John T. Reed’s news blog

No. You should not hold rental property in an LLC (limited liability company).  Real estate investing has more BS artists than other businesses So why is doing that extremely popular? Because real estate investing is a unique business in that it has an extraordinary large number of scammers—get-rich-quick gurus selling seminars and “mentoring” services and actual properties, cable TV flipping shows, and novices who do not know what they are doing, but who nevertheless prattle on about such things in internet-discussion groups. See my guru-rating article and my Real Estate BS Artist Detection Checklist. I have another broader article on all the...

Review of Discovery Home Channel TV program Flip That House by John T. Reed Copyright by John T Reed The Discovery Home Channel (DHC) has a regular program called Flip That House. Each episode shows a person or group of people renovate a house, then sell it within a month or two for a substantial profit. Unbelievably, there is another show called Flip This House that is not related to Flip That House. I have never seen Flip This House. I am inclined to start a third show to answer both of them. I think I’ll call it, “Flip This.” I do not recommend the Flip That House show for a number of reasons: it leaves out or glosses over a...

Much talk about rehab as a source of profit online and on TV. But little evidence of understanding that only a rare few kinds of rehabs are profitable. I suspect those talking about rehab are buying a building, rehabbing it, selling it for more than they paid for it, then assuming the rehab was the source of the profit. Bull! Assumption is the mother of all screw-ups. In fact, the source of the profit was marketwide appreciation. The rehab per se lost money—not even close to being profitable. To interpret the matter correctly, you need to investigate what the marketwide appreciation was during the time period was. What is left after subtracting...

Our son Mike, my wife, and I bought a house in June. Termite report obtained by the owner said we had termite damage $2,200. We called and told him to do it. He jacked the price to $4,400 and said we had to tent it. . I told my son I had no experience with tenting and told him to get a second, and maybe third, opinion. . Orkin said there are no termites at all in the garage of house, just in a tree and stump in the backyard. Absolutely no need for tenting. Tenting was also going to...

Cost accounting tells a typical company something like this: You are overall profitable with your 20 products, but after examining your business with a microscope figuratively speaking, we must tell you that only 20% of your products are profitable. Eight are around breakeven and another eight are losing money. Your belief that everything you are doing is profitable because it is overall profitable is incorrect is an example of the ignorance-is-bliss phenomenon. You need to either make the 16 unprofitable products profitable or discontinue them. Now let’s apply that to real estate investing. Many novices seems to be collecting as many cash-out refis, LLCs, and separate buildings as possible and some are overall profitable when they sell after five years or so. So...