All Forum Posts by: Gordon Cai

Quote from @Ashish Acharya:

If it is on residential property and is more than 2500, you will probably have to capitalize and depreciate it. 

How would the depreciation timeline work? Like how many years can I depreciate a HVAC system for? Per IRS it says 27.5 years but does that assume if you are purchasing a new single family rental investment and the depreciation needs to match the deprecation of the home? 

Lets say if I have 15 years of depreciation in a home left and I installed a new HVAC, can i depreciate the new HVAC system over 15 years or does it have to be 27.5 (a lifetime that exceeds the rental property)?

Quote from @Doug Spence:

@Gordon Cai If you aren't already househacking, I would start there. If you're already doing that, then I'm a big advocate for investing out of state. I live in San Diego, but I've purchased 3 properties in Milwaukee, and done 2 BRRRRs and 2 Flips in Oklahoma. 

You mentioned a downside of investing out of state is that you "won't be able to learn as much about renovations". Unless your goal is to be an expert in learning renovations, I don't think you need to focus on that. Let the experts handle that while you focus on building wealth, acquiring more properties, and spending time with family/friends, hobbies, or however you like to spend your time. 

Keep us updated on your journey, and let me know if I can help with anything. 

Hey Doug. Thank you for your input. My concern regarding renovations is how it would impact the underwriting process for a potential deal. Due to lack of experience, I’m worried my perception of a “conservative renovation budget” or a “reasonable renovation timeline” is way off. By not being at the property/reviewing the work done on the property periodically, do you think that it would significantly impact my growth towards being able to come up with a good ballpark renovation budget/timeline? Or is “being on-site” not a big deal and if I put in the hours reaching out to contractors/local investors, I would know enough to generally underwrite.

@Daniel McDonald - Really appreciate the insight! From your 2 deals, was there any heavy renovations needed? Did you feel like you would have missed an important renovation detail/issue or project management learning opportunity if your 2 deals were OOS? My main concern is the renovation. I'm worried that by trying to run before I can walk I end up hurting myself and taking longer to the end goal of being able to effectively invest OOS. 

Hey BP. I'm trying to get my first deal done but can’t decide whether to start off in-state or out of state. My primary goal for my first deal is to learn as much as I can but due to how expensive homes are in California, it’s hard to learn without putting too much on the table. I have read Long-Distance Real Estate Investing by David Greene, but I’m still worried that by investing out of state I wouldn’t be able to learn as much about renovations vs in state.

If my end goal is to invest out of state, should I just do that to begin with? Will investing out of state negatively impact the learn experience for my first deal, specifically the renovation aspect?