All Forum Posts by: Joseph Morell

@Chris Haydis Thanks for the kudos! I thought about using it for only the 20% down, but it seems I'd get more leverage/flexibility if I just paid cash outright, then had a great asset to borrow against! 

@Daniel Harnsberger the thought has crossed my mind, I just dont see people letting things go for less than retail, even if it is owner financed. Where in RVA are you investing? Like I mentioned, its one of the places I'm considering for #2!

@Cindy Bowman Well, I'm not actually in the area yet! Charlotte seems to have all the ingredients for a decent investment though! Are you looking to flip or buy and hold?

@Scott Nipp Are you investing locally in DFW? That's one of the areas on my radar, as I have some friends in Arlington (TX)

Hello All,

I just finished up my first year of investing. All in all it went well. My property is a 2 bedroom 2 bathroom condo in the DC suburbs. It took about 6 weeks to get rented, but my property manager did a great job, found great tenants and they have just renewed for another year lease.

This was originally purchased as my primary residence, so my invested capital isn't high. Percentage wise the return is decent (over 10% before tax benefits), but the cash flow isn't great, but it's in a great area with solid appreciation, so I think I'll hold on to it for the long term. 

Next year, my goal is to buy my next purpose bought rental property in Q1. This will give me my 2nd year of rental income on my w2, so hopefully whatever bank I use will count my rental income toward my DTI ratio!

So now for the questions! 

1. The condo fees are going up next year by 2.5%, should I try and raise the rent at the beginning of year 3 if the tenants choose to stay? I don't want to make them want to leave, but I'd like to keep my margin about the same.

2. Where to invest next? The high price of real estate means I'll almost certainly not be available to buy my next property locally. I'm looking at Richmond, VA and Charlotte, NC metro areas for my next property-anyone have any experience or thoughts on these two cities? Though I can't invest locally, I like the thought of being able to get to a place via car fairly easily.

3. Financing-Here is my thought for future financing: I take a cash loan from my 401k (for a $50 fee), pay cash for a property that I find, preferably with 25-30% equity, get a mortgage, pay myself back, and on to the next one. Do you think a bank would go for that? It seems better than saving and saving for a 20-25% down payment. 

4. Mobile Homes- Here in northern VA there are 2-3 mobile home parks, with the price for the units at 50-60K and renting for 1100-1200. Obviously there are pitfalls to every investment, but how does this sound? What sort of expenses go along with this type of property?

Thanks in advance, looking forward to year 2!

@Phillip Smith where were your properties located?

Thank you @Shanequa J. , @Dave Toelkes for the info and help. From the IRS docs and further research I've done this is how I understand it.

(Gross rents collected) - (all deductions) = net profit or loss .

And should there be a profit ( quick calculations show a loss ) I will be taxed on that.

Thanks again everyone! I'm looking forward to seeing what this year brings, tax wise!

Hey guys,

I'm sitting here pouring over my tax documents getting ready to drive them up to my CPA, and although I'm sure he will file them correctly, I was hoping to gain a better understanding of them before I file.

First question is how this side of my income will be taxed. Specifically, my property manager has listed income as the full amount of monthly rental income, and my expenses as the property management fee (9%). While I understand these two numbers, wouldn't my monthly mortgage come into play here? If I'm going to be taxed on the full amount of rent recieved, not Rent-Mortgage-Property Management, it's going to be darn hard to make any money in this business!

Second, my rental property is a condo, and it seems to be well published that I can deduct the condo fees as expenses, does this change since the condo fee provides some utilities? Would I be able to deduct a % vs the whole amount?

Third, the listing fee is not listed on the income/expense report. I emailed my property manager, and he told me that the listing fee is not listed, and neither is one month of income, to offset this fee.

Any help would be great! Overall 2013 went fine for my first year as a real estate investor, and I'm looking forward to purchasing more properties! Provided this tax situation doesn't eat up all my profits!

Thanks Again!
Joe

Jon Holdman "you buy investment properties with investor loans"....What kind of terms are you getting with these sort of loans in this day and age?

I bought a condo 2 years ago, lived in it, and now want to rent it out. It seems smart to form a LLC and get some income flowing through that, but THAT seems easier said than done.

The short question is this, why can't I use the profits from my current rental to form a LLC, buy another profitable rental property, repeat?

Ben Turner , just out of curiosity , what method did you use to finance this investment property? I'm trying to do some research as to what process is best for buying investment properties without jacking up my personal debt to income ratio.