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All Forum Posts by: Bonnie Low

Bonnie Low has started 23 posts and replied 1943 times.

Post: How to collect rent

Bonnie Low
#1 Medium-Term Rentals Contributor
Posted
  • Lender
  • Asheville, NC
  • Posts 1,976
  • Votes 1,790

In my opinion, this largely comes down to how you or your parents will be filing your taxes. Assuming one of you will be claiming this as business income, you should have a separate business bank account and here's the relatively short answer why. 

If you're declaring the income, you also want to be able to declare the expenses and depreciation. Since you are taking on additional liability having tenants in place, you're probably going to want to update your insurance policy and put some sort of asset protection in place - most people use an LLC for a small portfolio. If you set up an LLC - or any business for that matter - it's imperative that you keep personal and business finances separate. In the case of the LLC, if you commingle funds, you essentially wipe out the asset protection of the LLC. And, as others have mentioned, I believe in most, if not all states, you're required to hold security deposits in a separate bank account. So for all these reasons, I'd set up a separate bank account.

Post: Connecting with Relocation Specialists

Bonnie Low
#1 Medium-Term Rentals Contributor
Posted
  • Lender
  • Asheville, NC
  • Posts 1,976
  • Votes 1,790

As @Allen Duan mentioned, it can be tough to get traction with insurance placement companies if you only have one property but that shouldn't stop you from listing with them anyway. It's a good use of your time and you want to be in their databases. I also recommend you look for someone in your area who is brokering properties for insurance placement companies. I know we have several of these companies on the west coast and I'm sure you have some in CO as well. I know Craftsman Homes is doing this in CA but am not sure how far their reach is. Perhaps Erin Spradlin or James Carlson know of someone in your area. 

Post: Mid term Rentals

Bonnie Low
#1 Medium-Term Rentals Contributor
Posted
  • Lender
  • Asheville, NC
  • Posts 1,976
  • Votes 1,790
Quote from @Malieka Henry:

Anyone here doing Mid term Rentals in Las Vegas ? 

 I recommend you connect with @Allen Duan.

Post: Seeking a property manager for midterm rental

Bonnie Low
#1 Medium-Term Rentals Contributor
Posted
  • Lender
  • Asheville, NC
  • Posts 1,976
  • Votes 1,790

I strongly recommend @Allen Duan. He's an experienced MTR host and PM and is in your market!

Post: Mid Term Rental Lease & Supplies

Bonnie Low
#1 Medium-Term Rentals Contributor
Posted
  • Lender
  • Asheville, NC
  • Posts 1,976
  • Votes 1,790

Damage to furnishings and other belongings is always a possibility in an MTR, just as it is in an STR. Your deposit should be enough to cover most common damage. It usually comes down to the type of renter you get. I find families with children or groups of adults staying at my STR do more damage whether intentionally or accidentally than my longer stay midterm guests. I don't have specific language in my lease regarding damage to furniture, but damaged furnishings are mentioned as a reason to not receive a full security deposit refund.

As for cleaning supplies, I equip the property with a full set of cleaning supplies: vacuum, broom, mop, toilet cleaning brush, scrubbing sponges, and full containers of multi-surface cleaner, floor cleaner, Soft Scrub, and toilet bowl cleaner. I provide a small pack of dishwasher detergent and a small bottle of dish soap. I find the supplies usually get used and, to me, that's money well spent if my guest is keeping the property clean. For paper products I provide 2 rolls of paper towels, a small roll of trash bags, and a 4-pack of toilet paper. You can find a happy medium between being stingy with products and spending a fortune.

Post: Converting LTR to MTR in northern NJ

Bonnie Low
#1 Medium-Term Rentals Contributor
Posted
  • Lender
  • Asheville, NC
  • Posts 1,976
  • Votes 1,790

Hi, Amod. I'm not in your market, but the steps for analyzing any market are pretty much the same. I'd start by looking on Furnished Finder to see what other similar properties are listed for in your area and how much availability they have on their calendars. The key is to make sure you are analyzing LIKE properties. IOW, the amenities, decor and location need to be very comparable. You can also check stats on Furnished Finder to see how much demand there is in your area based on searches.  You can do the same on Airbnb by looking at their 30+ day listings.  Hope this helps!

Post: What to do with my 401k?

Bonnie Low
#1 Medium-Term Rentals Contributor
Posted
  • Lender
  • Asheville, NC
  • Posts 1,976
  • Votes 1,790
Quote from @Michael Plaks:

@Bonnie Low

You threw at least four separate (albeit related) issues into one pot, which makes decision making very confusing.

1. You want to preserve your retirement safety net.
2. You want to invest in real estate.
3. You want to generate currently spendable income.
4. You want to minimize taxes.

Not only these are separate goals, they can pull you in opposite directions, so you will have to prioritize. 


I disagree. These are not separate goals at all. These ARE the goals, my 401k funds (however I end up using them) ARE the source of capital, I already invest in real estate and intend to do so in the most tax advantaged way possible and, like everyone, I want to minimize taxes. Ultimately, my question was asking for referrals to an excellent financial advisor who I can go into more depth with. Thankfully, I have gotten some referrals from other investors and professionals here who understood the question.

Post: What to do with my 401k?

Bonnie Low
#1 Medium-Term Rentals Contributor
Posted
  • Lender
  • Asheville, NC
  • Posts 1,976
  • Votes 1,790
Quote from @Basit Siddiqi:

If you don't plan to work anymore, you may want to consider the rule of 55.
The distributions from the retirement account will be taxable in one way or another(now or later).

You want to plan it in a way so the overall tax burden is less. 
Taking a bit over a long period of time is better than taking it out all out at once.

Furthermore, you can have 80% LTV if you purchase property in your personal in your own name.
LTV inside of a SDIRA is somewhere around 50%


Yes, I'm aware of the Rule of 55, but not sure exactly how to execute on it. When you say LTV inside an SDIRA is somewhere around 50% are you speaking from an IRS rule perspective? I'm not aware of any lenders requiring 50% down.

Post: What to do with my 401k?

Bonnie Low
#1 Medium-Term Rentals Contributor
Posted
  • Lender
  • Asheville, NC
  • Posts 1,976
  • Votes 1,790
Quote from @Dmitriy Fomichenko:

@Bonnie Low,

Conventional custodians (Vanguard, Fidelity, Schwab, Merryl Lynch, and the like) will not allow real estate investments in an IRA. So, if your goal is to invest in real estate using your IRA funds - you will have to find a custodian who will allow that (aka SDIRA). 

When your IRA buys investment property - the IRA is the owner, not you. All income belongs to the IRA and must flow back to the IRA. As the IRA account owner, you can take distribution from the IRA, subject to applicable taxes and penalties.


When you say "when your IRA buys investment property....you can take distribution..." I assume you mean the SDIRA, correct?

Post: Self manage or hire property management, that is the question?

Bonnie Low
#1 Medium-Term Rentals Contributor
Posted
  • Lender
  • Asheville, NC
  • Posts 1,976
  • Votes 1,790
Quote from @Juliette Olsen:
Quote from @Bonnie Low:

I don't have a dog in this fight because I do both. For my LTRs I use a PM and for my MTRs & STRs I self manage (both local and OOS) so I've seen the pros and cons to both. It is definitely possible to manage your own properties unless you simply don't want the hassle. There are abundant tools and resources and plenty of people to learn from in order to set yourself up for success. Sure, there are horror stories but those happen with professional PM in place also. If you have the proper legal documents in place and a strong tenant vetting process you can avoid much of the risk, though it's never fool proof, even with a PM. 

 You’ve seen both sides, which is awesome. I’m wondering what your vetting process is for tenants. @Alecia Loveless mentions having a good feel for tenants, and I think that’s amazing she is skilled in that. I am not sure I’d be so great at this or at lease I not sure I’m willing to risk. So looking for recommendations on vetting. I’ve read to have your criteria high but not so high you’re sitting on your hands for 3+ months to Find the perfect tenant. 

Appreciate your insight !!

respectfully, juliette


 Great question, Juliette. I know a lot of people use an application. I don't. I DO start with some informal conversation to get a general sense of the person. These are basic questions like what brings you to Redding? What type of property are you looking for and do you have pets? Even if this information has been provided in their initial inquiry, I'll ask it again. Then I explain my process in brief and simple terms: background check, lease agreement, collect deposits and ask if they'd like to proceed. I've used both Avail and Keycheck for background check (credit check, criminal record and eviction history) but am currently using Turbo Tenant because they partner with the banking/bookkeeping platform I use, Baselane, and I like to keep it all in one place. I'm looking for a minimum 620 credit score and no late payments in the last 12 months. No evictions. For criminal record you have to use your own judgement and follow the rules for your state. Some states don't allow you to screen out felons, others do. You just have to be consistent and apply the same standards to everyone.