All Forum Posts by: Chris Drury

Hi Alex
I am also in the DC area and just found out about biggerpockets. I have a rental house (my old house) but am looking at buying additional property at some time.

I am in a little different boat and have the near perfect credit, substantial w2 employment that might make me an attractive partner to lenders.

Thanks
-Chris

Hi All
It's nice to meet some locals. I live in Rockville MD and have been mainly looking at places in the immediate vicinity.

$225k properties that rent for $1800 but are in stable areas near metro. Problem seem (to me) that coming up with a 20% down is difficult at best. The DMV average prices are Typically much higher so I can see why it can be discouraging in and around the city.

I would be interested in partnering with some locals around here even if a small scale. (Flip, rental, ect).

Thank you for the reply Jeremiah. I haven't run the numbers completely on what prime rates would be for me to start being cash flow negative.

I am at interest only 3.25% 5/1 ARM (100% financing) that has definitely reset since it was closed in 2005. The rates are low enough they haven't affected my baseline yet.

$280k 80% heloc (1st) for about $812/mo
$80k 20% heloc (2nd) for about $212/mo

Figure insurance @$900, taxes are $2800/yr

Property is rented to a nice lady for the next 4yrs @ $2000 per month.

Not bad for cash flow but only paying interest at this point.
Spent about 10k for HVAC and repairs this year though.

Not sure this counts as "investing"

Right now I am just trying to pay off as much of my other student/auto loans (their rates are higher than 3.25% anyway) so when rates start to jump I have options.

I think it's too late to sequester this property into an LLC or something since I already personally guaranteed it.

Thank you for the quick reply. (And I really like the site so far so will definitely try the new member section)
AGI is closer to 175k so looks like I might be out of luck. Might be able to set up my wife as primary investor? She is stay at home mom right now. (Used to be attorney)
She doesn't have any income to offset so probably not an option. Plus 3 kids under 6 makes her free time nearly zero.

My non-professional status makes the passive loss (and any write-offs) most likely not applicable to me. I am son of a CPA but he is now retired and was not well versed in real estate.

Many thanks for your assistance. This is new to me but I love learning.

Looking for a "sanity check" from the expert community.

Wife and I purchased a home in 2005 for $360k with one of those wonderful 80/20 interest only heloc deals and I am paying about $1300 per month (3.25%) plus taxes/insurance. 5/1 ARM

Bubble burst and now property is worth about $270k and slowly recovering.

2011 3rd baby came and needed more space so I found a great place nearby and locked in 30yr 4.25% fixed and moved in. I figured that if the rates rose I would at least be able to keep my new house.

I have looked at bank for options for refinancing my old house (now a rental) but the lenders don't offer any harp programs for HELOC loans. Plus it is no longer primary residence. Since I can't lock in the rate I am basically sitting in a ticking time bomb and am at mercy of rate increase. No one will refinance an underwater property.

Only good side is that I am clearing about $500 per month in rental profit (when things don't break) since I am only paying interest. I have been using that to pay off my car loans and student loans and make extra payments on my new house.

I have been speaking with advisors and have been told not bother trying to pay down the rental house principal since I would be "throwing good money after bad". 2 options:

1. Short sale or foreclose the rental in preparation for a rate increase. Seems like that would destroy my perfect credit and I would lose out on my potential rental profits. I am also worried about deficiency judgements. Seems stupid to me.

2. Continue to ride this out and see if the housing values recover before the interest rates jump. Continue paying off my other debts and leaving this "bad debt" for last.

I am betting on #2 and looking at opportunities to add additional rental properties that I can tap into equity or at least "dollar cost average" my portfolio. (3 or 4 winners to offset the one loser)

Any thoughts from the experienced community? Are there any programs or suggestions I am missing out on?

Btw I am really enjoying the rental process. I have a great team of folks for repairs when needed and found that our local area has a strong rental market.

Thanks in advance.

Hi all
I have a previous house (now rental) that is quite underwater. I paid about 10k in repair costs this year for a new HVAC and the basement had to be excavated due to the plumbing collapsing under the house. Yeah, fun...

Last few years I have been able to largely break even given the mortgage payments and taxes were about equal to the rental income. This year I was about to post a profit before all these repairs.

My question is whether I can deduct these expenses. I would think I would have to depreciate the HVAC purchase over 15yrs or so and the plumbing expenses surely would make this year a loss.

As I read the tax codes I believe I need to be a real estate professional (not my full time job) to be able to report as a loss.

It would be great to deduct these expenses this year if possible. Any suggestions for maximizing the tax benefits of rental property for "non professionals"?