All Forum Posts by: Derek Johnson

Thanks @Shaun Weekes 

Also wondering if I can estimate how much my property taxes will be after appraisal. I'm assuming they will go up...

Hello,

Hope everyone's New Year is off to a good start! I'm writing to seek advice and guidance on my next step in REI. Here's where I sit and what I'm planning next: I own two properties about 1/2 mile apart. The first was a 2br/1ba currently leased for 1 year at $900/mo. The second is a 3br/2ba (we added a bathroom downstairs), that was a foreclosure. We plan to buy another property and rent this one out next. Where you come in is telling me the best way to go about it and the next steps to take!

So, more info on our current property. We purchased it at $69,100 after a 4 way bidding war. We improved much of the house with sweat equity, and had a fair market value of $110,000 given to us by our realtor. So my plan is to cash out and refinance 80% of the new appraised value, which will hopefully be in that neighborhood. This would leave us roughly $20,000 to purchase another property, and we think we can rent the current for $1000/mo. 

A few questions. 

1.) Is this a reasonable plan?

2.) What type of fees should I plan for with refinancing?

3.) Is there any way to know how much a property might assess for before having it assessed?

4.) Are there penalties for taking cash out when you refinance?

5.) Once we have the money, would lenders be willing to give us a third mortgage after seeing the rental income on our tax return?

Thanks in advance!

Cheers,

Derek

Throw me on this list, I'm in Waterloo but I could travel. Cedar Rapids isn't too far away. 

Awesome! I'm in Waterloo, currently own 1 rental and living in what will be my second. How'd you get 100% financing from your bank? Would love to chat sometime.

I read this topic about removing PMI http://www.biggerpockets.com/forums/50/topics/1109...

I just want to confirm that banks can make the first year of PMI a requirement no matter what. We bought our home for $69,100 this April and our realtor thinks it's in the $110-120k range. So we would easily pass the 80% LTV. But when we closed they told me I'd have to wait at least a year before removing PMI. Not too big of a deal just want to confirm that I do have to wait...

Nope I forgot about the land not being depreciable. The $99k was our purchase price! I may try to figure it out and just come back here if I need any advice around tax time. There are just a lot of variables this year since it wasn't a rental until May.

This is the first year I changed my former home into a rental. I changed it May 1, and have done a little updating prior to tenants moving in. I've always done my own taxes, but I've never needed additional schedules just the simple 1040 forms. Should I consider outsourcing this or is this something I could handle myself? I did some reading and it seems like I can add the improvements to the tax basis, not deduct them. So would this be correct for this year:

Property Basis

$99,000

+ (window)

+ (roof)

+ (paint)

+ (water heater)

- (energy credit)

----------------

(New Basis)/27.5=(annual depreciation)

(Annual depreciation)*(.75)

That's my understanding, please let me know if this is correct. I'd also like advice on whether I should try to continue to file my own taxes or find an accountant. I am actually hoping to go to school for accounting in the spring because it's interesting to me, but that's no help now. Thanks!

@Steven Hamilton II I had the same circumstances occur, and wanted to double check that I'm understanding correctly. I lived in my home up until April 2014, and rented the property out starting May 1, 2014. So any painting, fixing windows etc. done prior to being rented cannot be deducted, but I can add the cost to my basis (purchase price) / 27.5 years?

I think it would push me into the 25% bracket. $60k + $30kish.

Also do I settle that up front or at tax time?