All Forum Posts by: Brad Jacobson

I was going to respond, but after reading this masterpiece of a response, I saw no need. Karissa nailed it and even through in the ADU option for owner-occupancy. I agree with everything!

Hey Peter,

In my experience as a landlord, you almost have to expect the unexpected and behavior like this is not uncommon.

As a landlord, you definitely want to ensure the tenants pay the utilities to avoid situations like this.  If the utilities are in your name and charged as a flat rate, you can expect to pay unfair amounts.  If they are in your tenant's names, they will be charged appropriately for their behavior.

If you're unable to get utilities transferred in the short term, maybe state that your property management standards have put a cap on what they'll pay for utilities or something like that.

Good luck!

Hey BP Team,

I have a client who's currently under contract on multiple properties (all great deals) but is getting into a position where his down payments funds are getting exhausted as he builds his portfolio.

Ideally, he'd prefer to not bring in a capital partner though we believe that would be the easiest solution.  We've also tried seller financing and unfortunately it's not available here.  We don't believe hard money would fund a down payment as the hard money lender could only take second position and the down payment has to be sourced properly.  

What are other creative ways you've found to fund a down payment for traditional financing?

My understanding is that as long as the home qualifies as a rental property, which your 11 month STR definitely would, that you should have no problem taking advantage of the depreciation tax advantages. If your primary income is real estate based, you might want to even consider a cost segregation study to offset a massive amount of taxes.

You're correct in that you can't depreciate your primary residence. However, if you have a space in the residence that is used for work (office, salon, ADU, etc.), that space can be depreciated as well like a rental property.

Either way - make sure you're having these conversations with the right tax professional!

Hey Chad,

If there is an active lease, it does carry with the property in a transaction.  There's no way to break the terms of an active lease and raise rents even if ownership changes.

Once the lease expires and the tenants go month-to-month, the rent can be renegotiated.

One trick I learned years ago was to add an automatic 5%/yr increase to the lease so then when the lease expires and the tenants go month-to-month, the rent automatically bumps up but I get to keep the good tenants in place.

Hopefully that helps a bit.  Good luck!

Hey Yan,

I would definitely recommend the background and credit check on all renters.  There are a lot of different services that will do this and they've all been pretty good in my experience. 

After a few goes, I settled on Rentler.  It doesn't cost you anything as a landlord and simply charges $39 per adult application.  Then it sends you a nice little report of their credit, background, and rent history.  

Good luck!

Hi Faaz,

This question can get complicated because it can depend on many factors including how the property is owned, managed, and how you file your own tax return (personal or as a business). 

Definitely get the help of a real estate friendly CPA.  If you're portfolio is growing and you have other side hustles, take a serious look at hiring a tax planner that will work with you throughout the year instead of just a CPA to file your taxes and only speaks to you once every year.  This will yield huge dividends in both the short and long term.

Good luck!

Hi Tracie,

I live in the Salt Lake market which I'm sure is similar to the Denver area.  You're correct in that it's extremely difficult to make local properties cashflow well at day one but as someone who's invested both locally and out of state, I still prefer the local scene.

Rents have risen almost as dramatically as home prices so it's still possible to cashflow even in our more expensive markets. It's unlikely you'll find any single family that cashflow at day one but look just outside of Denver proper and focus on small multifamily. I recently bought a duplex about 30-45 minutes outside of SLC, found a local credit union that had a 15% down with no PMI offer (they now have a 10% down I missed out on), paid just under $500k for the property in a fairly turn-key like condition, and currently have a gross cashflow of about $1,200/month (total rents are $3,300, mortgage is just over $2,100).

It can be done!  You got this!  Network in your local market and find agents and other investors that know what they're doing.

Good luck!

Hey Steve,

You should definitely read David Greene's book, Long Distance Real Estate Investing.  He goes into great detail on all of this.  Here's a quick summary of what I can remember from the book:

1. Get a professional inspection done and FaceTime the inspector in the "walkthrough"

2. The punch list comes from the inspector's report and findings

3. You can order the materials direct from a local Lowes or Home Depot and have them delivered to the worksite.  That way, you're only paying for the labor.  The PM won't be active until after the rehab is complete so these finishing details are done between you and the GC

I'd recommend contacting a few high producing agents in the area you're looking at for inspector and GC recommendations and get to work!

Good luck!

Hey Zachary,

Investing out of state is tricky, especially when it's your first go at it. My main recommendation would be to put in a focused effort TODAY to contact STR property managers in the area and ask them where their favorite properties are. Once the PM has assisted you in finding specific and properly zoned cities, start calling agents in those cities until you find an agent that either owns STRs or has helped past clients transact with STRs in the past.

Once you have a good PM and agent lined up, you can go to them to find any other teammates you might need like a lender, contractor, title, etc.

Good luck!