All Forum Posts by: Charlie Price

David Jesse Answer is yes. You own the property/LLC. So you can do what you would like. The issue comes when you write it off as a tax deduction and how you do that. Then your only able to use it a certain number of days or so. At least officially. I'm not a CPA, but hopefully you have one. They are worth their weight in gold as a real estate investor. You will definitely want to run this by then. Here's some info I found. 1. If you use the place for more than 14 days or more than 10% of the number of days it is rented -- whichever is greater -- it is considered a personal residence. You can deduct rental expenses up to the level of rental income. But you can't deduct losses. 2. The definition of "personal use" days is fairly broad. They may include any days you or a family member use the house (even if the family member is paying rent). Personal days also include days on which you have donated use of the house -- say, to a charity auction -- or have rented it out for less than fair market value. 3. If you limit your personal use to 14 days or 10% of the time the vacation home is rented, it is considered a business. You can deduct expenses and, depending on your income, you may be able to deduct up to $25,000 in losses each year. That's why many vacation homeowners hold down leisure use and spend lots of time "maintaining" the property; fix-up days don't count as personal use.

@David Faulkner @Charlie Price just a quick question, what prompted you to include utilities in rent? Are you able to mark up the rent for x above market that way? Why not just rent it at market y and then have them pay their own utilities? As David Faulkner...... When I purchased the property it was set up like this. 23 units, 3 electric meters. It was previously a totally dilapidated Garden Motel totally vacant that a bank had foreclosed on and sitting there vacant for about a year or so. I split a few of the larger units into two separate units and am making a few additional units out of what was previously storage space for what will eventually be a total of 30 units. I just finished # 28. These are tiny tiny efficiencies anywhere from 250-400 sq. ft. They do rent for a premium. $700 up to $1,400 per month depending on length of lease, and season (summers here are crazy busy). Some leases are for 3 months and I have some that have been with me since in purchased it 3 years ago. Average is probably just under a year.

Yes, sorry. You are correct. 15.6 Kilowatt system. :-)

Manolo D. Sorry for the confusion. It's a 30 unit apartment complex. 30 doors. 30 tenants.....15.6 MW will be for 12 of those units. So I guess that's 1.3 MW per door for phase 1. :-). That is scheduled to produce 21,498 Kilowatt hours annually per the solar companies "conservative" estimate.

@Jay Hinrichs Thanks, I'll take a look into them. I understand that the electricity costs in Hawaii are way higher then stateside. So makes it a quicker payback and larger long term payoff. @David Faulkner Thanks for your feedback... Haven't considered sub metering this property. I bought it as an old run down garden flea bag motel. Dumped three years and tens of thousands of $$ into it making it. I've and clean. They are small, 250-400 sq. ft. efficiency units. A couple of 1BR's. I rent them totally furnished and all utilities included. 2/3 long term tenants and about 1/3 shorter 3-6 month leases. Rent mostly to military contractors, construction contractors in town to do a large project., traveling nurses, people who have or are selling in another town and moving here to buy another home but haven't found one yet or having a home built. Then there are some that just want a simple small quiet clean place with all utilities in place. Almost all are single people lining here. I adjust rents frequently for new tenants and stay at 90%-100% consistently. A little effort getting tenants in and out, but most are professional and good tenants. Generated $240K gross in 2016. Started with 23 units ended at 28 for that year. 2017 will be even bigger as I started with 28 units and I'll end the year at my max 30 units. I Would never be able to achieve those numbers sub metered with 100% long term tenants. The business model isn't for everyone, but works well for us.

I welcome any and all ideas and critiques regarding this issue. Please comment or PM me if you have any thoughts. Good or bad. :-) I am installing a 15.6 megawatt Grid Tied solar system on my 30 unit apartment complex. Cost will be $46K all in. With 30% federal tax credit and accelerated deprecation for the system net payback is scheduled to be 6-8 years. This would be phase one as there are actually 3 electric meters on the property. 5 separate buildings. The solar for the other two meters would be 5.9 kW for $19K and 17.1 kW for $50K. That is should I decide to continue and the first one works out to my liking. I'm also doing roofs at the same time to the tune of another $50K. OUCH! I pay all utilities on the property. I've rehabbed everything and put in thousands of dollars of insulation new windows, doors, new HVAC's etc...so fairly efficient at this point. 2016 Electric bills ran 17K ok $240K gross rents. 2017 should be higher in both categories as I've renovated and put an addition 5-6 apartments on line. Some questions for thought? 1. Has anyone done this or considered doing this on this scale? 2. Considering that it will lower my electric bill, which is a dir ft operating cost I will in essence be raising my NOI, this raising value/equity in property. My thinking...I save 4K in electric translates to $40K in equity w/ a 10 CAP. Save $15K in electric for all three phases and I've added $150K in value. 3. Electricity costs will only go up in future so these numbers should hopefully get even more favorable. 4. Wondering what kind of value I would get whenever/if ever I sell. Certainly someone would be willing to pay something extra for solar panels installed. Even if I just got an extra .50 on the solar on the back end that would an extra $60K or so on the back end. 5. Still all said, hard to bite the bullet and come out of pocket $100K when I could use that same $$ and go buy another project...

@Thomas Gagnon I like the idea and business model with the leased machine concept. Just that I have a hard time leaving $$ on the table. If Mac Grey is doing that and making money then that's money you could be pocketing. Of course there is a time factor. For my situation $2K per machine would put me back $8K. Then there is probably a small monthly fee for setting up and paying the credit card deal which sounds gr8 also. At $120 per month It would take about 5.5 years to pay back the $8K and be i the clear. Then you have 5 year old machines as well! That doesn't factor in the time and/or $$ for break downs, regular servicing, monthly cleaning, collecting coins, etc...makes the leased machine look like a good deal over all. I'm going take another serious look into this for my units. Another option is that you could probably finance the machines at some small monthly rate over 5 years s or so. You would still have the time and service factor though. Thanks for the input. Cheers!

@ludmila M. I Like the idea of the Facebook checking. I have rented to hundreds if not over a thousand tenants and never used this. I'm not a big Facebook user, unlike my wife :-). But when you do that do you just search the persons name and take a look at their wall & photos? Or do I need to add them as a "Friend" to see their info? @Jeff Filali Your right about the honest part. I do feel a little bad about the lie. You become a little hardened in this business after you get lied to 100's of times from tenants, getting your property trashed, losing 10's of thousands of dollars over the years. And the thousands of hours the bad ones cost you as well. You just want to get away from the bad ones as quick as possible and find the good ones. I would never take the time to schedule, show an apartment/house to someone and that I never intend to rent to. I enjoy being with family traveling, or and sipping Margarita's on beach with my free time. And by the way. Aren't you actually not being honest by showing them the apt./house taking an application? Because then your going to deny them based on something else other then the truth. Unless your planning on just telling them the truth. In which case, why not just have a short quick phone conversation, which is actually probably the best advice most honest. Hopefully you never get sued for that by one of them for discriminating based on something that is probably true, but may not be. Anyway...done ranting. Thanks for your input. & thanks for listening.

@ Kyle Buterbaugh The way I is it is if your early on in your investing career and still have a decent W2 income the bank with 20-25% down is a good route. They will make sure your in a good position to pay them back and not allow you to get too deep. It's nice starting out to have the 20-25% equity also. Later on as you gain experience and knowledge you can look to go out on a limb and be a little more leveraged on deals. Like many people, I've been through the high leverage route. Had 15 properties or so and $3-4M on paper. Went away in a couple years when the market crashed in '08-'10. We (my wife and I) got absolutely CRUSHED. Down to nothing! Round two were much more conservative and have much higher equities and cash flows. Feels much nicer and effects our purchase and tenant decisions for the good. We have bounded nicely over the last 5 years or so. Having said that, if the seller is offering better terms then the bank then absolutely go for it. It is such a pain to deal with banks. At least on the front end. Get familiar with good mortgage calculator and play with all the numbers and take good looks at the amortization schedules to familiarize your self as to what your getting into. I use bankrate.net, but there are dozens out there that all do similar calculations for you. I negotiated and am closing on an 8 unit 1.5 miles from beach. Scheduled to close next week. I got the following seller financing terms: $275K purchase price, $75K down, 200K seller financing at just 3.5% interest. Payments amortized over 30 years ($900) With balloon due in 10 years ($154K +/-). Price & down payment was a little high, but gr8 terms on the $200K. I have another larger similar property in not as nice of an area and do well with it. After $30-40K rehab I'm anticipating between $8K-11K per month gross rents based on my other rental I have. Self managed expenses should come in around $3K +/-. Plus the loan payment. It'll be our first seller financing deal, so kinda excited about that. @Jim Murray & Brandon Hicks Thanks for your thoughts and comments on the issue. I like both your outlooks on the owner financing. I look forward to possibly doing more of these in the not so distant future, now that I have my first one nearly under my belt. Fingers composed that the closing goes through okay.

I had to do it at the website. Not the Mobil ap. There may be a way on the ap, but I couldn't figure it out. If all you have is the phone for internet access, just go to your web browser and type in the bigger pockets webpage. Log in to your account and click around until you find your profile. Then upload pic. :-) Hope that helps.