All Forum Posts by: Christopher Brown

My Question:
I would like to know if the cost of total demolition of a mobile home and removal of debris ($11,000) is deductible in 2022 on Schedule E?

We purchased a property that was adjacent to our triplex property in November of 2020.  At the time it had a mobile home that was rented and a vacant barn.  The tenant was already in default of rent payments when we purchased the property and the previous owner was in the process of eviction.  That tenant never paid us any rent even though it was due to us.  The eviction court date was in December of 2020 and that tenant was evicted.  This property has a shared well and septic with our triplex apartment house next door (this has relevance later).

We determined that the mobile home was in unsafe condition to ethically and a liability risk to continue renting. We took the mobile home out of rental service in January 2021. The mobile home and barn were demolished and the debris removed on April 2022. The land was graded with a pad for a new structure. Our intention was to place a tiny home on the property as a STR. In the middle of the process of ordering a tiny home we applied for a compliance permit from our county health department. They came back with a whole list of demands for upgrades and changes to the septic system before they provided a compliance permit. They did this even after approving the same system as in compliance in 2004. That put our plans for putting a tiny home on the property on hold until we can work through the permitting process.

I am completing our personal taxes and would like to know if the $11,000 demolition expense paid in 2022 is deductible on our 2022 taxes. We run separate spreadsheets and bank accounts for each of our three rental properties (Single family house, Triplex apartment, and this land next door to the triplex becoming a STR tiny home).

Was the mobile home considered "in-service" from Nov 13 to December 8th, 2020 and then taken out of service?  Does this help or hurt our tax situation?
Can any or all of the $11,000 demo expense be deducted on our 2022 taxes on Schedule E?
Can this $11,000 demo expense be carried into the future once we do get a tiny home approved and in service?

Any thoughts?  I'd be willing to contract for advisement services on this issue as well.  DM me.
Our CPA for our other business doesn't have expertise in real estate.

Thanks for any input!  

BP and REI has made a huge impact on our life and net worth! Plus, self managing properties has produced some stories to tell (they are funny now but not at the time).

@Juan Santos  Since Boone and surrounding areas are 3,300 feet to 4,400 feet in elevation, our summers are 10 to 15 degrees cooler than the rest of North Carolina in the summer.  Our average temperatures are June - 75, July - 77, August - 76, September - 71.  It barely gets above 82 degrees in the summer.  Many houses (like mine) don't have or need air conditioning.  We just have the cool mountain breeze and ceiling fans.  That saves on electricity costs in the summer.

My house has propane heat and stove.  I get a price lock on propane for the winter and it gets filled on a regular schedule.  There are two main propane suppliers that I know of up here - G&B Energy and Blue Ridge Energy. 

We also have a wood stove for supplemental heat in the winter.

This past winter we had very little snow.  My driveway didn't need plowing or shoveling all winter.

Trash pick up is expensive and most people do not have it except the STR and student apartment housing. Most people bring trash and recycling to the waste transfer stations around Watauga County. I believe I received a quote for $110 a month or quarter. I forget the exact amount but trash pick up is expensive.

@Jesse Wood

You saw our local Boone meet up thread. They met last month. I was not able to join in but I hope to next time. We moved the communication to a group text app. Contact Tristan S to see about getting joined. And try to attend during the next meet up (not scheduled yet).

@Ryan Warrenburg @Tristan S.

If you do meet tonight I hope it goes well.

I found out that STR in Vilas sold.

Here is how it went down:

had 20 showings in the first 24hrs, 3 offers. One was $7,000 over asking! Appraisal has been done, inspections are finished, just waiting on closing date of August 11th.

Things do go fast up here.

For our 3-plex + 1 it was listed this past Monday afternoon and we did a drive by Tuesday morning and put our offer in 9am Tuesday.

We are getting to know local bankers. So I can share that info with you all. Local rates seem to be 20% down, 20 yrs, 3.6% or 25% down, 30 yrs, @4%.

Christopher

@Ryan Warrenburg and the rest of the Boone REI crew.

We did our walk through of the 4-plex (3+1) today and it was great - In great shape, great location close to downtown, and it seems like great tenants.  I also had a local friend from the mountain rescue team who does renovation construction come along with us during the walk through.  Home inspection is set for next Wednesday.  Earnest money into seller's agent.  I'm excited about it.   That being said, it is our first purchase of a rental so it's a little overwhelming as well.  Our first LTR was our converted past residence.  I have to say that our (Okay, my business partner = wife) timing was quick and right on.  It seems things go quickly up here.  If you think it is a prospect jump on getting a contract and then dive down into the finer details.  After a year up here we have learned along the way up to the scary ride we took this week of getting it under contract just as it came onto the market.

I am trying to get that Vilas STR property info for you all. I don't see it on the MLS.

About Todd - Disclosure- I have not done the research yet. I do get the impression that the West Jefferson, NC area is blooming. Plus, they are making easy access to West Jefferson by expanding route 221 North. Something to look at all up and down there. I don't know if any of that is having an impact on Todd... or may do so in the future. Something to think about when a property doesn't have a great rental history but is in a growing area. We don't do STR yet but location, access to fun places, and beautiful or peaceful view/surroundings can add up points for an under producing prop. Check out the bike path (Railroad Grade Road) and areas around Todd. My wife, daughters and friends road bike up there a lot. On a weekend nice day I think there are a lot of cyclists on it. Something you could cater to with a STR there - Locked road bike storage, bike wash, hot tub, etc...)

Let me know when your next meet up is and I hope to join.  This has been my more interactive BP post conversation ever.   Can't wait to meet in person.  Tristan set up the FB group but as I told him I'm dark on FB.  I've never had a personal account/never will.  So contact me via PM or email. 

@Adam Payne

Even though I can’t make it this week, the meet up won’t be all APP grads. I guess I’ll represent the Northern States. I grew up in New Hampshire and my film school college was in Massachusetts. I just love it up here in the mountains like everyone else. The small community mountain culture is great. I truly enjoy being a member of the Linville Central Rescue Squad mountain rescue team and helping people lost or injured out in the wilderness.

I think others forums have mentioned that Boone has strong rental opportunities for both LTR and STR. LTR for the APP students and young employees, and STR for weekend get aways. I remember reading other BPer's mention that they get a lot of last minute, short 1 or 2 night bookings from last weekend getaway seekers saying "hey, let's go to Boone this weekend." We don't have a STR yet but our primary residence now in Vilas will convert to a great STR one day (cabin ext, updated int, open floor plan with loft and enclosed master BR upstairs, large covered front deck with swing and dining table, looking out over a valley, 8 mins to downtown). I would just need to throw a hot tub on the back porch. Someday we'll convert it when we find our dream primary residence here in Boone.

I believe there is a STR property with a rental history on the market in Vilas. I'll see if I can look it up for you guys.

@Eric Nelson @Daniel Jones @Ryan Warrenburg @Tristan S.

I'm glad you guys are meeting on Friday.  I really wanted to join in if I didn't have this Virginia family event weekend.  Next time.

I could use some local referrals if any of you know of any.  We put a contract on a Boone 4-unit muli-family this morning.  Can anyone recommend a home inspector and local Boone, NC bank?  We won't use the home inspector that did the home inspection for our Vilas primary residence.  I have bankers down in Winston-Salem I am talking with but I was also thinking of talking to a local Boone, NC bank.  It would be good to start a banker relationship up here and they may want to keep this new loan (and hopefully many others) in their portfolio of loans.  I can definitely find the local bankers, I just didn't know if any of you had a contact that worked well. 

We are excited about the multi-family contract.  It would be our first one.  There is still a lot of research ahead.

Thanks for any home inspector referrals and/or local banker.  Have a great meet up on Fri.

Christopher

Hey guys,

Yes, I was traveling for work and a family camping trip in Indiana. Sorry I didn't have my BP login and my laptop didn't have it saved in keychain. I'll update that so it works when I travel. 

I, unfortunately, am leaving Friday morning to travel to Virginia. I have a family reunion starting Friday, 7/24 until Tuesday, 7/28.  I then have a video shoot Friday, 7/31.  If you would like to go ahead and meet this Friday without me I understand.  I appreciate Tristan for working this out.  

I would definitely try to make future meetings.  As a small business owner in the video production field, scheduling last minute is usually best for me.  

Keep me updated and I'll respond quicker next time.

Tristan,

My wife and I are new investors but we are looking to grow and invest in more properties.

We moved to from Winston-Salem to Vilas, NC (9min to downtown Boone) in June of 2019. We bought a house here in Vilas and at the same time we kept our Advance, NC (near Winston-Salem) single family house as our first long term rental. We currently have a lot of equity still in that house as well as an unused HELOC on it. We are currently looking to purchase more properties for either LTR or STR.

We would be open to meeting with you and any other investors in the area to share ideas.  Our summer is filled with a lot of travel and I operate a video production company and travel to video shoots around the area and U.S.  Feel free to get in touch and we'll work something out.  We do love life in Boone at 3,400 feet elevation and 10-15 degrees cooler than the rest of NC.  Even though we are in our 50's, we still are very active in all the hiking, climbing, and mountain biking activities around here.

Christopher 

Willow Tree Property Group

Apex Video Productions

My wife and I are applying for a 100K HELOC (Home Equity Line of Credit) as a potential funding source for down payments/Rehab costs. We have not purchased any buy, rehab, and hold properties yet, but that is our goal. We applied to our credit union that we bank at and were approved for the 100K @ Prime - 0.25% with a balance repayment of 1% of the loan balance monthly. My question is whether a 1% of the loan balance is high, normal. Would a 1% monthly payment of loan balance be a good or bad thing? Thanks for any advise.

Christopher Brown