All Forum Posts by: Dan Cournoyer

Hi everyone,

I have a client that has a duplex rental in California. Her property manager has been submitting nonresident withholding payments to CA as required by law. We just filed her 2018 CA tax return and she received a refund for the full amount because (like most rentals) she had a taxable loss for the first year.

We expect taxable losses for a number of years so we filed a waiver request. It was rejected because she technically doesnt meet any of the waiver reasons. The one we tried was "taxpayer makes timely quarterly estimated tax payments" but she actually hasn't made any estimates because she hasn't needed to. I'm thinking of filing this waiver request again and either checking the "other" box and explaining this or having my client pay a Q4 payment of $10 and then checking the box for timely estimates again. I tried calling and the rep said both of those options are possible but could not confirm whether or not it would be approved. 

Note: my client cannot use exemption A because she has not filed in CA for 2 years. She would need to wait until this time next year to use that reason code.

Has anyone taken the approach of paying $10 estimates each quarter rather than thousands for the year? A free $40 loan from my client to CA seems like a better option than a few thousand.

Can we check two boxes at the same time?

Any other suggestions?

Thank you!

Dan

I've had great experiences with Jewett, haven't dealt with anyone else yet

Hi everyone,

I just purchased a duplex in Grand Rapids, MI. The norm in the area for multifamily units is for tenants to pay all utilities except water. Because of this most duplexes have one water meter and the owner pays the bill, approximately $600-$800 for the year total (both units combined). My question for you is should I spend a small amount of money to put in a new meter (assume $600) and attempt to put water on my tenants?

I continue to go back to my theory that you only need to convince one potential tenant (2 in the case of a duplex) that it’s worth renting. Also, it’s easy to tell potential tenants they pay all utilities, when comparing to other places it’s not a noticeable difference in my eyes. Maybe some will be turned away but I wouldn’t think all. Even an extra week or two of vacancy would be worth it if I can get rid of the water bills.

Thoughts? Thanks!!

Hey Pete,

I only have experience in GR and Muskegon. If you pick the right spots the odds of BRRR-ing in my experience is much higher in Muskegon if you are looking for a 6 month refi. If you're attempting to BRRR after a couple years the history of strong appreciation in GR made it much easier to BRRRR. You need to be much more careful in Muskegon with the area you select to buy in compared to GR. GR is undoubtedly a stronger investment the past few years but Muskegon is on the rise. It will be very interesting to see how both locations play out over the next 2, 5, and 10 year periods. I cant speak to Kalamazoo or other areas but hopefully that helps. Best of luck!

Dan

I'd recommend continuing to try to ask.  If you find yourself with no rent payment and an empty house in March, be happy you have those tenants out because they aren't high quality if they skip out on rent.  You can also deduct unpaid rent from their security deposit if you document it correctly (at least in my state you can).  Be glad you have your house back and stay positive on the next move!

@Caleb Heimsoth I know the Fannie rules. I’m wondering if anyone knows why Fannie rules go from 80% down to 75% for purchase vs refi. And I’m asking if anyone has found a lender who will offer 80% on a refi, maybe a portfolio lender.

When purchasing investment properties I've found lenders will allow 80% and in some cases 85% loan on the purchase price. I'm closing on one next week using 80% loan. My next property I'm hoping to do a BRRRR - purchase in cash and then refinance after 6 months. I just learned that the amount of loan on a 6 month cash out refi is only 75%. Does anyone know why it's lower? Have you used a lender that allows 80% or more on a 6 month cash out refi? Have I not been listening close enough to the podcast? I never heard them mention this. Thanks!

agree with everyone else, however if the principal paydown is large compared to your negative cash flow then I think it may make sense to consider holding it after refi. I definitely think refi and buy another would be my move but you need to consider your comfortability with leverage

Drake - welcome!  I started investing last February so I'm also a newbie.  I wish I could have house hacked, you'll be in the best position to succeed and it sounds like you're taking all the right steps.  I'd recommend attending the Friday morning RPOA breakfasts at Cheshire Kitchen, the free conference in February, or the Monday nights at Buffalo Wild Wings.  These types of events are filled with other investors sharing their best tips regularly, along with industry experts like lenders, contractors, etc.  I've learned the most from mentors and that group, it's also a great place to stand up weekly and ask whatever you are hung up on that week.  Best of luck and message me if you'd like to join me at one of the Friday morning breakfasts.

Hi @Alicia S., you're asking the right first question.  I've included a BiggerPockets link below that explains the basics of house hacking.  Talking with a CPA is an absolute must, I think a financial advisor would be helpful too but not completely necessary if the CPA is also financially sauvy.  I'd expect any CPA who focuses on real estate and/or is an investor themself would be able to cover all your questions and provide some really valuable guidance.  I'm a CPA in Grand Rapids, feel free to message me, I'd love to give some free advice and hear more about your plans.  Best of luck!

https://www.biggerpockets.com/renewsblog/2016/02/21/tax-implications-house-hacking/