All Forum Posts by: Andy D.

@Cory Adams Sorry, I missed that particular post. Damn Internet! ;-) And yes, you are indeed right and confirming my statement by providing even more explanation. Very good! OP and others should be thankful for you having taken the time to write this. And I do mean that.

@James Wise You know what, I actually enjoy this! :-) You make excellent points, and as a matter of fact - as you may have derived from my first reply on this thread here - you and I are pretty much on the same page when it comes to how we look at the bigger picture of a business and with respect to "relationships". I have run my (so far still smallish) business based on this principle as I do my other professional life, and it has gotten me very, very far, all things considered. So this approach can't be all wrong, to all y'all out there!

However, my experience is also that many people are not good at communication or mess up during that part (you and your above situation are perfect example of this! ;-) ). First of all, it's about the outbound communication (stereotypical "man and women" anyone? ;-) ). If it's us then this is what we need to focus on and control. But then there's the end of inbound communication! This we can obviously only control to a certain degree by how we handle outbound communication. But that is very limited as there a gazillion possible ways of how people might receive and perceive our communication.

Sooo... what's my point? This is a forum. There are many, many people out there reading (= inbound communication) what you (and I!) have described (= outbound communication). I just wanted to put your approach, description etc, into (possible) perspective for those out there who might need a different way of outbound communication as to not possibly get them into trouble when digesting the inbound communication coming from your end. :-) There's no "one fits all". But by all means, folks, communicate properly! Miscommunication is the basis of all problems as far as I am concerned.

@Adam Dassie Whatever you do, do NOT let it get to the point where your credit gets affected! I'm surprised to see that no one else has stated this as clearly.

As far as I'm concerned you're actually in a pretty cool situation: you entered the realm of real estate, albeit involuntarily. You posted on BP, so you are obviously not entirely put off by that fact. You have a steady job = steady income and you are apparently somewhat willing to deal with the idea of becoming a (distant) landlord.

All you now have to do is find a way to make that combination work. :-) Would it be easy? No, but anybody can do easy and certainly anybody can give up! You're in the military. Giving up in field duty gets you typically killed. Giving up on the back end typically gets some else in the field killed, ultimately. Not what you were trained for and not your personality, right? So...

I agree with @Steve Babiak and his quote of @Rick Bassett. Then again, as far as I have experienced during the last couple years, the real problems are the pre-eviction-phases. Why? Because, at least me, I try to avoid to get to that point!

So what do you do to not let it get to having to evict? Looking at another thread here where there is big talks about "relationships": how far should one be willing to work with tenants to accommodate for "slip ups" in paying rent on time? That is, again at least to me, the far more interesting question. When you reach the point of no return (= eviction) you should, by all means, go all-in. The sh%$§ has already hit the fan. But since i guess no one likes that (apart from those who are big enough to not care because their lawyers take care of it without the owner even knowing about it) the issue is in communication and working with the tenant during that pre-eviction-phase to avoif the latter. But how far should one tolerate late payments for an otherwise hassle-free tenant...

If this is what your prospective tenants are focusing on during a showing you should have no issues with them, I guess. Or, possibly, tenants of hell as things easily get "out of sync"... Oh, and btw, is that curtain rod really level? ;-)

I'm with @David Dachtera on this one. She's possibly laughing her a$$ off about you eating all these costs without even saying anything. You're (@James Wise) promoting "relationship", yet it never occurred to her to possibly offer you some kind of deal? This seems a rather one-laned road you're traveling on. And she might enjoy trying to take advantage of your there down the road. Nothing wrong with that if this is what you want. It's obviously entirely your decision.

But we are - being on BP - running a business here and (unnecessary) costs are the killer of every business. Yes, they will occur, but they need to be limited as much as possible. A large corporation can fire a couple people to compensate but most of us here probably do not have that scale to be able to do that. So costs hurt our bottom line. Dollar for Dollar.

Again, you are promoting good relationships. I'm with you there. But it goes two ways, not only one way. I'm saying this for the record as others are reading this and might run into serious trouble strictly following your approach, especially if they are representing the (I guess) majority of the readers here who are small time investors with all their money into 1 or 2, maybe 3 properties. They run into trouble if they need to replace a furnace, not to mention having a leaking roof. And you want them to eat $10900? I don't think so. ;-) Just saying...

I'm looking at this, forstarters, from a tax point of view: if you have a mortgage then you can deduct "that" (= the non-principal components) from your rental income. This will reduce your overall tax bill. Depending on your individual tax bracket/rate this should save you money after all numbers are crunched, factoring in the amount of interest you pay as this is, obviously, a true cost.

This of course also means that you, during the phase of paying off these mortgages quickly, will have less cash in your account. So it depends - as always - on your individual needs and therefore situation.

And then there's the topic of using leverage - IF you plan on expanding your holding and/or otherwise want to invest. Because the less money you do not have "stuck" as equity in your properties the more money you can use to otherwise make money. Example: you pay off your mortgage (quickly). This leaves less money in your pocket to set aside and save for another down payment of a 3rd place which would generate more (positive) income.

Now, if you do not want to expand your holdings nor otherwise invest that money (e.g. stock market) then you may indeed want to pay off your mortgages more quickly as this will, ultimately, increase your cash flow afterwards significantly. But also your tax bill due to no longer having that part available as a deduction. Again, if you're in a low tax bracket this may not make that much of an impact. For others it certainly does. That is something only you can decide. You should probably run these scenarios by your CPA to see which makes more sense within the parameters of your needs.

You are, at the day of the closing, the owner of that property. Any person still occupying the premises is technically becoming a person who should pay rent for the period they are indeed occupying the place. In any other situation with a tenant you would get a written lease agreement, would you not? Why should your situation be any different from that? It's not, really. You are allowing someone to stay in your place. Get that written down. Including when that person is supposed to leave.

@Bryan O. Thanks! :-)

@Bryan O. "cost segregation study and changing depreciation" - Would you mind elaborating a bit more on that?