HOW DO YOU KNOW IF A RENTAL PROPERTY IS A GOOD INVESTMENT?
Ready to purchase an investment property, but not sure if it will be a good investment? It can be stressful and challenging to take that leap and make the large investment. There’s mortgage interest, taxes, insurance, realtor fees, and all kinds of other expenses. It’s enough to make your head spin!!
So, you’ve been thinking about purchasing your 1st, 2nd, or 3rd rental, and you’re asking yourself, is this worth the investment? How do I know if I should invest in this property?
Relax! I’ve got the answer my friend! My good peeps over at Biggerpockets has this awesome rental calculator, to help you see if it will be worth your time. However, there’s a couple things you’ll need to do before using any rental property calculator.
Look up market rents in the area: Check out about 10 comparable rentals in the same zip code. Ex: 2Bed, 1 Bath Houses in zip code 12345 rent for $900 on average.
Estimate what you think it would cost to do upgrades on the property. Always say it will be more than what you think it will be because there’s always a chance that something will come up that will be an extra unexpected expense…. There’s ALWAYS something! So if you think it will need 5k in upgrades/repairs, estimate it at 7k just to be on the safe side.
If your credit is not the best, just estimate at one of the higher percentage rates for the mortgage. You can find out more info about mortgage interest rates here.
Now that we got all of that out of the way, check out this screenshot of a calculation I did with the mortgage calculator! It breaks everything down for you, and lets you know what your estimated cash flow will be.
(Toward the top right, you can see $449.04 monthly cash flow after paying mortgage and everything else.)
Trying to get an idea what your tax implications and liabilities will be as you set up your LLC? Taxes are so damn confusing aren’t they? Because I started off knowing absolutely nothing about how the different LLC entities are taxed, it's been absolute hell for me to try and figure this whole LLC and business tax thing out, and it took me days of research and many calls to CPAs and business attorneys. If you've reached this article, I KNOW you can relate! So I figured I'd spend a little more of my valuable time writing this article to save you a lot of valuable time. Hopefully this quick article will bring you some clarity.
Tax planning is a critical part of your overall business planning because it can save you a lot of money. While taxes can be tedious and confusing, it’s important to get it all set up now, because you have to know how to treat your business to get all of the tax advantages -- not to mention, your CPA will love you for it. You can’t wait until the end of the year, making a mad dash to your CPA on April 14th, asking if they can get you out of your tax mess. Speaking of CPA's, I know you don't want to hear this because you're here trying to learn this stuff yourself, but I'm still going to advise you that you should always speak to a CPA and/or attorney to make sure that you're clear on things and so that things are done right. If you're a business or investor, the last thing you want is to mess up your taxes and get audited!
Before getting into the tax calculators, here’s a quick explanation of the different types of LLC business structures how they are taxed, and the types of forms you'll need.
LLC SOLE PROPRIETOR:
Sole Proprietorship goes on personal taxes. It’s considered a disregarded entity for tax purposes. That means everything including the income, losses, and profits will ALL be filed on your personal taxes.
If you’re a Sole Proprietor, you will simply need a Schedule Cform to file on your personal taxes on a standard 1040 form. Any business that has paid you $600 or more of the year, should be sending you a 1099-MISC.
LLC PARTNERSHIP:
LLC Partnerships andS-corpsare flow through entities. This means, the profit will flow through into your personal taxes.
If you have an LLC Partnership, you will file a 1065 tax form, which is where all of the income, loses, and profits are calculated. Whatever your profit is, will then get divided among partners and will go onto a K-1 form, which will you will file on your personal taxes (1040 form). If you have one of your members actively managing your LLC, you may also have to give a W-2 or 1099-MISC to the manager who will then file onto their1040 or Schedule C form for their personal taxes.
LLC S-CORP:
S-corps file an 1120S formand each shareholder will get a K-1 form(for interest, capital gains, & dividends), which will then will go on your personal tax 1040 form. The other thing you'll have to do is pay yourself a reasonable salary. Since you'd be paying yourself a salary as an employee, you'd have to keep meticulous record of payroll and taxes withheld. You'd also give yourself and your employees/contractors W-2 forms or 1099 forms, which will then be filed on employee's 1040 and/or Schedule C forms. There's also form 941 that you'll have to file for quarterly employee tax reports, and may have to also make estimated tax payments depending on the amount of taxes owed. If you want to to be taxed as an S-Corp, you cannot wait until tax season! You will need to know this in advance! Once you decide this is the best option for your business, you will need to file a 2553 formwithin the first 2 months of the tax year in order to claim S-Corp Status. This is why tax planning is so important! NOTE: A lot of people wonder if it's more advantageous to do an S-corp or Partnership. This should help clear up a couple of things... It’s typically more advantageous for LLCs that are more-so below 30k profit range to file as a Partnership, and LLCS that are more so for the 30k and above range to file as an S-corp. This is typically due to the additional administrative work, responsibilities, and additional cost to do taxes with the more complex 1120s forms (which is 47 pages). However, once a business gets into a higher income bracket, that's when it may be worth it to go through the extra motions to save money, because that's when you're more likely to be liable for paying more in taxes. In a nutshell, the higher the income, the more tax liability, the lower the income, the less tax liability. (There's a link at the end of this article that explains advantages and disadvantages of each entity.)
LLC C-CORP:
C-corps file an 1120 form and shareholders will get a 1099-DIV (dividends)form, which will then will go on your personal tax 1040 form. If your C-corp has employees or contractors, you’ll give W-2 forms and/or 1099-MISC, which will then be filed on employee's1040 and/or Schedule C forms. Like S corps, there's also form 941 that you'll have to file for quarterly employee tax reports as well as make estimated tax payments.
If you are a C-corp, you will be dually taxed, meaning that the business pays corporate tax and that the owner pays taxes on dividends. Typically, this is most beneficial to businesses in the high income brackets with employees who receive benefits.
TOOLS FOR CALCULATING/ESTIMATING LLC TAXES:
There are a few different options and tools that will help you calculate what your taxes will be. See the list below.
1. Quick Reference Charts:
If you’re trying to set up or structure your LLC and figure out the tax liability for your real estate or other businesses, you can get a general idea of what your tax implications and liability will be at the link below.
When you get to the page, there are options on the left side of page:
How to figure out your tax rate if you’re NOT a C-corp [aka Partnership or S-Corp]
How to figure out your tax rate if you’re a C-corp
The above site makes it incredibly simple to understand how your tax liability will most likely pan out based on the amount of income your business makes.
2. Tax Form Tool + Instructions:
For those who want to get down to the nitty gritty and cater it specifically to your situation, There is a 1065 Calculator and instructions on how to fill it out at the links below. GET 1065 CALCULATOR HERE
(VIDEO INSTRUCTIONS ON HOW TO FILL OUT 1065 FORM BELOW)
(VIDEO INSTRUCTIONS ON HOW TO FILL OUT 1120 FORM BELOW)
3. Complete Practice Tax Form Page:
Tax Form Calculator has the entire list of IRS forms such as (K1, 1040, Schedule C, Schedule E, etc.) that you can use to estimate/calculate your taxes!! How awesome is that?! Bonus! BENEFITS & DRAWBACKS: If you want to know the benefits and drawbacks of each tax scenario, such as Partnership, S-Corp, etc. You can get a nearly complete breakdown from InternetLegalAttorney.com
How to Respond to Someone Who Doesn't Text You Back (In 2019)
(Scroll Down for Samples of What to Text Back)
Every now and then, I like to go a little bit off topic... especially when I get a good idea or two that I think will help others.
When someone doesn't text back for hours, and even days, it can be very disconcerting. The reason they don't text back may be something as simple as the person was busy, their phone died, or they got caught up at work, and they eventually get back to you; but other times, especially in the dating world, they never text back.... Regardless of the reason they don't respond, it drives everyone absolutely mad! I don't care who you are or how cool you think you are. When someone disappears without notice or reasoning, it WILL drive you crazy.
Unfortunately, "Ghosting" is a thing now. People do it with no feelings of guilt and no form of accountability for their actions... or lack thereof. It's cruel, selfish, and downright disrespectful. People can usually dish it out, but they can't take it back.
Whatever happened to having enough balls and facing a person to assert your feelings... It's seriously not that damn difficult... and it's much more respectable than running off and hiding... (shaking my head in disappointment).
Ghosting is typically a cowardly move that someone does when they are too much of a Pu$$y to face you directly and tell you the truth of whatever is going on. They typically don't want to deal with your reaction... Therefore they Ghost... Pathetic, isn't it?
I call it the "Nestea Plunge"...
Everytime I see this, I laugh, thinking about how asinine and jerkish people can be.
It's as if they're frolicking around, going about their lives, just doing whatever is fun, without a care in the world and no regard for someone else's feelings, while leaving you in a mental cycle of confusion and upset, unable to figure out why they have just so abruptly and cruelly cut you off....
What a cowardly jerk! Just be glad the Trash took itself out, and say, "Goodbye to Bad Rubbish"! They aren't worthy of another thought!
But if you just can't help yourself... and you simply must call them out on their blatant disregard for others, here's 34 witty, new, and original responses I came up with, that you can use when someone doesn't text back...
33 RESPONSES FOR WHEN
SOMEONE DOESN'T TEXT BACK
1. "Hey, how's it going" (No Response) "I'm going to assume that you're having such a great time that your phone got crushed when you jumped on it from the excitement.... and that's why you haven't responded." 2. "I guess a ghost abducted you and turned you into one." 3. "I see... a vulcher swooped down and snatched your phone out of your hand." 4. "Great conversation." 5. "OMG! Should I call 911?..." "Huh?" "I just figured I would call them for you since you're too incapacitated to use your phone." 6. "So, You got kidnapped by Pirates they are currently making you walk the plank with your hands tied and a blindfold .. and that's why you aren't texting back?" 7. "Haven't had a conversation this great in a long time!" 8. "Best conversation EVERRRRR!" 9. "My, you have the most interesting responses!" 10. "So, you're so excited to hear from me that you're at a loss for words? I know we've only known each other for 6 months.... Stop being so shy!" 11. "In the time it has taken you to respond, teleporting will have been made possible." 12. "For somebody who doesn't like when people magically disappear, your magic is better than David Copperfield's." 13. "So I'm guessing you spontaneously combusted into a jerk? Jerk!" 14. "OMG! Really? Great conversation! No.... REALLY! I learned everything I need to know!" 15. "Are you waiting for the return of the messiah before you respond?" 16. "If you don't text me back, I'm going to put your phone number in for every get rich quick scam on the internet." 17. "Let me guess... a gang banger held you at gunpoint and made you give him your phone, and that's why you didn't text back..." 18. "So the FBI came in a big white van, then took you to the White House to speak with the president about Russian secrets, and that's why you haven't texted back?" 19. "Does it always take you this long to text back? Or is this the special VIP treatment?" 20. "So, a pickpocket stole your phone, took off running... You chased after them and caught them, but then your phone fell down in the sewer?" 21. "So your cat was playing with your phone and managed to set a new password and you haven't been able to unlock it since?" 22. "So let me guess, you've been abducted by aliens, because no human takes this long to text someone back." 23. "So a meteor struck right next to you, and you survived, but your phone didn't?" 24. "So you've been naughty this year, and santa claus realized that he gave your phone to the wrong person, so he took it back and gave it to someone else?" 25. "Stop texting me so much! It's annoying as hell!" 26. "If you don't text me back in the next five minutes, I will designate your number as the Complaints about President Trump hotline. You don't want those problems..." 27. "So, let me guess... you can't respond because you're on a long call with the IRS and you're getting ready to pay them the thousands of $$ you owe in Bitcoin?" 28. "For someone who doesn't like people that ghost, you sure seem to be a pro at it." 29. "So you've decided to take forever to respond... Is this your way of trying to act cool and aloof? It's not working..." 30. "My asshole cat responds quicker than you do." 32. "So, you were so excited that your hands were shaking, and you dropped your phone into the toilet?" 33. "Wow. I didn't realize you cared so much! Thanks for responding so quickly!" 34. "So you ate a special brownie at a party and forgot how to send texts?"
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