All Forum Posts by: Curtis Steineke

Hello,

I am working on helping my son get his house ready to turn into a rental.  Looking for a referral for quality property managers in the Bayville/ Toms River New Jersey area.  Any help would be greatly appreciated.   Tried to Google a few but didnt get alot of returns. 

Thank you. 

Thats great, Sioux Falls has so much potential and plenty to offer in the downtown area.  

I am going to do a 1031 Exchange, I am looking for recommendations for companies in KCMO for my 1031.  I found several in the area but I am new to the area and don't know anything about any of them.  If someone here on the forum has used on of the companies I would like to hear some recommendations. 

Thanks. 

Cody, one thing to consider as a PRO for your house as a rental, you know the property, you know what maintenance was done and by whom etc.  You know the "hidden issues" already vs those that come along with looking for new properties.  Unless there is something that would not make your house a good rental ie location etc  it might make for a good rental, it all depends on the math.  If you run the math on keeping it, know that your taxes will go up slightly on your current home,for non owner occupied. Check with the city on the amount, they should be able to tell you, it will probably be around 200-300 more a year.   Add the maintenance set aside to your monthly and yearly expenses, as well as property management fees to your math, right now that would lower your cash flow quite a bit possibly even negative if you have to pay for property management.  Depending on that cost, your cash flow might be low initially but your rent rates will grow as time progresses increasing your cash flow.  If your at a negative cash flow in that situation, then selling, using equity to finance new and lower cost rental may be the way to go.   

 You could always refinance the current debt on the current house to a longer mortgage, helps to lower the math, (probably about $400 a month for payment) - the tenant is paying the payment now so that shouldn't concern you as much with the longer term on the loan. Buy the new house with equity from current home for down payment, keep current home for rental,  hold your 10k for the rainy day  or vacancies- no tenant = no rent, and then sit for a year or so to see how you like being a rental property owner, if you have the money and the math is working, start to look for your next property.   I don't know that you will get a better interest rate looking for new rentals vs what you currently have on your current home, so that's another think to think about as well.

If I run the quick math based on what you gave us, here is what I see.  I break the yearly costs down to monthly averages, but some things like taxes you don't pay monthly but it helps you see the cost spread out over the cost of the lease - typically a one year lease.

  1300 monthly rent

- 1120 for mortgage

- 104 property management fee ( @ 8 %  of monthly rent)

- 63  one time placement fee averaged out over 12 months ( @ 4.9 % of annual rent )

- 50 for maint reserve ( some people say $100 - I did 50 since its your house, you know the maint history)

-183 for taxes (assuming 2,200 for property tax)

- 40 a month for insurance

= (260) negative cash flow

I used the property management fees, based off of what Real Property Management Express charges. I have spoken with Derrick there a few times, he can probably help with more info if you are looking for a property manager.

Hope this helps some.

Cody, welcome to the forum, you are in the right place, there are a lot of smart folks on here and plenty of info, enough to be a bit overwhelming at times.  when you post the questions,  post as much details about your financial situation, goals etc- within reason- of what you are looking to do, it will help with the responses.

Good luck with getting your investment properties, Sioux Falls properties are selling really well right now so it can be challenging. I am looking to invest there  once I retire from the Army - used to live there years ago, some family in the area. Seem to be a lot of good options out there.

Curt

What are your thoughts on investment properties that are one block from a good sized college? Will the turnover make the financials unreasonable? I can cash flow about $150 a month after mortgage, insurance , property manager and maintenance set aside- I used a couple of different spreadsheets to analyze the numbers. Should I be concerned with the wear and tear of college kids? It wouldn't take a lot to eat through my cash flow. I am ready to put an offer in on Monday if I can make up my mind, just looking for some feedback from others who have rented near a college. Thanks.

I am in a similar situation, just on the recieving end.  My parents original purchase was in 1973, sold the property in 2002, 1031 exchange into another property, ran the business unitl 2013 then gifted us (myself and my sister) the ranch, as of now the tax burden, should we sell is on my sister and I.   When we sell, we now have the option to pay the taxes ( - any adjustment based on the basis and depreciation, improvements etc) or defer with another 1031.   This was in the state of Nebraska for what its worth. We had an attorney handle the transfer of the property for us.  Based on the comments above Bill is right and Dave has a point as well, there are technically two issues, the gift issue for the parents (and some potential 1031 concerns) and the 1031 more specifially for the kids. 

One thing our attorney advised us was that we would need to hold the property at least two years before sellling to avoid triggering capital gains, that wasnt based on a hard and fast IRS rule, his experince was that anything held over two years generally was viewed as being held long enough to meet the intent of holding for investment..... we also recieved advice that said we would be good holdling a year for what its worth.   From what I experinced, there isnt a clear trigger point on wheter the property was held for investement or not just what our attorney advised based on his experince. In our case we have had two seperate leases over the past two years that we have owned it and the current least runs till 2019 so we should, be ok with a 1031 exchange agin etc without triggerin capital gains..  Again, each situation is different,  I am not an attorney and dont claim to be, just wanted to share what we went through. 

 Do you know how much the mortgage is for?  That may make a difference on what they are willing to do, but you wouldn't think they would let it go for $1.   There may be other liens against the property.  You can go to the clerk of courts and find that out as well.  I looked at a property in SF a couple of weeks ago, had 1K in liens against it, there was a judgement that was for 15k, but missed the filing of the foreclosure by one day so it didn't attach to the property.   Something to look at in the process of figuring out.   

@Leslie Pappas, I had not considered that. Its certainly worth looking into, the diversification would appeal to me.  Thanks for bringing that up.

@ Brian Otteson,

Thanks, your right there are worse problems to have.  I think that's part of my hesitation is this is coming from the sale of the "family farm (ranch), my dad put a lot of time energy, effort and sacrifice over the last 40 years to get where he is today and the ranch is an extension of that labor and I get worried about making a good decision as I invest that money. 

 Knowing that there is risk no matter what you do (sit on the cash, lose to inflation, bad investments loose the $$ ) so I am still on the fence about the right balance.  Lately I am leaning toward buying a multi plex using a loan, one home loan, one home cash, -as long as its rented, I am cash flowing that can help cover payments on the other loan(s), since I don't have a loan on it, if rentals take a downturn, I can flex with the market and still use it to support the others through a down cycle.