Questions on calculations

[Bram Spiero]

Hi,

I'm tweaking my own deal calculator and have some questions.

I'm looking to invest in buy and holds.

Any help with the below would be much appreciated.

1. Should I break out withholding for general maintenance expenses and capital expenses into different line items and how much as a percentage of rent should each be? Brandon suggest 5-15% for each, should I use 5% for brand new houses and 15% for run down old wrecks?

1.1 A tax related question, will unused reserves for maint. and capex be taxed as income at the end of a year is there a way to shield these reserves from taxes?

2.How do I calculate depreciation for tax purposes. Is the depreciable amount the purchase price minus land value divided by 26.5 years or is it the value assigned after inspection minus land value divided by 26.5? Also, does the age of the property make a difference? I assume depreciation starts from the day of closing and not from when the property was constructed.

3. I can't for the life of me find the formula for extracting the decreasing interest component of mortgage payments. I'd like be able figure out when would be a good time to refinance for the purpose of increasing interest payments for tax purposes. 

4.How much should I calculate closing costs to be? Is this fixed or a percentage of the size of the deal? What should I assume the minimum closing cost to be?

5. Is there a minimum amount where banks wont provide mortgage loans?

Thanks in advance for answers or feedback on any of these questions.

[Wayne Brooks]

Partial answer;

1.1  Money not actually spent, just put aside for reserves, is not deductible.

2.0  Based on actual costs, plus acquisition/closing costs, plus "get ready for rent" costs, less land---not the value of the property.

3.0 Don't know any formula-  use myamortizationchart.com  But, an observation:  I don't like the idea of spending an extra $1.00 to get 0.25 back.  I'm still out pocket $0.75.

4.0 depends on local custom in the area you buy, as to who pays what.