All Forum Posts by: Kenneth LaVoie

@Mindy Jensen - I've also messaged via the suggested link to offer my writing (I've written a book on B&H real estate investing, and contributed to "Real Estate Rewind", bigger pockets first "book".) Did you at least receive my message? Not looking for a yes or no until you're ready but just want to be sure it was received. 

Does anyone know of a calculator that will tell you how much you can pay for a property based on the 50% rule? The link I have to an old one is dead but I loved it. You put in 50% of gross income for expenses, then put in what you desired per door for cash flow. The calculator would then tell you what your maximum price for the building would be based on all cash. It was really handy to double check myself. 

This is the old link: http://www.escapesomewhere.com/cgi-bin/real_estate...

If anyone can come up with the formula, I'll make one in excel and share it. 

Hey thanks Suny, I just ordered 3 of those danged things! (bombs). I think we've already cleaned as much as we can, though we did NOT use Hydrogen Per. 

Thank you for these tidbits. I did NOT know that you couldn't encapsulate drywall. There is ONE thing we think might be part of the culprit. Two of the floors are original hardwood. Because of shrinkage, there are 3-5MM gaps between the flooring. We did have the floors refinished and 2-3 coats poly but do you think perhaps "routing out" andy debris in those cracks would be a good shot? Like a little metal awl or pick with a vacuum running. Time consuming but not much more than 2-3 hours at risk. 

I keep thinking of that Seinfeld episode with the body odor from the valet .... "It's the beast!"

We've always been able to get rid of ANY odor, eventually, no matter how bad, even if it meant refinishing floors with six coats of poly with vinyl flooring over it! But we have a 2 BR unit that some mentally ill people lived in before we bought the building. They had 5 cats. 

Here's what we ALREADY DID:

1. 2 hardwood floors, resanded, then before the 3 coats of poly were added, I brought in a backpack sprayer with bleach water. Then another with 2 different industrial odor removing agents (like odo ban and natures miracle I think). 

2. Sprayed 2-3 times with high volume backpack sprayer (removed baseboard covers and literally pressure sprayed each fin so it gleamed) Sprayed literally every crack and crevice with about every odor eliminating chemical known to man. 

3. Every surface, odor blocking primer, then 2 coats. 2 floors that had carpet, stripped down to wood floor, soaked like #1, 3-4 coats poly, luxury plank vinyl over that. 

4. 12-24 hours ozone machine

Still can smell it, especially on humid days. Not overwhelming any more, but unmistakable. Because cat urine is organic, will there come a day when it will finally go away on its own? There's not much left for us to do, and we've already put 16K into the apartment in renovations (4K was cleaning, disposal, and odor mitigation, believe it or not!)

Thanks for any tips, and quips and jokes welcome as well, haha!

Our longest (simple 2 BR apt) went 8 months. Mostly it was our screening standards. Rentals can go slower in the winter. Have you used Zillow? That site sends out your ad to 5-7 other places like hotpads, etc. so you'll get more coverage, and we've been finding 3 out of 4 come to us from that venue vs. craigslist now. Also, post a link to your craigslist ad so we can critique. 

Only twice. I'd LOVE to do it again for tax purposes. 1.) Woman drained her pension and gave us 25K down on 60K property. Was late with first payment and we owned it again after a miserable 18 month /$5,000 foreclosure process. 2.) Then I sold my biggest building to an out of state investor. was going to do 10% seller financing but bank wanted to put restrictions on how he could pay me so I sold him that building (11 unit) traditional and seller financed (100%) a 2 unit to get him more units under control for less money. Both were great deals for me, great deals for him. 

@Jeff S. - Thanks for reminding me! My wife and I are sort of scaling down, to leave a little more room in our lives but it does bring a host of tax issues, whereas if we stayed "aloft" a little more (i.e. kept our mortgages as long as possible, bought and renovated more properties) we would reduce that tax issue. It's a big decision reversing course but your short comment gave me something to think about. 

Here's what my understanding is, and what I do:

1. Rental income is NOT "earned" income so not one dollar of it can be used to fund retirement plan, so it has to be "converted" into schedule C or wage income of some sort that qualifies. 

2. My wife and I each have a solo 401K. I also own a schedule C web business, (LLC) she owns a schedule C RE management business (LLC). We're each sole owner of these two LLCs which has a benefit I'll get to in a minute.

3. Our rentals are owned by a 3rd LLC (schedule E's).

4. The properties pay my web business x dollars per year for web design, hosting, consultation, etc. The properties pay my wife's LLC x dollars per year for RE management. Then we fund our SOLO 401ks from this schedule C "income".

So the benefit to owning TWO LLCs is just that we don't have to do any payroll stuff. If we owned just the ONE, and I owned it, then we'd have extra work to do (941's, withholding, etc.) because my wife would be an employee. 

We did consult with John Hyre in Ohio who just warned us to be within the generally accepted amounts (i.e. don't pay my web business $50,000 for web hosting when the local market rate is $9.99 per month)

This is especially helpful when we sell a building. We sold 4 units this year and have a pretty sizeable cap gain and depreciation recap. By plowing most of it into our 401ks we avoid the big caveat: Going over x dollars per year in AGI and having to pay back $18,000 in ACA health insurance subsidies. Ouch. This brings tax planning to an entirely new level. 

PS: Keep in mind RE income is NOT subject to self employment tax but earned / wage / schedule C income IS. So depending on your tax situation you might not want to convert too much. We're literally doing it to avoid a ridiculous and unjust ACA penalty, which I'm hoping gets some rule changes next year. But for every dollar we convert into earned income, we have to pay 15.3% for SS/FICA. 

@Giovanni Isaksen - I am trying to get "jiggy" on doing an IRR on some recent sales I've made. I'm thinking of listing the dp and closing costs as min initial "in" then cash flow (pos and neg) as my "withdrawals" and one big capex contribution I made from my own savings as the one additional deposit, then the amount of my check at closing as my end point. Would this be right? And in the case of the capex would I just deducti it from the cash flow to make one lump decrease? (I'm thinking most IRR calcs in excel only have one column for that, not an in and out column separately, right?)