All Forum Posts by: Andy Webb

Hi Neighbor - welcome to BP and REI!

Hi neighbor - welcome.  Lewisville and Carrollton are two great areas if you can get into a deal there.

@Jessica G. Welcome to BP! We bought our first single-family rental in Lewisville in 2012. You live in a great market!

I am not a fan of the home warranties either. However, on our first SFR, we chose not to replace a visibly aged A/C condenser, so as a hedge, we did pay the $385 to get a warranty for the first year. The condenser was rather old, but the furnace was just 7 years old and we had both serviced.

Naturally the condenser died in the mid-summer Texas heat of July. In the long-run the hedge/warranty did save us some money. But note that on top of the initial purchase price we also had to pay for the initial service call $60, plus around $400 in fees for removal of the old unit and the addition of freon to the new unit (we only replaced the condenser - not the full system) - these were not covered.

Note as well that we had no control over the choice of contractor performing the work, and the bureaucratic hurdles we went through led to a longer lead time and disgruntled tenants. These two in particular are a strong negative in my mind.

If you go with a home warranty to target a specific mechanical item, make sure you know what additional charges may be involved to replace/repair.

Hi @Jessica G.

Welcome to a great path! We have been investing in the area for 1.5 years and it has been a good ride. I have had difficulty finding reasonably priced buy and hold properties in your area (Richardson/Plano/Carrollton), but if you can get your first few nearby, it is helpful for the learning curve.

Andy

Thanks! I will see what our CPA says.

Correct. Hail damage is a constant issue here in the DFW metroplex.

It was around 1300. We took a pretty big hit on make-ready/repairs after evicting some tenants in the same house, so the expenses are there to offset it.

@Duncan Taylor - Thanks!

Let's say the roofer "paid" to advertise his services with a sign in the yard, and that amount exactly offset the deductible...I guess the deductible amount is still recognized as an expense, but the advertising service is taken as income; so there is a net zero effect for taxes?

If I just replaced a roof for hail damage and insurance paid the full amount (they did not, there was a deductible) - does that negate the depreciable aspect of the capex? Does the cost have to be out of my pocket to depreciate it over its life?