All Forum Posts by: Daniel Rogers

@Yehoshua S.

Stessa is all you need, and it’s totally free for the accounting features. Changed my life! I was die hard with my homemade fancy excel trackers but it got out of hand once I got to two dozen doors. Went into Stessa and back filled a couple years worth of accounting. It lets you attach all of your receipts and invoices and spits them out at the end of the year as a zip file to go along with your tax report. Amazing free system that has changed everything for me. I used to put off my accounting for months at a time bc it was too painful, but now I happily knock it out very quickly once a month. It also gives you some really nice metrics so you can get more insight as to how you’re performing.

I tend to be pretty generous - but also cautious. A few of the times that this has happened with me, we just modified the lease to start those couple days earlier and didn’t charge so that we could establish a good first impression. But looking back, a higher percentage of those tenants than ones who stuck to the original lease are the kind of tenants who try to bend more rules down the road. Depending on the person, you open up the door to setting the wrong precedent to a tenant who might be the type of person who likes to take advantage of others - a precedent that they don’t HAVE to abide by what they agreed to on the lease.

@Raymond Singletary

I have to agree with the STESSA recommendation! I tried Quicken - I hated it. The interface is painfully outdated. For years I have been using my complicated excel sheets that I developed to provide analysis and track transactions, but it got to be too unwieldy.

Stessa makes it absolutely painless and cranks out all sorts of metrics for you so that you can view your performance from a variety of perspectives. You can attach documents (receipts etc) to individual transactions, and at the end of the year, it’ll spit out a tax document and a zip file with all of the receipts - making your EOY accounting nearly effortless and making your CPA very very happy.

I recently made the switch a week ago and spent three full days backfilling years’ worth of transactions, and it was so gratifying. It’s literally removed an ever present element of stress from always being behind on my accounting.

Also…it is FREE!

@Dave Foster

That’s what I was hoping to hear!

Next complication that hit me right after I posted...we owe $120k or so on it, I’m swagging (haven’t done the precise math quite yet) $50k or so of depreciation recapture that’ll be taxable. If it sells for say, $280k, and we buy a duplex for $160k, am I putting myself into a less than optimal situation, since I’m purchasing a property that costs less than what I’m selling, or is there some way to still pull this off and defer depreciation recapture?

Thanks again for the input!

I’m expecting an offer on a former primary residence that we are renting out. We paid $173k in 2012, expecting an offer of $280k. Because we are active duty military, my understanding is that since we lived in it 2+ of the last 15 years (+10 years for active duty military), the appreciation will not be taxable.

We are about to submit an offer on a duplex, and I’d like to use a 1031 exchange to avoid depreciation recapture but not use the 1031 for what should be tax-free depreciation. I know partial 1031 exchanges are a thing, but I don’t know if it’s an administrative nightmare or high-risk to differentiate what is being deferred...if that makes sense...

Has anyone had experience with this, and is this something that I can easily do? I haven’t had time to get with a 1031 facilitator or my CPA, since this idea only sprung to mind this evening...

Thanks!

So, we recently came into some cash and are in a good position to make some additional real estate moves...trying to pick everyone's brains for some advice!

Quick background - bought first house using VA Loan back in 2009 (currently active duty Navy) and second home using FHA in 2012. We're renting both out. Last year, we realized that only investing in homes that we live in first just won't get us to where we want to be, so we bought a property last summer, another early this year, first duplex two months ago, and we should be closing today on our second duplex! It's all coming together quite nicely, and thanks to all the great insight from this site and from many books, my standards for cash flow have gotten extremely high, and we're killing it on our COC for the most recent three properties.

Where we are now is...we just got a very nice cash payout from some complicated circumstances surrounding my wife's company being bought out and all retained employees getting huge retention bonuses. Details there don't matter, however what does matter is that we're about to bring home a sizable chunk of change in the next month. The ever-present question on this forum comes up, and that is...what to do with this money?! It's enough to cover down payments on two more properties similar to the ones that we have been buying, however we are contemplating paying off one of our duplexes (about a $95k loan) and take a quick break from purchasing to let our finances calm down and deal with a bunch of repairs and other extremely busy life circumstances that we have going on. The goal with paying it off would be to jump the mental hurdle of owning a property free and clear, start an LLC and transfer the title into that LLC, and then to have a property that we can HELOC against in order to have the flexibility to make cash offers so that we can begin making LLC purchases more easily rather than titling in our own names.

I'm certain that plenty here would advise to continue rolling the money into new properties, rather than to pay one down, since owning the house free and clear would provide about half the cash flow that we could get from down payments on two new properties, however my wife (in particular) and I both like the idea of simply owning one property outright and then using the above strategy moving forward. I'm not looking to nit-pick the finer details of maximizing ROI so much as I am looking to hear from people who have used this strategy and to find out the up/down-sides of it.

Thanks for the thoughts!

Have you considered splitting the difference and paying down 10%? That’s put you in the green monthly along with free “rent” for yourself and help rebuild cash reserves for your next property. You’re definitely right about the [unnecessarily confusing] multiple VA loan situation. Lots of banks won’t even attempt to do a second one, because they simply don’t understand it. That screwed us on our second home, and we were too naive and simply believed the lender...ended up doing an FHA to go low down payment but got burned with PMI. We were fortunate that it still worked out to a decent cash flow in the end, but it could have just as easily gone the other way, since we weren’t really crunching those numbers like we should have. Also concur in regards to just getting your feet wet. Few learning methods are as good as taking the plunge and watching the numbers sort themselves out as time goes by and problems arise! Also, are you familiar with the IRRRL VA refinance? I did that once when interest rates dropped. It’s a pretty easy VA-to-VA refinance program that you can use to spread your loan back out and increase cash flow down the road after you’ve built up that equity, so you can start with low/no down payment to keep your cash handy and ready to make another deal with, and after a few years, if it makes sense, refinance the VA loan to drop your payments and boost your cash flow.

Ryan, I did the same thing but with a SFH. The way I like to look at it (maybe just to make myself feel better?) is that you’re paying $50/mo for rent, and it’s hard for me to consider that a loss at all. When you move out, you’ll have put down hardly any of your own cash towards the actual investment value of the house, and yet you’ll be reeling in some good cash flow (depends on what it’ll flow once you move out, of course), resulting in a killer cash on cash investment...AND it’ll leave that 20% down payment available for you to make moves on another investment property substantially sooner, leaving you with two properties instead of one. The downside to that VA loan is that you can’t use it on a pure investment property, so using it on one like you’re looking at is good in my mind, since wherever you move next, you may not find a good MF property to use it on. Plus, I believe that you can refinance into a conventional later on if you pay down enough equity, freeing up that VA to be used again!