All Forum Posts by: Ben Kirchner

I have heard the 75% rule from a lender before, so that makes sense. 

As far as tracking claiming investment property, expenses, depreciation, etc... That will be something new. Currently, I've just been tracking mileage viewing properties and going to the property I'm closing on for 2016 taxes. Owning the investment property in 2017, what tracking should I be aware of to claim on my 2017 taxes? Perhaps my days of doing it myself over TurboTax should come to an end to leave no stone unturned? Is there a book one would recommend for my next read that dives more in depth of the taxes involved in REI?

I'll be closing on my first rental property in January.  Therefore, it won't be until next year that this will impact my taxes.  I was curious to how people claim their rental income, and how it's taxed.  Is it taxed along with employment income?  Taxed separate and different?  Is claiming rental income for an investment property different than claiming for something like house hacking in a single family residence?

I hadn't thought of this until recently when speaking to a lender, who said in order for rental income to be recognized in your debt-to-income ratio, you would need a year of rental income documented on your taxes.

I appreciate the helpful input!

As of today, I've been told my offer has been accepted for my first investment property!  Exciting.  However, I'm hustling to get everything in order to fill it.

The house is move in ready as of now, and I won't be closing until the start of January.  In the meantime, I'd like to get all my ducks in a row.

I'm getting pictures of the property, posting them on zillow, facebook groups, and putting out signs pointing out the house for rent.

Questions:

- Are there recommended websites for putting together a lease agreement?  Making sure everything is covered.

- What are the recommendations investors here have for tenant screening?  Outside of verifying income.  Are there certain resources that cover all needed areas for this, as well?

I realize I'll be looking for tenants outside of peak rental time.  Should I change my strategy from what it would be if I was renting it at a more popular time?  Would consider opening it up for shorter.

He would refinance for 70% of value, getting $105,000.  That would be the new loan amount, correct?

Since he bought the property for $75,000 and put $30,000 in renovations, he would be able to cover his expenses, and have a property to rent out while paying a mortgage for $105,000.  This is what my understanding has been, at least.  Please correct me, if I'm wrong.

I attended a seminar yesterday.  I didn't know much about the company.  I still don't know a lot, but the company was Renatus (myrenatus.com).  The presenter talked about paying off your mortgage with your credit card to avoid the front loaded interest in a typical mortgage.  Below is an example used to communicate her

$200,000 loan, 30 years, 4.385 interest

With the amortization: $1000 payment per month - Your numbers in year 1 would be:

$8704 going toward interest

$3293 going toward prinicpal

If you paid for the year with a credit card with 21% interest, you would pay $12,000 in principal that year, while paying only $2520 interest toward that credit card.  Essentially saving over $100,000 and paying your house off earlier.

What people of course were asking - Pay your mortgage with a credit card?  Her short answers were cash advances or paypaling money from your credit card.  Unfortunately, questions started to lead the presenter down a different path, and I had to leave the seminar to get to an appointment.  

This is the first I've heard of this concept.  I'm wondering if anyone has experience doing this and can shed some more light on it.  All help is appreciated.  

Do landlords here do a thorough video upon a tennant move in?  Something to document the conditions of the property before the tennant moved in, to compare to the conditions when the tennant moves out?  I think it's a great thing to do, as many things may be missed in photos.  I plan on doing this when renting out my home, and just want to make sure I'm covering all grounds.  

In landlords experience, have you done this and missed any areas?  Or have you noticed areas that are most commonly damaged that you would want make sure to monitor the condition of in the beginning?

Thanks

In a townhome, with the exterior of the house covered by the HOA fees, do you typically estimate the maintenance costs lower than you would on a single family home? In my NOI estimations, I've always put 10% of the (Rent - Vacancy factor) to use as a maintenance reserve for the property. Are there recommended numbers to go by that differ depending on the type of property?

Thanks for the input.

@Jamie S. and @Dawn Brenengen

I spoke with a local property management company to ask some questions regarding the local renters market.  Being that you have experience renting in this area, I'd love your take as well...

Is there a price range most in demand for renters?

His answer was houses from $200-250.  I was thinking lower.  Particularly for my first investment, I don't want to be on the hook for that mortgage for any vacancy time.  

Any features/amenities that renters look for or pay more for?

His suggestion was being pet friendly and having a fenced in yard.  I was curious to what other amenities you saw marketable in this area.

Areas he said were most popular were Southpoint, Duke, and UNC.  I figured this much.  He said a general rule of thumb for pricing rent in these areas are .80-95cents per square ft.  I really would appreciate your input, particularly on the price range for renters.

Thanks

Ben

@Jamie S. 

Thanks for the suggestions.  I've looked in Woodcroft but not the others mentioned.  With students, do you typically do 1 yr leases?  I was thinking Durham is the perfect place to rent to medical residents and students, but know one investor who is doing 9 month leases, and having the property vacant in the summers.  It works for her, but certainly not ideal for me.  

@Greg 

@Thomas S.

I've been very upfront with my loan officer of my intentions of buying, living there one year, and moving on.  She said there is no issue.  She said in time I may have to justify why I'm moving.  Reasons could be as simple as "I don't like my neighbor."

I appreciate the input.  Right now I'm doing a lot of analyzing properties at a computer desk.  I plan to walk through the properties, but want to efficient with my time, and realtors time, and do what filtering I can.  

@Matthew Minor

That's a good point on the turk key/fixer upper differences.  As I stated above, I've been looking at zestimate to get an idea of true property value.  I'm not sure everything that goes into a zestimate, but I'm assuming they are basing it off of what other properties in that neighborhood are selling for.  Therefore, if a property is priced far below a zestimate, is that generally a good indicator that the property needs some fixing up?  Perhaps that should be a tool of narrowing my selection of places to walk thru.

@Justin Fox

Are you referring to https://www.hudhomestore.com/Home/Index.aspx ?  That wasn't even on my radar, and I'm a unfamiliar.  Are these basically forclosed houses up for auction?  Do they differ from other forclosed properties in any way?

Big thanks for the help!