I plan on to do a lot of the grunt work and some of the trade work on rehabs…my question is: Do I pay myself for the labor as I go along, or do I just wait until the property sells for the income?
What are the benefits either way? Thanks in advance.
Dave
Would you take a draw for yourself on funds during the rehab? Otherwise, how would you pay yourself until after you make the profit?
Use the money you have set aside to do the work, then pay yourself once it sells.
At least that is my opinion.
depends on the cash on hand…the strategy for sale…the market…etc.
all this should be worked out ahead of time.
if you buy it with ABC LLC…
then possibly ABC CORP does the fixin’s for a fee. LLC pays corp…
you should work all this out with cpa first…
outside of the tax implications, it pretty much comes down to whether or not you need the money. If you are trying to become a full time rehabber then you need to pay yourself, when you work, in the end your profit will be the same, you will have just taken part of it early. I am a realtor and I buy alot of properties instead of selling them to other investors, I pay myself $3,000 per transaction side for homes.
Eric Medemar