All Forum Posts by: Billy Zhao

Carl, you are correct that it the $750k (2018 and onward) mortgage interest deduction is primary and secondary residences only. Still, for someone who's house hacking or using the 2nd property for short term rental, this can hurt. Don't forget, the 2017 tax cut also limited the deduction of local/state tax to $10k as well. This disproportionally affected coastal real estate owners like California, Washington, and New York. 

And I do own 3 rental properties and am working on expanding my portfolio.

@Cameron Whitehead Thank you! I've love to start looking around San Marcos a bit. Just realized that Amazon built a distribution center there. I remember hearing someone on the news said that eventually Austin metro and SA metro will be connected, and San Marcos will be the ideal spot for a huge international airport. A long shot, but it would be nice for a long term hedge.

What is the main industries that San Marcos support? I didn't really consider it since I thought it was either students or the outlet mall that both are struggling due to Covid. But we should look at some deals and see what the market is like. Last time I checked it is not all that cheap either especially closer to campus. 

@Cameron Whitehead Thanks! Is San Marcos housing all tied to Texas State?

To create $400,000 annual taxable income after deduction is statistically difficult. There are only about <1% of American households that make this much money. Then, among them, real estate investors who utilize 1031 exchange will be a smaller subgroup. 

On the other hand, the current administration passed the tax cut that limited the property tax deduction at the cap of $1 mil which affect almost all real estate investors big and small. 

I wonder if we should focus on our efforts roll back that tax deduction or stop the the new one.

I've seen so many people talking about the election and how its gonna change the market and help/screw all the investors in a huge way. But I haven't found any real historical evidence that any of the previous elections that actually directly resulted economic tsunami, perhaps with the only exception of Andrew Jackson who hated the central bank and national debt, and as a consequence, his policy caused a major land speculation bubble and subsequent bust and recession (one of the longest). But even that didn't take place until his 2nd term.

So do you know any "wait till after" regrets and reliefs to speak of?

@Amy Fulbright in terms of data, there are still a lot to be desired. I am not talking about any specific deals, but demographic and geographic analysis for any specific neighborhood, subdivisions, and blocks of a city. I am also thinking of using machine learning to evaluate all the listings and quickly identify deals. 

It seems vest majority of people here think that paying off car first is not as advantageous as buying a rental, even a fee only based financial advisor said that, I am amazed.

The answer should always be: it depends - because there are so much we don't know about your financial situation.

First, what is the interest rate on your vehicle? What is the monthly payment?

2ndly, what is your current credit score? And what is your debt to income ratio?

3rdly, assuming you want to use the savings to buy a rental, what kind of loan can you get at what value?

Only knowing all these details you can make an informed decision. For example, say that you paid off your car loan first, your debt to income ratio improved and your credit score also increased, that may push your loan qualification higher for a property with better cashflow potentials. 

In the end, chances are, you can go both ways and the end result is pretty much the same. But I would check those factors first. Me myself am very financially conservative thus I always pay off my consumer debt first.

First, this is definitely one of the awful tenant stories I've heard for a while, though it is not unique, I still cringe by reading it. All I can say is that I feel your pain, and hope you will continue your effort despite this setback.

My question to all others is the issue with property management. I feel the promise of "excellent PM" is not logical. This is because there's no incentive built into the pay structure for a PM to perform above and beyond his/her duty. Similar to that of financial planners or real estate agents who are all paid by a percentage, they maximize their profit by doing as little as possible not the other way around.

For instance, say I am your PM and you retain me by 10% of the monthly rent of $1,000. That is mere $100 each month. To go to property and doing regular inspections will quickly turn that $100/mo revenue into a minimum wage job. Thus, I can't imagine any PM will do it just because he/she is "excellent". It's a simple math.

Therefore the "excellent" PMs are probably just happened to be sitting on your low-maintenance property and easy to deal with tenants until they become "bad" PM when issues arise.

I am not being dismissive of all PMs, I was a PM until I quit after I was owed thousands of dollars of maintenance cost when the landlord starting delaying his reimbursement because he ran into cash issues.

I'm in favor of building an incentive structure so that the PM has a skin in the game and is motivated to solve the problem. Do you have any ideas if this kind of pay structure exist?




 

I'd love to join one of those meetups for SA. Thanks!