If your sole source of income is investment properties would you be able to avoid social security tax?

If you're a Sch. C filer you'll likely get hit w/ SE tax (SS+Medi).

If you're a Sch. E filer you won't.

You'd have to be a RE professional to be Sch. C filer, which is something like 400 hours a year or something.

I mean it all depends on how you set it up. You should probably look into setting up an S-Corp and taking a reasonable salary out of it if you are making any real money (net 30k+/yr). You will save some on SE taxes that way.

Well hypothetically let's say I'm living modestly off savings and income of one rental property, I live with family rent free

if I plan on buying more properties how should I "set myself up" so I won't be responsible for the SS tax

btw, for anyone who has read this thread and wants to learn more or just have some questions answered, I suggest heading over to biggerpockets.com/forums

A lot of really smart REI guys there, and especially in the rental properties sub-forum, seem to espouse the same type of smart investment strategies that spex and others have

If you are not an RE professional, you only report your rental income on your schedule E, which doesn't hit you with SE tax.

I want to start my own real estate management company, is a BS BA enough or should I also go for my MBA?

GED should be enough

Here's a question:

I want to buy the cheapest house in the continental USA with water, electric, gas.

How do I find this? Where is it???

What's the best way to obtain a loan with an insufficient show of income? Is this possible?

I've heard it is, via hard money loans, etc., but don't understand how they work or how it would be possible.

They are high interest 10-12% interest only loans with about 2-3% loan fee off the top.

Plus you need about 25-35% downpayment.

How does Zillow Calculate what a house is worth? This house increased in value like 70,000 dollars in one year but is listed at a price 35% of its zillow estimate.

http://www.zillow.com/homedetails/123-Mason-Ct-Royal-Oak-MI-48067/24635313_zpid/#{scid=hdp-site-map-bubble-address}

Does the owner of the house matter? I.e. if the house is foreclosed on or owned by fannie mae influence its price?

If you don't mind please elaborate

I just finished reading this thread and it has definitely inspired me. I will be reading through the recommended books along with re-reading this thread throughout the year until I have a better understanding of what I'm doing. I am hoping on getting my feet wet next summer.

I do have a question though: I'm planning on attending law school and hopefully becoming a real estate / business lawyer. How advantageous would this be in real estate investing? I would think that understanding the law regarding real estate transactions and taxes would be beneficial to investing but who knows? Does anyone have any thoughts on this?

For the record, I would be practicing in a mid-size blue collar city.

P.S. Spex, you probably made John Reed lots of $$$ by recommending his books in this thread.

Is it possible to do a lonnie type deal with a house?

Private mortgage lenders.

They work very simply.

They'll loan up to 65-70% of the value of the property. So you have to fork over the rest.

But they charge minimum 10% interest, up to 20%. The reasonable ones are about 10-12% interest only loans.

A fee of 5% is normally added on.

The term of the loan can range from 6 months to a few years. Definitely renewable if you're a good paying customer.


The legit ones will have mortgage deeds identical to any national bank mortgage deeds.

It is never a bad thing to have a law degree.

If you look at real estate from a investing perspective with a law background, that's very solid.

Simple answer is yes.

It is just more difficult to do it when house prices are expensive relative to rental income.

I think zillow uses sales filed in the registry but I'm not 100% sure.

Don't rely on zillow though. I would take active listings on MLS and on average reduce it by about 10% as my solds if I had no other alternative. That would be generally more accurate than zillow.

bought a house last week at trustee auction for 230, zillow has it (over)valued at 370

previous owners are still living in it, going to try cash for keys when i get the deed in a couple days

not sure if im going to flip it, rent it, or live in it

never done one of these before, maybe not the smartest impulse decision ive made.. ill keep you guys updated

I'm considering purchasing a multifamily home in the downtown section of Jersey City. This is very preliminary, and as a first time home buyer and investor I'm not entirely sure where to start. This would be where i would live, its a 4 unit building (2x 3 bedroom 2 bath and 2x 2bedroom 1 bath). Both 2 bedrooms are rented @ 1600/month and one of the 3 bedrooms is rented at 2200/month. This seems like it would cover the entire monthly cost of the mortgage and taxes and leave room for good profits + an essentially free place to live. I guess I'm just looking for general advice and caveats because quite honestly this seems a bit too good to be true.

Quantify all of this, per the analysis in this thread (including how much you're currently paying in rent and how much your place would be worth to you per month -- have to value it somehow). If you post your analysis of the deal, others I'm sure will jump in and help you out.

If you haven't read this thread, it is time well spent, and if you're not willing to do that, you probably shouldn't be doing any property investing!

Best of luck in any case.

edit: and off the cuff, 380k is likely a slam dunk price for this place. More than that, and you'll have to get into the nitty gritty details, which you should do anyway. And I'm from NJ, so yes, I understand what property costs here.

Thanks for the reply, I'm actually reading through the thread right now as today is the first time I have seen it. when I'm done I'll try and put up more details.

So I've read through a bunch of the thread (wow its long) and I wanted to know if I'm getting this at all.

Value $400,000
20% down 80,000$
Mortgage 320,000$
30y/5.25- 1767

4 units, rent 1600x2 1800x2 3200+3600 =6800

estimate 2000/month expenses?(how do I calculate what my expenses would be?)

4800x12 =57600 = NOI
1767x12 = 21204
=36396 cash flow
57600/400,000 = 14.4 Cap Rate
COCR = 36396/80,000 = .45495
Is this right?

45% is the national average for expenses but obviously it will vary from property to property so it's best to just get the numbers from teh seller