All Forum Posts by: Benjamin Stickler

"And for good measure aslo a little one in the mathroom."

I wouldn't want a tv in my mathroom to distract me from pushing out all those derivatives but to each their own.

Most financing does not have early prepayment penalties.  You could get a 30-yr with the cash flow and always pay it down like a 15 yr note.  Yes the interest rate is higher but it gives you optionality, in case your extra money for helping pay the 15 yr note disappears or your investment goals or priorities change for that money.

 Agree but he suit wasn't brought by angry buyers it was filed by sellers so they could get a bigger piece of the selling pie.  Despite all the talk about saving on buyer's commissions in the news this to me has never looked like a win for first time buyers.  Experienced investors and wealthy buyers probably have the most to gain from this.

The scary part of this to me is that it could make the MLS not the one stop shop it is today. Finding a house to rent or buy in Japan and Latvia you have to go to several realtors to see what is available because there is no central repository. Sure commissions are lower but I pay for that with time.

Also for everyone who says the internet will pick up the slack, who didn't waste a bunch of time tracking down false leads (houses that sold months ago) on Zillow when it first came out.

Living overseas I will continue to rely on buyer's agent to represent me but I'm curious to see how this goes. I read an article where on agent predicted nothing will change because all the settlement stops is mandatory buyer's fees, so all the selling agents will just convince sellers to still include them so that they get the most opportunity to sell their house.

Planning for option A but hoping for an option C that looks a lot like the current system. I'm hoping that FHA/Fannie/Freddie rules that will allow a buyer's commission to be financed. Or at least where it can still be worked into the purchase price and then given to the buyers agent at closing when funds are dispersed. And then non-agency lenders will hopefully follow suit or lead the charge since they can dictate their underwriting standards. After all lenders and agents will be motivated to keep deal flow churning and not have a stagnation period where all first time buyers sit on the sidelines saving extra for their down payments.

I'm going to preface this with I'm not an accountant or certified tax-preparer but the previous advice seems slightly off (maybe based off old forms).  First of all the schedule 1 has a line for Net Operating /Losses, it's 8a.  22 is reserved for future use and I don't know why you would use other if there is a named line.  Plus Pub 536 says to use line 8a. That Pub should probably be your friend for doing all the calculations and where to report it. NOL from a negative AGI would not be stuck on the property.

However if you only had negative rental income from a schedule E then the answers would look more like this.

How/ where do I utilize that prior loss?
If you did your taxes in 2021 with the rental income reported on schedule E, then you should've also completed Form 8582 which would have given you the allowed losses in 2021 (these would be the ones that created the NOL) in section VIII and the unallowed losses in section VII.  These losses would then carry forward in 2022 and 2023 via this same form.

Is it an NOL on Schedule 1 other income for my 1040?
For a NOL use PUB 563 to calculate what goes on 8a of sched 1 and use 8582 to calculate any unallowed losses that would now be allowed.

Is is stuck with the properties that created it and I only get to use it against those properties when they have income or I sell them?

The NOL can be used against any income (not capital gains as noted above) and can even create a new NOL if it doesn't offset all income that would be usable next year.

For the 8582 unallowed losses assuming you are not a real estate professional than these losses are passive.  Which means they can only offset any other passive income or up to $20,000 in active income (phases out based on AGI).  The form 8582 calculates this.  

If you sold the property and listed it individually on the schedule E (or grouped it but sold everything in the group) then the whole loss should be recognizable at the disposition of property.  I think the sale triggers a change from passive to active and it can be used to either lower basis or offset capital gains/depreciation recapture and if any is left your ordinary income.  

If you have enough stock that you don't need to sell all of it you could try to find a brokerage(you would have to transfer the stock to the brokerage)/bank willing to loan you money on the portfolio.  Of course with today's interest rates that may make your deal less appealing.

I would start with a house hack like everyone else said. My first real estate purchase was my own house and I bought a condo that fit me and is now a good rental many years later after moving. But if I could do it again I would buy a duplex to quadplex and take advantage of the ability to buy it with little or no money down (VA or FHA if eligible) and have started collecting rent much sooner.

Advice I wish I had gotten earlier would definitely be accounting and tax related.  I've taken a bumpy road to getting where I think I understand it but I wish I had gotten professional advice sooner.  I made some elections about grouping by not grouping as I expanded and didn't understand the consequences (making material participation easier/when passive losses can be harvested/ease of filing) of that at the time.

Also random question but do you have a sister Nicole?

Nathan,

I've been investing in Oklahoma City for the last decade and when I started out you could easily find what you are describing and now those deals are much tougher to come across.  You could probably find this still in some smaller towns but I don't know if this is what you want.  

I now live out of town and still invest but it's not like it used to be.

If you DM me I can give you the realtor/property manager I use.  They are solid and have been good to me as an out of state owner/investor.

Hi Dina,

I have some thoughts on this, first like already said your PM shouldn't dictate how many days you can use the property you own, that's something you should tell them.

Next while I don't have any experience in STRs but have general real estate experience in investing and owning homes that I have lived in.  Buying in these two situations is totally different.  Investing is about making numbers works and finding a property that will enrich you through cash flow or appreciation.  Buying a property you use has a lot more considerations, like does it have a fireplace, is the layout what you like, where will your sectional fit.  Part of your analysis paralysis may be because these two world are bleeding together in your situation. 

You may have to decide which primary use this property will have and evaluate primarily through that lens.  If you decide to view it as a vacation home then decide what it's worth out of pocket to own that property and find one that checks all your needs.  Obviously the more you plan to use it the less you will make from it.  

If you view it as an investment then find one where the numbers make sense even if it isn't your dream vacation home. Or an alternate strategy if your goal is to have a vacation rental paid for is to buy some sort of investment, STR, buy and hold, stocks, bonds whatever and just dedicate the cashflow from that to renting a place each year.

From your post it sounds like more of an investment.  But as a vacation home 5K a year in losses may not be bad to own your piece of heaven.  One final note that I haven't seen brought up yet but personal use over a certain number of days per year (14 I think) triggers different tax treatment for the property and limits deductible expenses.

Hope this helps.

I was wondering if there are any meetings still going on?