of renting) for 47k, sold it last year for 107k! Money in the pocket my friend. Hopefully things can turn around and get back to a master plan. Need a new job for that!

 

[GaryDebs]

I have a friend who's is looking for a home in SCS. She is looking there for a couple of reasons. She wants to close to her children her and her ex share custody and wants to stay close to EP. I am pretty sure she wants to buy, but renting again may be an option.

 

[Taxman]

QUOTE(garydebs @ Feb 8 2003, 01:05 PM)I firmly believe that real-estate is the best money return. My master plan was to keep my home in EP and rent it. But due to financial reasons (pay cuts and possibly facing head count reduction) it was better for us to dump it. Both were good decision cause we bought it back in 89 when I was 21(the best decision I made instead of renting) for 47k, sold it last year for 107k! Money in the pocket my friend. Hopefully things can turn around and get back to a master plan. Need a new job for that!
and all tax free!!

 

[Taxman]

QUOTE(MrsSunbum @ Feb 8 2003, 12:49 PM)Do you have an opinion about duplexs vs. single family homes? We are planning to buy rental property in Fl.
We are debating between a duplex and 2 single family homes.
Any thoughts would be greatly appreciated!
Both are great if you buy right! BUT I think that there is more potential for market value increases for single family residences. A duplex is a commercial adventure, a single family residence can go either way.
Taxman

 

[Focker]

Taxman, I wish I would have meet ya a lot sooner. I set up a s-corp almost 2 years ago that I run all of my rental/investment houses through. I asked my attorney and accountant what they thought would be the best route. The attorney said to ask the accountant, the accountant said to ask the attorney.
I talked to a couple of people doing the same thing and they set up a s-corp, so that is what I did. I was worried about being sued personally, so that was one of the biggest reasons. I guess I could've have increased my insurance to cover myself. Another reason is writing off expenses before taxes. Anything and everything that I can think of I buy & right off through my s-corp. All of my fuel, oil changes, truck payments, phone bills, repairs, material, cleaning supplies, etc. etc.
Right now I'm looking into getting a commercial loan/line of credit instead of having a mortgage for each house. It is a pain in the a$$ writing out a ba-zillion checks for mortgage payments every month. I would love to write one check to the bank to cover all of the houses. Also all of those mortgages show up on my credit report, which is hurting my buying power personally. The last couple of mortgages that I've gotten I had to go "no doc", which the intersest rate is higher and I usually get stroked a couple more points.
Well I think I babbled enough for now. I need another coffee.

 

[rerun]

Please don't stop talking about it. I like most people on this board want to get into this and any advice you have will help greatly.

 

[HazyMemory]

Just had to print this. Thanks again Joe. You are the best!!!!!!!!!!

 

[HazyMemory]

Yea, actually, once I was told by the little red sweater girl that you were the best and I was thinking she was just gushing about someting entirely different and she might have been, but you are the man.

 

[Focker]

I do have to admit that rentals can be a pain. Especially the last 2-3 months. A couple of my renters got laid off from their jobs, so naturally they are behind on their rent. ALWAYS make sure you have money reserved if this should happen.
So needless to say, I got myself in a little pinch recently. I closed on a house in Clinton Township last November. My closing costs and prepaids were more than I anticipated. I didn't want to lose the deal, so I bought it anyway using up ALL of my reserves and even took out a small cash advance on my business credit card. The house is worth at least $30k more than I paid for it. The guy I bought it from lost his job and was close to foreclosure. I basically got it for what he owed, plus put some cash in his pocket so he could get another place and also saved his credit.
So with my renters behind, I spent numerous nights unable to sleep and worrying how I'm going to make the mortgage payments. Thank god for 15 day grace periods I guess. This was a very valuable lesson for me and you can bet your last dollar that I'll be more careful buying the next house.

 

[Goose]

QUOTE(Taxman @ Feb 7 2003, 07:36 PM)An investment in stocks or bonds that earns 10% will double in 7.2 years. (the rule of 72) or @ 7.2% your money will double 10 years

example invest in stocks [email protected]% in 10 years = 20000.00, 10 more years = 40,000.00

invest in a 100,000.00 home, 10,000.00 down, 15 years = 150,000.00 home! (And yearly tax benifits)
Sounds easy, but you also have to take into account that you pay yearly taxes (although deductible) on the investment house. You also pay insurance, maintenance, should set up reserves for large items that may need replacement in that 15 years (roof, furnace, etc.) The place won't be rented 100% of the time so make sure you can handle 2-3 months without a renter. These expenses make the return less than it originally appears. With a stock investment you put your $10,000 in and thats it, dont need to worry about feeding in more money and expenses. Both have their advantages though, (I personally prefer real estate, but I can pretty much fix anything from roof to foundation that may go wrong with a house). If your not handy the maintenance can add up.

 

[Shandog]

off the subject so I'll make this short and sweet - LOVE the avatar Deuce-Fiver!