All Forum Posts by: Bryan Petrinec

Apparently, with the new rules for loans (new since the bust), it is up to the mortgage company if they want to accept the power of attorney paperwork or not.  If they don't and there is a valid case, you can have an attorney representing you provide them the appropriate justification but will delay closing and even if using the same mortgage company you may need to do it again for the next property.  

In that instance, and for the next 4 transactions, I just had my partner sign and then moved the property into an LLC after close. We are now in a position where we have started buying properties cash so it is no longer an issue.

Overall, I am still glad we have all the paperwork in place as I am managing all the properties.

Hope this helps.

How is income from a seller-financed property treated from a tax perspective?  I am considering selling a property that has no mortgage on it through seller financing.  I know that if I were to sell it through a standard mortgage, there would be up to $250k of capital gains that would be tax free as a single person, 500k as a married couple.  

For sake of this example, assume I'm single, I'm selling a home for $500k that has a basis of $250k and forget about all the closing costs.  If I do this as a seller-financed deal, I would be getting P&I payments of $2500/month and the deal is a 30-year amortization with a 10-year term.  

I assume, and this is where I need clarification, that the principal in the monthly payment is tax free (repayment of capital) and the interest is treated as ordinary income just like most investments.  Then after 10 years, when there is a large ($200+k) payment or if the seller refinances before then.  Is that money then just considered as proceeds from the sale and not taxed since the overall capital gains were less than $250k?  Or is there some way this becomes ordinary income or has a long-term capital gains tax applied?  

I am interested in proceeding with this deal as seller financing, but I don't want to be hit with any unforeseen tax burden in 10 years or sooner when the buyer refinances.

Thank you in advance and yes, I will seek the advice of my CPA also.

Thank you all.  @Account Closed, I appreciate the detailed response and will charge that as reimbursable billing.  That makes sense and if the situation happens where the charge back is larger than the security deposit and I don't get paid by the former tenant, that is easily tracked for a year end write off.  

I am looking for some guidance on managing security deposits, repairs, and return of the balance from a bookkeeping standpoint.  This is the first time I am going through this and I want to make sure I am handling it correctly in QB (I use Desktop Pro 2018).

The security deposit was held as "Other Current Liability" for the the sake of this discussion was $1000.

Tenant moves out - some minor repairs are needed that are charged back to the tenant in the amount of $200

I pay my handyman $1500 to turn the apartment, which includes repairing the tenant damage

So here is my confusion - I pay the tenant the remainder of the SecDep of $800 from the Security Deposit account.  Do I allocate the $200 remaining to the operating account and then becomes income?  Or do I spit the repairs (or ask for 2 invoices) and pay the $200 directly from the SecDep account to cover the repairs and keep the remaining $1300 in repairs and maintenance?  Come tax time, I assume either way I can only deduct the $1300 and not the full $1500.  

Again, this is my first go at this and I want to make sure I am doing right now to prevent issues later.  Thanks in advance.

Get the water tested, it is usually free from a local water softener company.  If it is city water, there should be public records of water quality you can compare it against. If it is well water, you may need to install some additional water treatment to get rid of it.  Well water can change composition depending on the level of the water table.  Just make sure it is a sulfur smell and not a "rotten egg" smell.  The rotten egg smell is an indication of hydrogen sulfide in the water which can occur naturally, but is very corrosive and can cause problems with plumbing and fixtures.  Sulfur is also a problem but is less immediate need to fix and is harmless.

@Manon Sheiman - All of the purchases have been 25% down with conventional financing. I just closed on another earlier this month in the Pflugerville area. Again my target are small multifamily houses that have a lot of differed maintenance and under-performing rents, yet still provide cash flow after PITI and a 10% reserve for general maintenance and repairs. I have no issues getting the building back up and looking nice and along the way I am able to increase rents. I am always looking for the worst house on the block - mainly because the nicest looking ones don't have numbers that work for me.

@Account Closed sent you a connect request.  I'll send you a pm once we connect.

Thanks @Mayer M. I fully intend to get this in writing but she is pretty motivated to get out early.  Fingers crossed there will be no issues.

A tenant has indicated she wants out of her lease early due to her mother's failing health.  Regardless of the reason, I am glad to let her out early as she was an inherited tenant and she has been a concern since day one.  So far, rent has been paid, but I have had several requests for delayed rent payments and when I remind her of the late fees, she seems to find the funds. 

However, I am holding her to her lease obligations while I look for another tenant.  Given that her lease expires at the end of July '18, I want to get something signed stating that she will move if another tenant is qualified and moves in prior to the end of her lease.  I don't want her changing her mind at the last minute causing me to turn away a qualified new tenant.  

Is there a stock form for this sort of thing?  Or can someone share key points that would go into this document?

Ultimately, I don't think she has the income to support the rent and this will be a win-win if she can get out a few months early. I just want to get something in writing that commits her to this process and she will vacate at the appropriate time.

Let me know what you would do.  Thanks! 

I am in the process of remodeling my father's previous home and getting ready for the market.  I was a time capsule from the '80s.  I am redoing the kitchen, in addition to other key areas, and I am nearing the point to get appliances.  Where are the best places to get matching appliances in the Austin Texas / Georgetown Texas area?  I need an electric cooktop with downdraft vent and dishwasher.  The issue I have been having is the cooktop with downdraft vent.  - Where can I get a decent glass top cook top that is less than $900.  Seems like that they are all <$1k, and I just need it it nice enough to sell

Where do you get your appliances??

Thanks,

Bryan