All Forum Posts by: Derek B.

I am trying to understand the safe harbors as it relates to expensing rather than depreciating items.  I've read some of the forums and blog posts, and everyone's examples always seem to be slightly different than mine and I want to make sure I approach this correctly.

Under SHST, can I expense the cost of an improvement (in this case, a new water heater) fully in the year it's placed into service?  The only other assumption I would want to clarify is regarding annual expenses less than 2% of the unadjusted basis - I assume this is for maintenance and repair expenses, not the sum of all expenses (interest, taxes, 27.5 year depreciation, etc)?

Thanks for any guidance you all can offer.

@Account Closed

Start here before making a trip downtown:

http://rdlxweb.co.guilford.nc.us/guilfordNameSearch.php

@Josh Wright

Hurricane Floyd. Devastated the eastern part of the state. I remember it all too well.  

When he gives an expense breakdown you can make a better judgement. Knowing that they were rehabbed in 99 should prompt more digging imo. Just make sure you know how soon you will be hitting big capex spend on these. If all of your appliances, water heaters and hvacs are 16 years old and throw in roof or two, you will quickly get into some big #s. That could be why he is selling?  

I know that geography really well. I suspect you would have very long term tenants who are relatively low maintenance. The big question is whether these places generate the return you need based on upcoming and current expenses. 

Please also run IRR calculations. ROI alone means nothing if you don't factor in your exit strategy.

@Josh Wright  welcome. 

Lots of questions that need to be answered to give any solid feedback, but I will start with a few:

What class properties are these?  How is the area/tenant base?

Deferred maintenance/capex?

A breakout of expenses?

Judging by the price point and total rent for that many doors, I assume this is strictly a CF play with little/no long term appreciation?

How old are these places?

@Ethan M.  good answers so far. One thing I would add is that tenants pay their own landscaping in an sfr here. That may be different than what you see in cali. Landlord will usually pay in multi, though i have seen some side by side duplexes where tenants pay/cut their own half. 

@Uriah D.

Fill me in. You noted in intro that owner wanted 12k down and at bottom you listed 8k cash needed. Which is it?  

Is that $700 rent for one unit or both combined?

Break out your expenses and you may get more detailed responses. 

Since this is a hold, what kind of repairs are needed?  Whats the capex situation look like?

Not a fan of condos, but I think we need more info to give a fair answer. 

PM me for a list of the people not to use. 

I have heard good things about Ray Barton at Triad Investors Realty.  

Some of my colleagues have used Karen Rittenhouse's company and have been pleased.   She is on the forums if you search her name. 

I personally haven't used either but do hear good things. 

Hopefully others will chime in. 

@Henri Meli

 Do you have a NC real estate license?  

@Account Closed  to clarify, are you asking:

1.  Are you looking for connections here on bp to network with people who are investing in condos and townhouses?

or

2.  Are you seeing the transactions take place and you want to know who is buying them all, owner occupied vs investor, etc - basically looking for data?

If you are looking for data, I would start on the county tax administration/property search website.  You can search sold properties and limit your results to price and date ranges, as well as land use.  That's probably the best place to get data without going to a paid source.  I think Durham's website is more robust than Orange, but they both have good info.

@Chris Martin  that makes more sense now.  

On that March 2015 D-T:

122 Wake Co - from your post above

144 Guilford

158 Mecklenburg

94 Forsyth

So yes, $552mil must have been a multi-state transaction.

@Chris Field  See Chris' post above mine to clarify the amount of leverage vs # of houses.