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JOHNSON'S
PASSION NEWS
"Focusing
on QUALITY not quantity of Real Estate Investments"
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| In This Issue |
Improving Operations and Cashflow
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| The Tax Benefits of Commercial Income Properties |
| Our Most Recent Deals |
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"Energy and persistence conquer
all things."
--
Benjamin Franklin, Inventor
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IMPROVING OPERATIONS AND CASHFLOW
What
have I been doing since the last time you heard from me? Running
a 230 site RV park in Arizona with the help of our seven wonderful
staff.
I love RV parks, just as I had anticipated in my email to you just
before myself and my partners closed on the property in December of
2014.
The
investment has been very profitable as well! I had projected a
$72,500 net operating income for our first year of operations,
increasing slightly each year, but instead our professionally prepared
financials have shown an NOI close to $120,000 each year during the past three years!
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 THE TAX BENEFITS OF COMMERCIAL INCOME PROPERTIES
When
you are a partner in a large income property investment, there are
great tax benefits. On our current investment, my partners have
received a 16% cash disbursement the last two years, but less than half
of that has been taxable. This is because of the legal deductions
of depreciation and amortization.
And because of the way our accountant structured the 2015 return, they
have owed no taxes in 2016 and 2017. I explained this in an
earlier newsletter as a benefit of large income properties and it has
held true.
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OUR MOST RECENT REAL ESTATE DEALS
In
2014, I presented two deals to my subscriber list. Many of you
were considering investing at that time. As mentioned already,
myself, my family, and two investors from Canada closed on the rv park
in December of 2014. In January of 2017, we were able to
refinance with a regional bank with the property appraising at
$1,225,000, a full $515,000 more than our purchase price of $710,000
two years earlier. The cash flow has been very good. I was
able to distribute a 16% cash return on investment to my partners for
2016 and will be sending a similar cash ROI for 2017. I did not
send out a disbursement for 2015, but the tax benefits of a large
income property such as this has resulted in us paying little or no
taxes in 2016 and 2017.
You may remember that I also presented you a 21 unit apartment building
near downtown Detroit as a wholesale deal in September of 2014.
The building was being sold by a court-ordered receiver
(bankruptcy proceedings) and I had the three-story apartment complex
with balconies under contract for $277,416.00 ($13,210/unit). I
was asking for a $15,000 wholesale fee.
How did this property investment do? The resulting purchase is
recorded in property records as $280,000 on 1/13/2015. The buyer
was then able to obtain a new mortgage for $320,000, $40,000 more than
their purchase price, with First Independence Bank just four months
later on 5/5/2015. And then they successfully sold the property
on 3/23/2017 for $1,100,000. You can see this sale in the...
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