All Forum Posts by: David Lao

I am strongly considering buying rentals in Mobile, Alabama. Do any of you have recommendations for licensed contractors? Realtors? Lenders on homes worth under 100k? TIA. 

@Andrew Street@Andrew Street @Carolyn Fuller @John Underwood @Nathan Gesner @Alex Papai @Joshua Kitlas

Thank you all so much for your feedback! This question that I asked is a part of my due diligence. I'm erring on the side of caution as you all recommended and am thinking long-term.

I'm looking into getting a short-term rental property (AirBnB) in the next 1-3 months.

According to Nashville's website (https://www.nashville.gov/depa...) "Short Term Rental Property operators are required to post a picture of their current permit to all listings online."  However, I see a lot of Nashville listings that don't post the permits on the listings.  To what extent does this get enforced? 

I am also wondering how well other STR rules get enforced in other cities, like Las Vegas, NV. Do you operate a STRP? What are your thoughts?

Thanks Chris for the reply, and the goal is tax efficiency (for example, so that a spouses's W2 would have little-to-no federal income tax until retirement). I thought about these multi-million syndication deals before, and probably have a surface level understanding of them compared to you. Although being a limited partner on a large syndication could lead to a lot of depreciation in the beginning, a lot of these syndications have exit strategies that don't involve 1031s (at least as far as I understand), so the depreciation usually gets recaptured in a few years when the property is sold. There's still the time-value of money aspect benefit, but I was looking into these non-syndication deals where I'd have full control of deferring taxes via 1031s until death (assuming 1031s still exist in the future). For this reason, I find that the compounding effect for syndications is inferior. I definitely have the impression that being an LP in a syndication would be the path of least resistance though. Please feel free to tell me that I'm crazy and disagree with everything that I wrote. :P

 I was hoping my question would lead to an interesting thread, haha. So based on what you wrote, 2.75M of improvement value can wipe out 100K of taxable income (assumptions: RE professional designation, net rental income of zero excluding depreciation, & "straight-line" depreciation over 27.5 years). Does that sound about right to you? Thumbs up if you agree, or comment if you disagree~

For this thought exercise, let's assume the RE professional requirement has been met, and that the net rental income (excluding depreciation) equals $0.

Isn't 100K of gross taxable income less 30K of depreciation equal to 70K of taxable income (i.e., 100K-30K=70K)? 

Going back to the original question, "What value of real estate holdings would he need to have enough depreciation to offset $100,000 of gross income (assuming he does not buy commercial real estate)?", 30K of depreciation (assuming the depreciation is not front-loaded via cost segregation), could be obtained from 825K of improvement value (or 1.18M of real estate investments assuming a 70% improvement value). This seems unusually low, but maybe I misunderstood. Thoughts?

"Special Allowance for Rental Real Estate Activities

Active participation. If you actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities."

What does this mean? What's the difference between "nonpassive" and active (W2) income? Is this saying that there are special cases in which up to $25,000 of passive losses can be used to deduct from a W2 income?

 Very simply, yes. There are tables out there that can guide you on the number of years it would take you to break even from the additional points (and decreased interest rate) that you choose to pay when taking out the loan.