All Forum Posts by: Buddy Holmes

OMG,

I see why so many CA tags here in SC!

@Charlene Stovin

Charlene, first choose your investment always based on having a positive cash flow.  Don't invest based on future appreciation but looking for markets that are growing and increasing their work force is good work.  The grown should be good for a steady and growing rental market as well.  Just spend the time to find that deal that gives you a reasonable cash flow return.

@Ross Shively

A 1031 exchange just moves the gain and depreciation to the exchanged property.   However, DO the 1031 Exchange into an income producing Rental for all the cash from the sale then do a REFI cash out in a year.  Be sure it still has +cash flow and you are building income streams for retirement. 

@Dustin Faeth

Introduce him to the 1031 Exchange and suggest some exchange ideas. Save/"delay" ALL his LTCG!

Exchange into cash Properties then REFI in a year or so with all the cash out tax free and his 15% tax turns into perhaps a 15-20% invested into rentals.  Show him how to save money and make money for the future.

And don't forget to roll ove some of your 401k or IRA into a Roth IRA! Guess which way Taxes are headed in the future!!

Get it over now and save on future taxes on it and ALL the Money it is going to make in the furure!

@Devon Butler

If they paid a specific amount for the storage space, use that. Otherwise, I think I would just let them know that you need to use the garage in an upgrade and in return you will give them $X off the next rent increase.

@Mora Clark

Hi Mora,   If you are in this for the long haul and your rental has appreciated ten you have a property with cash flow in a good rental area.  Try an REFI while rates are still down.  Perhaps the rate is much lower than your current rate and you can get cash out and still have nearly the same mortgage payment and hence cash flow.  Then use your cash out to get a second unit that will cash flow.  You should be mainly concerned with cash flow and increasing income streams of cash flowing properties. As they appreciate repeat the above process.   As far as rent increase for your current tenant.  Your PM has a good point. a good tenant is a real plus for you. So keep a long term tenant happy and keep there rent well below market to show your appreciation.  Remember a Change will cost you at least a months rent or more that 10%. that said increase some and don't let the rent gap become vary large.  With today's inflation a 5% increase, if you are 15 -20% below market, is certainly reasonable IMHO.

@Don Paulsen @Basit Siddiqi,

You may be correct in reading the rules. I am an engineer and not a CPA, but...

I have recently gone through an IRS audit of 3 years of returns dealing with a handful of SFR's and one new STR.

The STR was 360 mile R/T from my home at a Beach location. The auditor did not allow the trip miles to do clean up and finish the landscaping saying it was just my commuting mileage. My rep fought the good fight won some lost others all the way to Tax Court. My auditor said could not combine time spent on my multiple rental properties to make the 750 hrs criteria, rather that much time had to be on a single property.

So if you want to test the rules and think it is worth it have a good time.  This was my first IRS audit in over 50 years of returns and I want no more of them.  I can tell you conversations with the IRS is not quite as logical as I was used to in my working life!

@Andrew Fletcher

Not sure what glamping is, but the bet place for a land loan is you local Credit Union.

@Scott Rodriguez

Good that you are wanting the investment to be beneficial in your planned sale.

I would suggest that you visit the new construction sites around your area and see what the Big Boys think the current market is looking for.  If your home is significantly smaller than those your visit then your market may be more to the first time buyer which would rather have a low price than a fancy bath, or to the older scale back buyer.  For the older buyer, a stand up enclosure with a built in tiled seat might be preferred. 

Good Luck.

Cheers,

Buddy