All Forum Posts by: Jagan Reddy

The cost segregation allows for accelerated depreciation creating pretty big losses on first year of acquisition and there after also.

But schedule E doesn’t allow posting those losses to personal taxes 1040. 
losses stay with schedule E until they get offset by future profits from property.

Did I get this correct?

If yes, offsetting personal taxes as ‘benefit’ of owning real estate is not really an easy thing right?

Thanks in advance for feedback 

Jagan

Hi Gino

Thanks for your reply 

In my question I should have been more clear 

It is physical vacancy 

Jagan

I came to know in general Memphis city above 40% to 60% vacancy on average in apartment properties 

I hope it’s not true 

Any reason for such high vacancies?

New deal question:  I am looking for a property. In fact I am already on contract for last 4 days.  Inspection is scheduled. But due to my agents personal perception my wife signed contract a bit too soon before analyzing macro economic factors of the the city. 

CONS:

(1) City population is just about 8714. It declined from 2010 to 2020 by 4.09% (from 9106)

(2) Overall this downtown has steady crime rate above state average. ( 1:36 vs for state 1:96)

PROS:

(a) This city is 20 minutes driving to three major cities which has multiple universities and many other business with increasing population by double digit. All three of them are expensive to live compared to this city. We do have another property in one of these three growing cities.

(b) In 2019 some yooung entrepreneurs revitalized one full street of this city (with brand new apartment building and some business buildings) which is just one street down where this building is located. (I will talk to city development and other officials to find any more such revitalization plans are there for future).

(c) This building is secured with front door digitally controlled, video camera enabled

(d)Tenants are in this building staying over 6 to 7 years, many of them are old

(e)Very good financials with over 25% Cash on Cash

(d) City police told this building has one problem tenant. I came to know current owner is evicting that tenant. But City police also told this building is so close to many county offices like court house, library, small historical museum and so on. So there is heavy FOOT TRAFFIC.

(e) Other people told me, this particular building is ok, but less than half a mile, there is pretty known drug and high crime issue.

I have a handyman who also lives in this city but in a different side of the city. He says he has no problem if he were to live in this building.

My problem, if the population is decreasing steadily, it may become tough to find tenants and that could lead to decreasing rents and then loss of NOI.

My agent is telling my own only course is to do inspection and if I do not like results, get out. She says (who knows) there is another buyer if I want to cancel now.

Any thoughts please?

Thanks

Jay

Finally I selected ashpalt shingles and used a long term local roofing business with their warehouse and material in their own stock. other contractors buy from these guys so using them directly is better than using individual contractors who may not stay in business for long time.

--Jagan

@David Daily Thanks  a lot. My only concern is Metal roofer is quoting almost $6000 less than asphalt roofer. I need to ask him fully written quote.

The other thing I need to worry about is warranty. Small contractors can do work, but may not be in business many years. Their warranty may not hold good for many years. I need to worry about that too.

Thanks

Jagan

I am being recommended to replace roof and gutter for my apartment property. Coincidentally my metal roof contractor is quoting less than Shingles. Will metal impacts property value someday when I want to sell?

Hi all,

Sorry for posting to old thread. If you happen to see this please

In my case with 12 unit apartment building my metal roofer is $6000 less for metal roof vs shingles. He is ofcourse $3000 more on gutters compared to another roofer.

I am going to ask him formal written quote. So I can trust him. The contractor quoting $6000 less for metal vs shingles is very highly ranked in angies list and also verified installer. Not a national level company though. So warranty may be an issue.

Shingles fellow quoting for gutter and roof : $32,000

Metal fellow quoting gutter and roof : $30000.

Thanks

Structural Engineer says it is maintainable. His comments "Building is sound, will not fall, but requires may be frequent maintenance if the cracks occur. Can try to put more supports".

The foundation contracts quoted same price, off them only one is willing to repair as the crawl space is very tiny. There is already vapor barrier. But too much water still going to foundation due bad gutter.

Appreciate your quick reply as I am under contract doing due diligence please. Thanks