All Forum Posts by: Allan C.

@Alex Bernth as Ashish says, you are confusing cash flow with net income/earnings. You are not taxed on cash flow, but rather your earnings after accounting for depreciation. Cash flow is what you see in the bank, and depreciation is a paper exercise. Does your $5k/yr example already have depreciation deducted or is it pre-depreciation?

Also, it’s unlikely that $20k worth of renovations can be considered expense in a single tax year. Notwithstanding some safe harbors and exclusion exceptions if you have a large property, you’ll likely have to capitalize your $20k renovation expenditure and depreciate it over the useful life.

In short, a $20k renovation will reduce your reported earnings by $1k/yr (depending on depreciation life), but it will not offset your $5k/yr net income.

@Michael Ritrovato are you calculating equity only as what you have put into the property or does your equity estimate include appreciation? Most folks on BP don’t operate in areas where appreciation gains significantly offset the near-term value of cash flow value, so the natural answer you will receive is to sell the property. Is this property in CA or elsewhere?

The likely answer may be sell the property since most indicators suggest we are at the peak of the market, but you’ll need to determine what additional upside in appreciation is left on the table, and the probability of you being able to capture that gain vs risk of losing your current gain.

You’ll also need to determine what you will do with the gains if you sell. If you plan to invest in the same market or asset class, then it likely doesn’t make sense to sell. If you are willing to invest out of state or in a different asset class then you’ll need to determine if the additional risk and effort are with the extra yield.

Markets are efficient and all investments reflect level of risk involved.

@James Kirby I use phone apps that scan to PDF. Dropbox even has an app that scans to PDF for free.

@Sam Marquez many SEA countries require you to be a citizen to own property, and some have limited time leaseholds for foreigners.

I agree that investing in SG doesn’t make much sense, but many locals can have modest success since interest rates are extremely low - 2% debt servicing gives you lots of purchase power. That being said, rental yield is a paltry 2%.

@Michael Lee

We vary every single rent amount, even if it is by $1 so that we know which tenant is paying rent. As we added more units over the years we started to vary by $0.10 to differentiate.

@Joanne Hanson

Create a good documentation systems to organize yourself. Tax optimization is not a topic that many people like to discuss, but it can deliver equal value as other landlording tasks.

@Farzan Setayesh

Nothing out of the ordinary, but I use the combination of the following consistently:

- google photo for agent photo/video sharing

- docusign for executing docs

- acrobat X for all other doc edits

- whatsapp for texts and phone calls

- online money wiring or ACH for large items

- paypal or venmo for smaller items

- zelle or ACH for collecting rent

- yelp or taskrabbit for misc repairs

- lawnlove for landscaping or snow removal

- skype for group meetings

- Dropbox for online record storage

- google voice for call forwarding

- email for all tenant communications

- autodraft for all utility & mortgage payments

- online payments for all taxes & insurance

- google earth to survey neighborhoods for out of town purchases

- amazon or HD for online parts ordering

The automation & streamlining of low value tasks enable me to preserve time for higher value activities. I’ll always strive to complete tasks online if possible, and in person as last resort. Some of the other methods that I employ are more out of necessity due to remote management.

I’ll qualify this post and say that I focus solely on A and B class properties, so these processes won’t work for all asset classes.

@Cameron Riley

I own all in the US... it’s where I’m currently living that is 9300 miles away.

@Cameron Riley

Most recent purchase was 9300 miles away. Being on opposite side of world requires many systems in place to remote manage, but technology these days have made it possible.

@Frank Wong

I would agree with Frank on this one. I was in a similar situation a few years ago where I chose Option B and D. While I scaled up from one condo in San Francisco to several MF properties in Midwest and Arizona, I now have 20x the hassle.

As people always say, it depends on your strategy. Are you content with steady income with fewer headaches or do you want to put in the hard work for higher revenue.