All Forum Posts by: Brad Z.

Interesting Topic and I agree with a lot of the point being made. Have just a few units doesn't requires solid systems in place and every time something goes wrong, its an inconvenience and fire drill. When you only screen and lease once a year, its hard to through and probably feels like a new process each time. Once you hit a certain threshold, it requires people, processes and systems to be in place or you will pull your hair out. Scalability is critical. Personally speaking, i was more stressed with 10 units than I am now with around 50 doors or so. A new property doesn't require a tremendous amount of effort to onboard if you have systems in place to absorb it.

@John Soforic undefined

I am in a similar situation, getting ready to install 57 windows in a new project in February. I have shopped multiple companies and think I may end up going with Alside excalibur line. I have tried to do as much due diligence as possible as window companies often just sub-contract out jobs as quick as they can secure them. I believe I am around $230 a window installed which is slightly higher than I have paid in the past but I plan to hold this property a long time and want a fully welded window. I have paid 200 a window plenty of times in the past and now that I have had hte properties 5+ years, i can see the benefits to investing slightly more in the quality of product.

Kyle,

It looks like you are going after a bank owned REO on auction.com. These properties generally come with a warranty deed and title policy. Did you ask if if the sale includes a title policy? Auction.com also sells alot of short sales and state that "buyers assumes occupancy" and you only get a quit claim deed. The second scenario is one that requires additional due diligence as your at risk of prior liens, etc.. Overall, auction.com is kind of a pain to work with but you can occasionally land a deal there as they dont often get their properties to the MLS.

Congrats @David Turner Can you provide a breakdown of your closing costs?

Realtor.com app is great becuase you can save a search for your area and sort by recently listed. It saves tons of time cruising the MLS. It seems to have a slight delay from mls to realtor.com but generally pretty updated.

Daniel H. In my opinion the only thing that would come out of this is you paying additional taxes. An experienced investor will look at your asset performance, identify gaps, and complete his/her own analysis. I personally would not do this simply becuase I absoulstely hate paying taxes. In most cases, if you make quality decisions when you buy, your property will show taxable income on your schedule E even after depreciation.

The Kilz X pro grade at home depot is a great paint at a good price. I use the same tint in a flat wall paint on all units. Its easy to touch up if needed. Its usually around $85 for 5 gallons which is a good value and it covers very well.

http://www.kilzpro-x.com/kilzpro-x/html/english/index.html

I believe I am paying it back also. I sure wish I would have purchased in 2009.

Steven Hamilton II Another scenario for you....I dont know if I will be in this situation but cant find any irs explanations for this.

What if I pay it back on my 2012 tax returns then sell the home for a net loss, say in 2015? Is there a recapture?

Here are some simple numbers to help convey my questions. Purchase the home for 180,000 in 2008, convert to a rental in 2012, sell it for 182,000 in 2015 with a realtor. my net would be 171,080. The irs language indicates that you have to repay the "interest free loan" only if you have a gain on the property. Can I recapture the $7500 on my 2015 tax returns?

I have a vested interest in this question as well going into tax season. I owned and lived in my primary for 4 years and then leased it. I know the 36 month rule is valid for the 2009 and 2010 8k credit but cant find it clearly stated for keeping a 2008 purchased property as a rental.

I believe the answer is that the remaining balance has to be repaid upon converting to a rental

See information below from IRS website...

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Q. Do I need to repay the credit if I purchased my home and claimed the credit in 2008?

A. The Housing and Economic Recovery Act of 2008 provided a refundable tax credit to qualified first-time homebuyers purchasing a main home in the United States after April 8, 2008, and before January 1, 2009.

If you claimed and received the one-time credit on your income tax return for 2008, you must repay the credit. It is repaid as an additional tax on your tax return. There are special rules for repaying the credit if the home stops being your main home.

For more information on repayment of the credit, see the instructions for Form 5405, First-Time Homebuyer Credit and Repayment of the Credit.

Q. Do I need to repay the credit when my home remains my main home?

A. If your home remains your main home, you are required to repay the credit in equal payments over 15 years with no interest charges. To repay the credit, you must attach a completed Form 5405 to your tax return each year beginning with the second tax year after you received the credit. For most people, this is the 2010 tax return that you file in 2011. This repayment increases the amount of income tax you owe. You continue to make annual payments with your tax return until the credit is repaid in full. Read the section below for what you need to do if the home stops being your main home.

The IRS calls the repayment period the “recapture period.” The amount repaid each year is one-fifteenth, or 6 2/3%, of the credit for each taxable year in the 15-year recapture period, which begins with the second taxable year following the year of purchase. To find out how much you need to repay each year, take the amount of your credit and divide it by 15. For example, if you received the maximum credit of $7,500, divide $7,500 by 15, which equals $500, and add the $500 to your income tax each year for 15 years. If you received a credit of $6,000, divide $6,000 by 15, which equals $400, and add the $400 to your income tax each year for 15 years.

In the fall of 2010 or the first year after you claim the credit, and every year until the credit is repaid, the IRS will send you Notice CPO3a, Repaying your First-Time Homebuyer Credit. This notice lists the amount of the credit you received and the amount you have to repay as additional tax.

Q. Do I need to repay the credit when my home stops being our main home?

A. If you received the credit for a home purchased in 2008 and the home stops being your main home, you may need to add the entire remaining unpaid credit amount to your income tax on your next tax return.

Q. When does my home stop being my main home?

A. Your home stops being your main home when:

•You sell the home.
•You transfer the home to a spouse or former spouse in a divorce settlement.
•You convert the entire home to a rental or business property.
•You converted the home to a vacation or second home.
•You no longer live in the home for the greater number of nights in a year.
•Your home is destroyed or condemned.
•You lose your home in foreclosure.
•You die.
There are certain exceptions, but generally, if the home is no longer your main home. you must repay the entire remaining part of the credit on your next tax return. The IRS calls this “acceleration of recapture.”

My approach is very similar to what was mentioned above. I give my handyman a heads up that I am leaving but thats about it. I also have a solid list of more specialized contractors that I reach out to if needed. I can usually handle routine maintenance via phone. I collect all rents electronically or tenants post to our account. I leave somebody I trust pay or quit notices to post if I am going to be out of town on the 6th in the event that i need it. My tenantts have a "maintenace line" that goes to a google voice acct and also emails me the vmail as well as my maintenace contractor so I can handle most everything from my iphone.