All Forum Posts by: Jason Vaughn

As others said it all depends. I am signing papers Friday to finish up my HELOC that I have similar plans with. In Washington I was monitoring rates for 6 months before and Navy FCU was always the lowest so I am going through Navy FCU they go up to 95% at 8% interest only payments for 20 yrs then it turns to installment laon for next 20yrs. Also I double checked they do business there and have branch in Miami but you don't have to go to branch, in fact I have never been to the branch. Fyi their membership requirements are pretty lax but need someone in family that was in military.

Thank you both, but let me see if I understand this correctly @Ashish Acharya. So lets throw some #'s at this and for now lets ignore the fact that it is a duplex and lets just say a SFH. Let say:

Bought  for 100k in 2015 and rented 2015-2018. Lets say land was worth 50k and home worth 50k. so during those years we depreciated for 1818 per year so value at 42.728 +50k land = 92,728 at end of 2018

Plus in 2017 we spent 10k renovating the unit so depreciating 10k for 2 yrs =9272.8 

Is this then added together to determine total value of 92728+9272=102000? 

Lets say I then live in the unit for 2 years then rent out again? I would start at 102k again, say 52k for house and 50k for land. Lets say we rent for another 3yrs then sell so the depreciated value is  44327+50k = 94437? Is that correct? 

Also am I correct that you can only depreciate the Home not the land? 

Also how are land/ home values determined? Total value and percent of property that is land compared to percent that is the home? 

Also how does this compare to say just taking your primary and making it a rental after. Looking at it the major benefit has more to do with the immediate tax deduction repairs instead of the depreciation of the renovations.  If wanted to do major renovations and not repairs does it make much of a difference? 

If I bought a unit for 100k lived there for a few years renovated it and with market appreciation it is now valued at 125k when I turn it into a rental. Do I use the original price or the new market value? or new Tax value? 

Sorry for all the questions.

So my fiance and I bought a duplex as a house hack a few years ago. Last year the tenant we inherited moved out and we completely renovated their unit and got another tenant in it. I am thinking once that tenant moves out, we will possibly move into there unit and completely renovated our unit but wondering how that will affect our taxes. If I understand depreciation correctly the renovation is being depreciated at 1/27.5 a year. If I move in for a year then move out in a year or two does that just put depreciation on hold or does it cancel it completely from then. I would rather renovate a rental and be able to take the depreciation instead of renting my primary residence unless I am missing something.

If it was me instead of 15 I would do 30 so I have at least a little cash flow then sell after a year. But really it comes down to personal choice neither option seems bad and that's a good thing that you even have the choice.

@Bill S. That makes a lot of sense about the cap rate and expenses. As far as notes honestly it's something I just heard I believe from the BP podcast. The guest was talking about how he purchases them and even the good ones he buys at discount the bad ones he buys for pennies on the dollar.

@Ola Dantis thanks for heads up and yeah Definitely will if it gets to that point. My thought is he is only doing small amount seller finance so we can pay off his mortgage and he just seller finance the rest but haven't gotten that far yet.

@John Acheson Definitely plan to get both tax returns and bank statements to verify information and come up with a better CAP rate but at this point going on the limited data from the owner. I will be requesting more info when and if I decide to put an offer in. At this point deciding if it is even worth it

@Bill F. I recheck and it looks like they are correct, it looks like you may have missed the $2400 management but that seems super low anyways. Yeah I was also thinking looking at them separate and then adding it back together. 

The Park: I have never dealt with septic tanks or wells but looking quickly I am not seeing there is much maintenance other than pumping them every 1-3 years which cost $100-300. Other than that If all the homes are tenant owned and there are not any other park owned buildings,other then landscaping and Cap EX what other yearly maintenance would you expect? I would want to have septic systems inspect first of course though and as you said that will help determine Cap EX. Unless systems need major work or replacement I was thinking more like 40%. 

The Notes: Yeah I was thinking about a 30% discount as long as they were all current. Do you know any note buyers? The seller at this point wants the notes to go with but I was thinking turning around and selling them right away to a chunk of money back and increase IRR but not sure how feasible it is though.

@Victor S. Sorry I miss typed, they are all tenant owned but only 10 are on contracts. The balances range from 5000-12000 with payments from $80-$210. They are 7yr loans at 8% but not sure how far into the contracts they each are. I have not seen the contracts but none of this is include in the #'s above or the Cap Rate as listed above 

@Rachel H. Yeah repairs and maintenance is low but with them being all tenant owned and no office on site that kinda made since to me. May I am wrong though I have never purchased park before. I was actually thinking it was for landscaping and doesn't look like they do anything fancy other then mow. I realized the plumbing was missing to and since septic and we'll thinking including that with capx but not sure.