All Forum Posts by: Brandon Elliott-Pandey

Just curious, why are you investing in real estate? Is is for the freedom, passive income, wealth creation, bragging rights, to start a business/ real estate empire, or something else entirely?

Let us know in the comments!

3 Votes

Denver, Colorado

Quote from @Bruce Lynn:

Real Estate Professional status to offset losses against gains is more complicated than meets the eye.

I think none of my passive losses due to bonus depreciation did not count.

ALso if I remember correctly my CPA said my active agent/broker income could not be offset by passive losses.

While I meet the basic requirements of hours worked, it did not help me.

I would guess 99% of most realtors cannot offset their income, because they do not actively manage the brokerage or have enough passive losses over and above their normal investment income from those assests that they get to write off anyway.

For sure this is an area for most people that they want their CPA involved and on their return....there's probably enough people who think they can claim professional status and not qualify for the offsets, that it ends up being a flag for IRS.

Interesting! This is the first time I've heard of any push back on the Full time rule... I appreciate your comment Bruce and would love to talk about it in more detail! Let's connect!

0 Votes

Denver, Colorado

For all my fellow Relators out there. We've ALL heard that if you are a full time real estate entrepreneur you can offset a large amount, if not all, of your tax liability by investing in real estate and selling it at the same time (or other activates that involve over 750+ hours of acting in a real estate capacity)

Well this is my first year doing that and I would love to hear how it's working for a more seasoned real estate professional using this tax strategy. If you are comfortable please share your tax liability and how much you were able to offset or how it worked out overall for you? Please share in the comments below! :-)

TIA!

2 Votes

Denver, Colorado

Quote from @James Carlson:

@Brandon Elliott-Pandey

That's a great story. We have MTRs in Denver and Colorado Springs. We like the model so much, my wife/business partner wrote a few books about them. (The latest is aptly named Erin's Guide to Midterm Rentals.) I've always been interested in getting synced with insurance companies for the above reason. That's a great connection.

We had a similar experience with our 4br/2ba SFH in Colorado Springs. We bought to live in just before Covid. We moved out two years later and got college kids in from nearby Colorado College. We initially paid their utilities, but they paid medium-term rental rates but stayed for 9 months. We repeated that with another set of college kids the following year.

Then this year, we were able to bump up our rents and have a family staying in there. This time they pay utilities and the furnished MTR rates. It's just over $1,000 in cash flow after all expenses. Now ... we bought our house in 2019 when prices were lower and -- most importantly -- rates were crazy low, so this is more difficult to replicate, but the numbers still work, if not as well.

Thanks for sharing.

Thanks James for sharing your story! Id love to connect and talk more about this strategy!

1 Vote

Denver, Colorado

Quote from @Kyle Spearin:

@Brandon Elliott-Pandey this is an awesome outcome! I'm thinking about trying a medium term rental/temporary housing in Boston when I leave my current property for a house hack in the near future. This is certainly encouraging and I hope that you can replicate it in your market again.

I'll keep you posted Kyle. There lease is up at the end of the year and once we go to market it again will see how replicable this truly is!

1 Vote

Denver, Colorado

Story time!

I purchased a long term rental in 2020 and shortly after my first tenants lease was up I came to find out they up and left, breaking the lease, and leaving me with a ~$10K bill to get the home rent ready again!.... all of our favorite surprises right ;-)

Fast forward, my property manager mentioned something about having a temporarily displaced family move into my rental and their insurance company would cover the rent. To my pleasant surprise they covered the rent to the tune of almost double the mortgage payment!!!

It now cash flows over $1,500/m with a tenet that acts like a long term tenet. They cover the utilities, supplies and all routine house maintenance. It's like having Airbnb profits without the Airbnb headaches!!! I like to explain it like this, "long term tenet tendencies, with short term tenet benefits!"

Now this isn't typical but definitely possible :-)

If you haven't already listened to BP's 728 podcast I HIGHLY recommend it. The gentlemen on the podcast dives deeper into this strategy and shows how you can make a LARGE amount of income without having to have the LARGE amount of rentals in your portfolio.

If this helped you in your journey please up vote this post to help with it's visibility and lets share the wealth. Also if you have a Mid term rental story please share below! Would love to hear it :-)

12 Votes

Denver, Colorado

Quote from @Zeliang Zheng:

I want to start out-of-state BRRRR. Does anyone have recommendation as to what city I should start? I am looking for places that has good potential to appreciate over time and good monthly return (~1%).

This is a deeply personal matter and really depends on your level of risk tolerance. I know of a few possible BRRRR's in CO for example but the market is a bit more expensive than the national average(s). What is your financial position at this point and where have you been looking so far?

0 Votes

Quote from @Joe Villeneuve:

Quote from @Brandon Elliott-Pandey:

Quote from @Joe Villeneuve:

Sell it. You made no mention of the cash flow. Based on the high property values, I would guess the cash flow (if any right now) would disappear if you ended up[ with a higher mortgage payment trying to tap into the equity (only part of it (while trying to keep the property at the same time.

If you grab equity in cash, but have negative CF, you're just giving back that cash out in pieces...with the additional cost of the interest. In other words, you're buying your equity. Why?

Hey Joe, appreciate the thought. I happened to mention at the end it is cash flowing quite well. This year it will have a ~65% COC return. That's why it would be hard pill to swallow on the sale...

I've also heard a few stories about persons whom have sold their real estate and wished they kept it. Have you happened to sell any in the past and how did you fair after those sales??? Any remorse?

No remorse. What you are looking at is the little picture and by doing so you're stepping over many dollars to pick up a penny.

Interesting... well said! Shoot me a private message and lets chat more!

0 Votes

Denver, Colorado

Quote from @Brian Markley:

I'd leave it alone until rates settle. Focus on keeping it occupied and cash flowing. Maybe finish the basement now if you're able to increase rent and realize a respectable return. Might as well have the increased rent help pay for some of the basement finish while you wait to cash out.

Thanks for the reply Brian, very thoughtful and insightful. I'm definitely contemplating the finish and cash out option at this point!

0 Votes

Denver, Colorado

Quote from @Joe Villeneuve:

If you grab equity in cash, but have negative CF, you're just giving back that cash out in pieces...with the additional cost of the interest. In other words, you're buying your equity. Why?

0 Votes

Denver, Colorado

All Forum Posts by: Brandon Elliott-Pandey

Brandon Elliott-Pandey has started 41 posts and replied 187 times.

Post: What EXCITES you the MOST about Investing in Real Estate?

Post: Great way to pay little to no taxes!?!?

Post: Great way to pay little to no taxes!?!?

Post: Curious about Mid Term Rentals??? Read Below!

Post: Curious about Mid Term Rentals??? Read Below!

Post: Curious about Mid Term Rentals??? Read Below!

Post: Which city should I start my first out-of-state BRRRR

Post: What is the BEST way to TAP into Equity???

Post: What is the BEST way to TAP into Equity???

Post: What is the BEST way to TAP into Equity???