All Forum Posts by: Andrew Lingle

Hi @Sherief Elbassuoni, would you also have a recommendation for a real estate attorney for Washington State? Purchased a property with my kid who has lived in Washington for 3 years at the property and paid the mortgage. The mortgage is under only my name. Trying to figure out the best way to handle a title transfer or sale now that they can fly on their own :)

Patrick

You might have a hard time finding someone who specializes in “keeping money away from the government” but there are many professionals who will help you do your taxes right and in accordance with the tax code 

My advice: learn how to calculate cash flow.

Your mortgage is $1690 and your rental income is $1950. That's $210.

Tenant moves in, stops paying rent after eight months. You've saved the $210 you consider cashflow ($210 x 8 = $1,680). It takes you two months to get the tenant out. You discover his unauthorized dogs tore up the carpet in most of the rooms, scratched up doors, and dug up the yard. The place needs new paint, new flooring, landscaping repairs, etc. It takes you 45 days to turn it around and place the next renter. 

3.5 months lost rent: $6,825

Flooring: $5,000

Paint and other repairs: $2,000

Total lost: $13,825

Even after your $210 monthly cashflow, you've lost $12,145 and it will take 57 months of perfect performance just to break even. 

This is not an uncommon scenario. I know some investors that have lost tens of thousands over the course of 5-10 years so their only gain is appreciation, which is dramatically deluded by the amount of damages caused by bad tenants.

When calculating cashflow, you should include all expenses. Your expenses should include mortgage, taxes, insurance, and at least 30% set aside to cover maintenance, vacancy, capex, and other expenses.