All Forum Posts by: Chris B.

Thanks for the additional insight. I would be going from a 2200 sq ft, 4 bedroom SFH in Tucson to a 1200-1800 sq ft, 3 bedroom SFH in Gilbert. I'm looking for something smaller. 4 bedroom + extra room homes in Tucson can be tough to rent and when they do, large families tend to produce a lot of wear and tear. I do expect the maintenance expenses to be a bit lower in a Gilbert property. I'm pretty handy so I can do a lot of it myself. Taking most of a day driving to do anything related to the Tucson property gets a bit old not mind current gas prices. Regarding the additional depreciable basis with a new purchase, I wasn't sure how that works but have done some research and looks helpful. Last, I feel a 3 bed 2 bath is much more rentable than a 4 bedroom plus loft and extra rooms from my experience. Thanks!

I just bought a new to me SFH as my primary residence last year in Chandler. Inspector did a sub-par job and its been a bit of a money pit getting it in shape so I'm tight on cash and can't afford an additional property without unloading the Tucson property at the moment. I did keep my last home BTW and am now renting that one out also.

Thank you for the HELOC insight and depreciation advice. I acquired the Tucson property in 2008 so we have seen our ups and downs with it. We have been depreciating it and appear to have about 12 or so years left on that.

I have a SFH (Single Family Home) in Tucson, AZ and the tenant just moved out. I've cleaned it up, re-tiled downstairs and its in great shape and in a good school district on the edge of town. Current mortgage with PITI is just under $1k. Rent value is just over $2k. HOA is $35 a month. Once rented I'd be bringing in about $1100 a month after listed costs. Home value is about $360K. 1031 Exchange proceeds would be roughly $200k after paying agent and old mortgage off.

I'm considering doing a 1031 into a SFH property in the vicinity of Gilbert, AZ (much closer to me). Purchase price would be in the area of $450 - $500k. Lets assume $500k. That would equal a $300k mortgage. I was quoted a 6.25% interest rate with the $200k down. I'm calculating a mortgage at this rate would be about $1850 monthly. HOA would be about $100 a month. Rent would be around $2200. Profit before other expenses would be about $350 a month.

So the current situation in Tucson is bringing in a lot more profit from rent.  However, appreciation in Gilbert of a $500k home is likely to be greater than a $360K home in Tucson over the next 10 years.  I'd like to keep the property for 10 years minimum either way before I sell it.

Does anyone have any advice on this decision?  Maybe factors I'm missing, or a strategy I haven't thought of yet?  what do you think will be the best investment 10 years from now?  Thanks in advance!

Thank you for the advice.  I've seen Hull, Holliday & Holliday attorneys mentioned here in other posts with good reviews and have started engagement with them.  

I have in the past accepted payments with Zelle and also the tenant walking into a branch of my bank and doing a direct deposit.  I'll be taking steps to disable these methods as to not let a partial payment slip in.

I have a tenant who has historically paid rent late and this month is no exception.  I'm very forgiving and to my detriment it has come to bite me as expected.  Contract is currently month to month.  I don't think the tenant will be willing (but probably is able to) to pay this months rent even by the end of the month as the tenant has had a history of pushing limits.  I did receive a small portion late on the 13th of $500 out of an $1800 rent.  I will provide a 5 day notice to pay or quit for this.

I also want the tenant to leave.  Period.  Tenant has moved in 3 adult family members not on contract, has started smoking in the property (forbidden by contract), and market rental rates are substantially higher than the current rate so I am loosing a lot of cash.  I also need to replace the roof and garage door at a substantial cost to me.  Therefore I want to end the contract and have the tenant move out.  I may need to evict them on this matter if they don't willingly move out.  They have such a good deal right now and along with their issues managing their finances, it will be impossible for them to find anything remotely similar to what they have now.  I will issue a 30 day notice of termination of contract.

Therefore It seems I need to both serve a 5 day notice to pay or quit on the late payment and additionally a 30 day notice of termination of contract.  Does this sound correct and can anyone offer advice on this?  Can I just deliver these both at the same time?  I plan to hand deliver them with a witness present and also a copy mailed to them certified / return receipt requested.

Its my fault for having substandard screening back when I first rented to this tenant many years ago and I have learned my lesson and have great tenants at other properties.  I have since started requiring minimum credit scores of 620 to 640 at my other properties and have gotten excellent tenants.  I have various other requirements, but the credit score alone seems to fairly accurately correspond to the quality of tenant I will receive.

I don't get home warranties also, but that's due to my situation where I don't really benefit from one.  I'm pretty capable and the appliances in my properties are in great condition so rarely have issues and therefore not worth it for me.  Some reputable home warranty companies absolutely will cover water heater repairs.  There are good companies and many bad ones.  If you get one, you will need to research and get it through good company for it to have any value.  In general, the idea is to provide a warranty on major home appliances.  So water heaters, air conditioners and similar items are in scope.  Everything else is out of scope.  So if your tenant punches a hole in the wall, or you get a water leak in the roof or something like that, its not covered by the home warranty.  One additional thing to keep in mind is a home warranty covered repair will usually cost about $75 or so per visit and include the least expensive option available instead of the best option for the repair.  If you have an old AC unit dying on you, you may be having the warranty company coming out frequently doing minimal repairs instead of the proper repair.

I had this same question for my mortgage broker in the past few months and I got a different answer.  I'm not sure if maybe I misunderstood, or this broker simply works with a different formula.  However I was also told there is a limit of 4 standard mortgages.  If you were to get a 5th mortgage, you need it to be for your new primary residence and then there is no issue.  If the 5th is an investment property, then you will need extra emergency reserve money.  Proof you have funds which can pay all of your mortgages for 6 months.  So, based on the information I received, any property bought after your 4th needs to be a primary home to avoid the extra funding requirements or you can go ahead anyway if you do have the extra reserves.  Not sure what the upper limit is and that may be 10.  Has anyone else herd anything like this?

Sure... but things to consider:

How long has he owned the property?  Slumlords are cheap by nature and the longer they have owned the property, the more damage they have done / allowed to happen to it.  I've experienced them before myself as a renter in the past.  Expect substantially sub-standard repairs that will fail sooner or later.  Expect non-permitted work.  Expect low quality and improperly performed work.  If he has owned the property for 30 years for example, expect a lot of problems for years to come unless you do a serious remodel.  Also slum lords are generally very resistant to let the property to sell at a low value based upon its deteriorated condition.  A good inspection should reveal most issues, but the ones hidden in the walls will still surprise you.

If you are planning a major remodel, this may be a good opportunity for you as you can "make duplexes great again".  Offer low expecting a lot of needed repairs.  Good luck!

Definitely not.  If you do this, by definition it is not a 1031 exchange.  However, one can 1031 exchange properties and rent the new property for a while and then possibly decide to move into it after a few years.