All Forum Posts by: Carlton Wood

Hello Everyone. Just closed on a two family in Binghamton and would really appreciate some recommendations For a solid property management company. And any other information about investing in Binghamton that I could find useful. Thanks !!!

Hello Everyone. Just closed on a two family in Binghamton and would really appreciate some recommendations For a solid property management company. And any other information about investing in Binghamton that I could find useful. Thanks !!!

This post was meant for Binghamton NY. No Birmingham Alabama!!!

What’s up BP!!! Have a question about the $25,000 offset I’m hoping someone could answer for me. To be clear I’m referring to the up to $25,000 in passive losses that the IRS allows you to offset your earned income by. 

I was reading up on the $25,000 offset and I’m a bit confused about how it’s calculated. One book I was reading spoke about multiplying your net loss by your effective tax rate and using that number to offset your income. Another book I read says to just take your net loss and use that number to offset your income.

Example 1

You make $10,000 in rental income, you subtract your expenses and depreciation and have a net lose of -$10,000. Assuming you have a W2 income and your effect tax rate is 22% you multiply that by -$10,000(.22X-$10,000) and get -$2,200 and you can offset your income by $2,200. So if you made $82,000 you could lower your taxable income to $79,800.

Example #2

You make $10,000 in rental income and you subtract your expenses and depreciation and have a net loss of. $10,000. You take they negative -$10,000 and offset your income by the whole $10,000. So if you made $82,000 you would lower your taxable income to $72,000

Of course both examples are assuming you made no more than $100,000 and you were involved in your real estate business enough to qualify for the offset.

Which example would be the proper way to calulate the offset?

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Folsom.

Purchase price: $290,000

Cash invested: $21,000

Using an FHA loan I purchased a 4 family fully rented home in Folsom Pennsylvania. The tenants were all on month to month leases so one of them moved out at closing so I could move in. Will live in house for at least a year and probably move out and rent the whole building. Right now the 3 tenants cover the mortgage payment so I am living rent free.

What made you interested in investing in this type of deal?

Wanted to live for free and take advantage of as many units an FHA would allow me to get

How did you find this deal and how did you negotiate it?

MLS. Came close to asking price as long as seller agreed to give me a %6 sellers assist, which covered all my closing cost.

How did you finance this deal?

FHA Loan, downpayment from employer 401K

How did you add value to the deal?

When I moved in the property one tenant was well below market rates for rent and I offered him a new lease that was higher than his rent but not as high as market rate. He refused and moved out, I ended renovating his unit and advertising unit for market rent and getting a tenant within a month.

What was the outcome?

Still live at property. Wil most likely move out after a year and rent out the unit I am staying in.

Lessons learned? Challenges?

Pick management company wisely. After you pick management pay close attention to every move they make, make sure they get the green light from you to do anything. When they are finding you a tenant stay make sure you make the final decision on tenant selection.

@Kevin Dougherty @Wayne Brooks thanks for your responses, the previous owner hadn't been maintaining the house and I believe the sinkhole came from a broken sewer line that was never taken care of. I have found that it is almost impossible to find a good contractor in this area. Some of the guys have I have met with either haven't even gotten back to me or have given me a very high estimate for the job with no detailed scope of work with pricing for each phase of the project. Some good contractors I have been able to find either are too busy or don't deal with sinkholes. I'm hoping to get a good recommendation because finding someone on my own is proving difficult.

Trying to renovate a 2 family house in Pittston PA. House has a sinkhole in the basement of one side of the house. Having a hard time finding a contractor to get the problem fixed. Anyone ever dealt with a sinkhole and does anyone know a contractor in Pittston PA that can help??!!

missed the last one. looking forward to this one! see you guys there!

Great Meet up! To anyone who was there and i didn't get your info connect with me on here!