All Forum Posts by: Zeb B.

I have 2 houses and a duplex out of state that I own and manage myself. I usually visit each property 1-2 times per year. Long term, responsible tenants really help when self managing an out of state property.

I'm still on my first set of tenants on two of my out of state units (6 years and 5 years). I have turned over the other two out of state units a few times over the years. If you have to turn your units over every year, or if your property does not attract responsible tenants, it might be hard to justify the hassle of managing them yourself.

Managing the properties is pretty easy when you are not turning them over to new tenants. I make sure that prospective tenants know that when there is a maintenance issue they will need to to give the service tech access to the house. When a tenant calls me with a plumbing issue, I call a local plumber and have them coordinate with the tenant on service call timing.

When it's time to turn the place over, I advertise it for rent for about 10 days before I start showing the property. Anyone replying to the ad gets an emailed questionnaire to pre-screen them. After I have a list of prescreened prospective tenants, I set up 6-10 appointments for showings on a Saturday. I fly or make the long drive out to the property and show it 6-10 times on a Saturday. By the end of the weekend I usually have 3-6 applications. I do my screening and approve a tenant. I usually go back to the property for a weekend to check out the property after the outgoing tenant moves out and to hand over the keys to the new tenant.

Sometimes I end up paying through the nose to get simple issues fixed because I can't be on site to deal with them, but it's still cheaper than paying a property manager for all the months when there are no issues. I make sure I'm very responsive to issues so tenants want to stick around and are willing to be accommodating to the fact that I can't run over there and let the service techs into the unit myself.

I have about $50,000 in unrealized stock market losses in my taxable brokerage account. I'm considering selling some of these securities for tax loss harvesting. I don't plan to change my exposure to equities, the proceeds from the sales would be reinvested in similar manner (without violating wash sale rules).

My question is, if I harvest $50,000 in losses this year, will that loss reduce my income available to qualify for conventional mortgages? (I understand that only $3000 of these losses could be used to offset income other than capital gains this year, and that I would have to carry forward other losses for use in future years.)

I'm not currently planning on taking out any more mortgages in the near future, but I don't want to box myself in to a corner in case an opportunity to buy or refinance a property arises.

I have about $50,000 in unrealized stock market losses in my taxable brokerage account. I'm considering selling some of these securities for tax loss harvesting. I don't plan to change my exposure to equities, the proceeds from the sales would be reinvested in similar manner (without violating wash sale rules). 

My question is, if I harvest $50,000 in losses this year, will that loss reduce my income available to qualify for conventional mortgages? I'm not currently planning on taking out any more mortgages in the near future, but I don't want to box myself in to a corner in case an opportunity to buy or refinance a property arises.

Thanks for the tips everyone. I've started watermarking my photos.

I have a few tenants moving out, so I am getting ready to list a few single family homes for rent. Last year I had scammers download the photos and property info I had posted on Zillow, Apartments.com etc. The scammers then created their own ads on Zillow, Craigslist and Apartments.com. When I found out about the duplicate ads, I was able to contact the websites and have them taken down, but it was whack-a-mole for several weeks. I later found out from a police report that a prospective tenant who I never had any interaction with lost about $5,000 to one of these scams. With housing in short supply, there are apparently plenty of people willing to wire thousands of dollars to someone they have never met, without any evidence that the person they are wiring the money to has access to or any association with the property.

These types of scams are very common in the area, and I am wondering what "best practices" people use to avoid having their properties used by a third party to scam a prospective tenant.

I am planning to add a watermark to my listing photos with an email address. Any other ideas?

The fees are more than 3%. The platforms charge both the hosts and the guests. In reality it doesn't matter how the platforms split the fees between the guests and the hosts, ALL of the fees come out of the guests pockets and reduce the income to the hosts. For an example, the breakdown from one of my guests:

Guest paid
$206 x 3 nights = $618.00
Cleaning fee = $149.00
Guest service fee = $108.28
Occupancy taxes = $70.02
Total (USD) = $945.30

Host payout
3 nights room fee = $618.00 

Cleaning fee = $149.00
Host service fee (3.0%) = -$23.01
Total (USD) = $743.99

Guest pays $945, of which $70 goes to taxes. Of the $875 remaining, Airbnb collects $108 guest service fee and $23 host service fee = $131 or about 15% of the pre-tax booking amount. VRBO is slightly cheaper but still well above 10%

For relatively small expenses I think that is fine. The key is to document the expense at the time it happens. You want contemporary records that substantiate these types of things, you don't want to be "remembering" them at the time of the audit.

Contemporary Records means records that are prepared or generated at the same time, or immediately after, the event.

I send myself an email with the details so I have some documentation with a time stamp on it, but there are no hard and fast rules about how you have to document. It is important that the documentation be generated near the time of the transaction rather than a year later. Transactions over $600 have other requirements.

If the 1940s wiring is original then it is definitely due for an upgrade. A buyer's inspection will likely flag knob and tube wiring as a fire hazard. If the wiring is nonmetallic cable (romex - plastic looking outside layer of insulation) and has a ground wire (3rd wire, bare copper) it might be fine to keep. If the insulation on the wires looks like cloth impregnated with black tar it is past it's service life. 

If you are tearing down the plaster/drywall/paneling on the walls and exposing the studs and the plumbing is old (not copper for the supply pipes or PVC/ABS for the sewer pipes) I would update the piping. I don't do flips though, so your cost/benefit analysis might be different than mine as a buy/hold investor. 

Fishing new wires and pipes through existing walls is a huge expensive job. Much less labor intensive if the walls are down to just studs.

I found the Nolo book "Every Landlord's Tax Deduction Guide" to be a good starting point. You can also muddle though the instructions for IRS form 1040 Schedule E and IRS Form 4562. Make sure you understand how to depreciate the house (it is not optional!). It's probably worthwhile to have someone who understands rental property taxes to do or look over your taxes the first year. If you get started out right it is not that hard to do the taxes in subsequent years unless you are adding/subtracting rental properties.

Start out planning to buy one per year and see how it goes. If you wind up with enough cash and time to do more than that some year then go for it. I'm not sure what your time horizon is, but I rented out my first house 10 years ago and have 8 now and am happy with my progress. In hindsight being a little more aggressive probably would have been more lucrative, but being too aggressive has it's own risks especially early in your career. If you buy one per year, in 10 years you will likely be in a pretty good financial position.