All Forum Posts by: Andrew Caldieraro

If you follow the guidelines (materially participate, etc.) how long do you need to hold a property as a STR to take advantage of the loophole to offset W2 taxes? For example, what if I only want to hold the property as a STR for 1-2 years? How would that impact my taxes on a sale, or how would that impact my taxes if the STR was converted to a LTR?

I don’t have a property in mind yet. My plan was to find a property that needs a little work, and do the renovations from the start. Where I’m investing, there are a lot of 1b/1b or 2b/1b units.  Larger u it’s are more rare, which might be why there can be a decent jump in rent, and also tenants tend to stay longer. 

And just so I'm clear, I don't necessarily care if I find a SFH, duplex, 4-plex, etc. I'm mainly looking for larger units. My thought was to buy a 4-plex that needed work and do the conversion to get the larger units.

I would not say the numbers are better.  The reasons for me are:

1.  In the Midwest where I’m at the 1b/1b units will rent for $600.  If two small-medium sized units are converted into a larger 3b/2b unit, the rent will be close to double.

2.  It will be two fewer tenants to deal with, two fewer hvac systems, etc.

3.  The tenants tend to stay for a few years in the larger units, and will most often only stay for a 1-year lease in the smaller units. This equates to more days that the unit will be rented, and it will also eliminate the leasing fee from the PM company every year (if the tenants stay more than one year).

Everyone has a different opinion on this subject.  I often hear people say that they just want more units.  Me, personally, I’d much rather have 20 units that rent for $1200 each than 40 units that rent for $600 each.  Every market is different, but I prefer this method in my market.

Has anyone converted a 4-plex into a larger duplex? What kind of headaches do you run across when you do this? I realize there are city and zoning regulations, permits, converting the hvac systems/water meters/electrical panels, etc. Has anyone went through this, and if so, any advice would be great!

In my experience the best realtors that I’ve had were honest, responded to my questions in less than a day, helped evaluate a deal, would take pictures or videos of specific properties, etc. They never brought me “awesome” deals. On an occasion I would be brought a property before it hits the market, but they were always at market value. I think if I was a realtor I would also get some business from the general population, not just investors. Investors can be hard to work with bc they want to look at a lot of properties but often won’t buy unless it is well below market value. I think working only with investors would be very time consuming and stressful for you. Just a guess based on my experience....

@Natalie Kolodij. Is a cost segregation study required for a simple job? Or, for example, if the flooring of a unit was replaced, can we claim this as a 5-year property?

When we discuss “5-year property,” is is just the cost of the specific appliances, carpet, blinds, etc.? Or, is the labor cost for the install also included?

@Anton Ivanov

Prior to sending any letters, do you look to see when the properties were last purchased? If so, do you avoid contacting the owners if they were recently purchased (within the last couple of years)?

Hi, I’d like to start looking for off-market properties for a buy-and-hold strategy. I’m looking for basic insight on the process and if I’m missing any pertinent information.

1. Have financing in line.

2. Determine what area you want to invest in.

3. Contact the owner’s of properties I’m interested in.

4. Run comps and submit an offer to property owners.

5. Send seller a purchase agreement after agreeing on a sale price.

6. Send signed purchase agreement to the title company of choice and send title company the earnest money.

7. Do due diligence, inspections, appraisals, etc.

8. Have title company do a title search.

9. Close on property at the title company.

Am I missing any critical parts to this process?

I honestly don’t know.  I mainly invest with index funds, so I keep it pretty basic.