All Forum Posts by: Bill B.

No help with a STR realtor though maybe you could find an STR manager and assume they have realtors they recommend. I THINK @Eric Fernwood looked in to STR managers but it might have been MTR managers. 

Ps. You'll have to avoid Vegas proper unless you plan to live in the property. As STR is only allowed while it's your primary residence in Vegas and you are in residence. You'll have to look at Henderson, North Las Vegas or Paradise, NV. So you might want to do the math on MTR and see if it works as it would be allowed anywhere the HOA doesn't prevent it.

I’m not sure how many of the previous responders read your post because they didn’t even ask obvious question number ONE….

1) How much of a capital gain will you have? (Net sales proceeds after all costs (PS. loan payoffs are considered proceeds.) minus purchase price is your taxable net gain. Your equity doesn’t matter one bit. If you pay the loan off before selling or do a refi and have $1 of equity, it won’t affect your taxable gain. 

2) if you stay 2 years you’ll have 14 years of personal use out of 22 years so 63.6% of the gain cane be exempted, up to $500k. So if you have more than a $786k NET GAIN (not cash, not equity, GAIN) you’ll be able to take the full $500k tax free and then do an exchange on the remainder. 

3) For that exchange to work you’ll have to buy an investment, not primary home that costs more than the remaining sales price, and reinvest all the “cash” beyond that $500k. Unfortunately being in CA they will hunt you down every year and make you confirm you haven’t sold the investment property. Because if you do, they are one of the few states that will require you to pay their tax after you’ve left the state. But if you hold it under it you die you’ll avoid their tax and the depreciation recapture you also owe. 

4) I’m not sure if you have to turn it back in to a rental for a year after those 2 years to qualify for a 1031 or if you’re rental history in the last 5 years qualifies you. That would be a question for a QI/expert like @Dave Foster. 

Congratulations on finally planing your escape. Good luck. 

Call some local competitors. It doesn’t matter what you want to charge or think you should charge if they’re charging 25% less. 

Personally I pay $300 commission to get the new tenant, 8% of rent collected, and $150 for renewals. That’s total cost. No charges for admin or managing repairs.(The vendors give a quote, usually discounted for being a PM client and if I approve I pay amount, no extra fees/surcharges/etc.)

For this I get GREAT and immediate service. So if a competitor came to me today they probably couldn’t steal me as a client for free management. If I was new and comparing 2 services not knowing either. This is what you would have to compete with. If I see nickel and diming like admin charges, repair supervision charges, vendor add-ons, or large placement fees you wouldn’t even get a call. I have enough unknowns, knowing exactly what the PM service will cost is a plus. 

Who ever borrowed you $1.2m will have sent you a 1098 by Jan 31st. That’s your home mortgage interest as well as property tax and insurance for 2nd half of the year. There’s no percents of the rental mortgage or anything like that. 

You should have, or you should create an amortization table that shows the actual interest paid on the $650k mortgage for the first 6 months while you lived there. (Or check your mid-June statement, it will have interest, insurance and property tax paid to date. Again, there’s no 1/2 of the rental property mortgage calculations or some such, the interest isn’t equal per month. 

I assume the first house hasn’t appreciate much if at all and that’s why you didn’t sell it and take the tax free gain that could take 10+ years to overcome as a rental?

You’re going to deduct the rental mortgage interest against your rental income and your personal mortgage interest (if allowed and more than standard deduction) against your regular income. You may want to get a CPA or a tax guy involved. If you think this interest part is hard, the first partial year of depreciation is really going to throw you for a loop. 

I don’t know what was involved. The new PM simply asked/told the existing PM what they needed to do in order to process the transfer. They were “earning my business” by doing an hour or two of extra work. I signed a form “giving them the power” but I don’t remember if it was even notarized, probably just docusigned. 

I was suggesting you simply ask the new PM if they’d be willing to do it for you. 

When I switched I simply gave my new PM the power to get me out of my current PM’s agreement. I made no calls and signed no other paperwork. It was done in a day. 

But there will be ZERO protection. You will be personally sued along with your LLC. There is nothing that could happen at your rental that wouldn't be your fault for not preventing, curing, fixing. Buy a simple umbrella policy. WAY cheaper than then thousands if not 10's of thousands in extra interest.

You are adding costs and complications for no benefit at all. If you truly just want your primary paid off you can just do a cash out refi on your investment, still in your own name, and pay off your primary. But this will cost you thousands and thousands in higher interest. (You'll pay higher interest because it's a rental property, and, if you try to do it in a corporation/LLC you'll pay an even higher interest rate.) And again, for no real benefit.

Magnifying glass upper corner. Thsi one is only asked monthly, not weekly. So you may only find 30-40 previous times this question’s been asked. 

The property is worth exactly what it is with zero STR rental income. Especially in a market where 95% of the buyers, and 99% of the highest offers come from owner occupants. And buyers can't borrow $1 more than 75-80% of the comped value of similar non-STR homes. So the rest is all cash out of buyers pocket. DESTROYING COC return.

You'll still be personally responsible for the debt and it will still show up on your credit report/DTI if that's what you're trying to pull off.

You’ll increase your interest rate by 2-5%? Maybe more?

So those are the downsides…what upsides are you imagining happening? Why bother with the LLC? Why borrow against an investment property at a higher rate than you can against your primary?

There’s zero protection by paying it off. In fact you make yourself a bigger target for lawsuits. Did you happen to listen to a podcast or go to a seminar that’s leading you down a stupid path?

Start with why you want to do this. What are you trying to accomplish, what’s the upside to fight all the additional downsides I’ve pointed out?

You have $190,000 in equity earring $7,200/year when there are no repairs and no vacancies. SELL. Even if you didn’t have any crippling debt you could put the $190k in the bank an earn a GUARANTEED $8,550 minimum. Assuming your debt is SUPER cheap and only costs you 12% you’ll save $22,800 TAX FREE  

So the combination is saving $60k at 12% (or more) is $7,200/yr and $130k in the bank at only 4.5% is another $5,850/yr  so you’re over $13k GUARANTEED instead of a chance to make $7,200 before taxes