All Forum Posts by: Chris Sullens

Very helpful answer! Thank you @Levi Ballard. I wish I had known that before! I had to pay all kinds of title fees and title insurance, which I thought was pretty ridiculous at the time, but didn't know how to avoid it. 

Reading through the thread, and I'm not sure what "seasoning" means exactly? If you purchase a property with cash, the bank will not give you a mortgage until you've owned and rented for some period of time? Or is that only if you are refinancing?

@Levi Ballard, can you explain how closing costs are minimal for a refi when using the same lender? I just refi'd my primary residence, and the fees were unpalatable to say the least. 4-5k. But I used a new lender.

So, I have completed my first real estate deal in Oklahoma City, which went fairly well. I posted about it here. I talked to people all around me during this process, and by doing so, I managed to generate interest from a few people who would like to invest with me. All together, I estimate that there may be a couple hundred thousand dollars to invest with. This is obviously just the very earliest stages, wherein these individuals have expressed interest in investing with me, but no steps beyond that have been taken. So, before I do anything, I'm looking for advice. What are some basic strategies and approaches that I should be thinking about? Who should I be talking to for professional advice to help put something together? Should I try to use the money as hard money and pay interest to the investors? Should we pool money together to create some sort of investment fund? Are there some basic rules that I need to be aware of? Can we use money from 401(k)/IRA's in this project? Should I be looking at larger multi-unit deals or commercial deals? Is there a book or reference I should be reading/consulting? I know this is a very broad question, but I know you guys have the best advice out there, so any bit of guidance is welcome and appreciated. Thank you!

@Natalie Kolodij, you know I really hadn't even considered that I might want to use a CPA who isn't local to me. That's something I guess I should consider. Thanks!

That's for the answers guys. As a non-CPA, what I'm taking away front this is: 1. I probably have to capitalize most of my expenses prior to making the house available to rent. I really wish I had known this upfront. That detail seems to escaped most my if reading about investing, most which leads one to believe that many expenses are immediacy deductible. 2. I need to find a CPA who really knows their stuff and is experienced with real estate investors!

Thanks @Ashish Acharya! Regarding the de minimis rule, is that saying that any invoiced expense under $2500 can be deducted rather than capitalized? So, I had new flooring installed in this new rent house, but it cost me $2000. This is prior to any tenant being placed. Does that expense fall into the de minimis rule? What if I have several items like that and all together it's 12k worth of expenses? But each item is less than $2,500?

So an experienced CPA recently told me that essentially all costs incurred prior to placing a tenant are considered to be acquisition costs and get written off only as depreciation. Is this true? I'm sure he knows what he is talking about, but I wanted some second opinions. Are there any expenses that are directly tax deductible which are incurred prior to placing a tenant? Or are all expenses taken as depreciation? This includes closing costs? Interest on mortgage payments? Utility bills? All rehab expenses? Everything? 

@Dustin Verley I've thought about doing a refi, and I'm leaning against it. With a monthly mortgage of $300 and a rental income of ~$1000/month, the cash flow seems really nice. I'm worried about paying another several thousand in fees and closing costs to refi. 

@Austin Peck, I found the property on Zillow, but it wasn't on the MLS. It was listed on Zillow directly by a wholesaler. They were asking 60k. They showed the property for a short time and indicated that they were just going to take the highest offer after 24 hours. I offered 62k and they accepted. Then, later, the appraisal came back at 50k and we renegotiated to 55k. I think the appraisal was low, but it helped me save 7k.

@Rhett Tullis, thanks! I appreciate all the help from you and your team. I really hope you are right, and I feel the same way. 

@Matthew Cretzman, I am using property management. So they just used their standard lease and I didn't involve myself much in the details there.