All Forum Posts by: Eric H.

I am about to refinance my primary mortgage from 3.75% down to 2.875% and am considering doing a cash out refinance to pay off a rental I have with a 5.875% rate with $57k left on the mortgage. Crunching the numbers it looks like my primary mortgage payment will go up about $140 while I will drop the rental payment of $345 for a net increase in cashflow of about $200 per month. My rental is in my name and not in an LLC.

Think I should do this or just refinance the primary and drop my primary mortgage payment by $100 and leave the rental leveraged?

 No they are keeping accounting. I like to keep my own records as well since I have multiple properties and just wasn't sure if best practice was to record when the rent hit my bank account or when they paid the PM.  Thanks!

 Yeah that makes sense. I'll start doing that.

I use a property management company and they receive rent at the beginning of the month but don't disburse it to me until a few weeks later.

For my bookkeeping would I want to record the rental income when I actually receive it or when the tenant pays the property management company?

I signed a purchase agreement for a property about a month ago and am feeling a little uneasy about continuing with the purchase in this environment.  I just heard from my employer that they may start laying us off in the next month or so if things don't improve.  I also have not received rent from my tenants in my other rental and don't know if they will be able to pay in the near future.

I kind of feel like I should hold on to cash for now until things improve.

On the purchase agreement it says closing will take place on or before April 11th which won't happen so can I back out of the agreement after April 11th and get my escrow money back?

I'm wondering how you determine the depreciation on a rental.

Let's say you buy a property that was just rehabbed and buy it for $100k and it gets appraised for $100k.

You look at the tax assessment and it says the land is worth $10k and the improvements is worth $50k.

When you depreciate the value of the property would you do $100k - $10k = $90k or would you scale up the land value with the new appraised value?

So on the assessment it shows 1/5 of the value is land originally so with the new appraised value and purchase price would you assume the land is worth $20k now and the property $80k? Therefore depreciating $80k?

If you don't have an LLC set up and are using an umbrella policy to protect yourself from liability do you want a policy limit greater than or equal to the amount of equity you have in your properties or greater than or equal to the property values?

Let's say you own 10 houses worth 200k each which equals 2 million. You only have 40k equity in each which is 400k equity. Let's ignore other assets for this example.

Would you want an umbrella policy covering 500k or 2 million?

I currently have a 15 year mortgage at 3.75% on my primary mortgage and am 3 years into paying the mortgage down.  I am considering refinancing to a 30 year mortgage in order to lower my payment and increase my available cash for investing.  The 30 year mortgage will be a higher interest rate ~4% but my monthly payment will go down by $700 - $800 and I will be investing all the extra cash flow.  Another plus of refinancing is in the event that my wife or I lose our jobs in the near future then we have $700 to $800 less a month in that we have to worry about.  With either mortgage we don't plan on riding out the entire loan and in 5-8 years will probably start hammering the balance down.

What is everyone's opinion on this?  Would you refinance if you were in my shoes or keep the 15 year mortgage?

I am saving up for my next property and I hate having money sit in a savings or money market account so am thinking I would invest it as I save. I was thinking of going with a "permanent portfolio" which is:

25% Stocks

25% Long Term Bonds

25% Short Term Bonds

25% Gold

The premise of this portfolio is that whatever economic cycle you are in you have assets that are negatively correlated so when one asset or assets are crashing there is another or others that are doing well.

What does everyone else do with their down payments as they save? Thoughts on utilizing the above vs just using savings or money market?

I just got a letter in the mail from the city saying a permit application has expired for my primary residence and I have to pay a fee to reinstate the permit and get an inspection.

I pulled the permit info and it looks like when the house was built in 2014 the builders never got the AC unit inspected after install.  The permit application then expired and the city just noticed now as they are about to roll everything into a new system.  I am the second owner of the house.

I called the city and they said that this issue follows the address and not the owner of the house at the tine so I have to pay the reinstatement fee for the application, then pay for the application, then pay for an inspection.

Does this seem right?  Shouldn't this have been caught when I was closing on the house?