All Forum Posts by: Jay Dean

I have been dragging my feet on the Bigger Pockets upgrade to Pro.  I need a kick in the backside to push me off of the fence.

What is your favorite feature of the Pro membership?

5% is 5% but it is still relatively cheap money in the grand scheme of things.  Make sure you have a strong rainy day fund before dumping money against the principle.  Once you put it against principle, you won't get it back unless you sell or refinance.

@Corey Drexler  I am not clear on how many total doors you have at this point.  Some people here will disagree, but I feel like once you have at least a few doors it makes sense to keep you books more professionally.  Keep in mind that every expense you can legitimately claim against the business is money in your pocket.  The miles and expenses quickly add up.

In my case, I found a bookkeeper to set me up correctly in QuickBooks.  I only had to provide statements for a month or two so she could the books setup correctly.  After the initial setup, it is pretty easy to maintain the books.  I usually pass my books off to her about once a quarter to make sure I am doing things correctly.  Well worth the expense in my opinion.

Ask your BookKeeper to setup you up with "classes" in QuickBooks.  This will give you the opportunity to allocate your costs and income items to each individual unit.  The huge benefit here is being able to see your Profit and Loss statement for each individual unit in addition to seeing it for your overall enterprise.

I also recommend that you consider the QuickBooks online version.  I originally bought the desktop version to save money but eventually swapped it out for the online.  There are some very worthwhile perks to the online version.  Yes, there is a monthly fee instead of the one time expense but well worth it in my opinion.

In summary, there is a cost here but the payoff in knowing where every dollar went and the ability to run your reporting and know exactly where you stand is well worth it.

The upside is too dependent on rent increases and appreciation which don't seem to be a guarantee.  I would lean toward passing on this one.

I have not directly dealt with these situations but have heard of many situation second hand.

I don't think you can apply a rule of thumb in this case.  That is why I recommend that you take a Contractor with you.  Those guys know what it cost to fix stuff.

Termites do not scare me away from looking at a deal like they might with the majority of the general public. 

I would be inclined to have a termite inspector / home contractor with me during my walk through of the property.  Why make an offer if you can quickly eliminate it as a viable deal.

I definitely would not buy without doing these inspections.

@Matt Koury - Keep in mind that when you refinance you typically get about 70% of the money back.  In order to get all of your money back, you have to buy really cheap and add value in the form of renovations.

As Joe stated, negative cash flow isn't a completely bad deal.  If your mortgage is say $1,000.00 and your net cash flow has you losing $50.00 per month then you basically have your tenant paying your mortgage for you.

Would I pay $50.00 per month to get a $60,000.00 house for free?  Probably not, but the same monthly loss to get a $500,000.00 house for free sounds pretty tempting.

The trap is all of the other expenses that you need to account for.  Property management, taxes, repairs, etc.  There will be months where you will be in the red by more than $50.00 in my example.  This is where people go under.

Remember - The calculations don't lie unless you cheat and fudge the input values.

Ditto on lead paint and asbestos.  Get a registered structural engineer and / or experienced home contractor to go through it with a fine tooth comb.

Keep in mid that these renovations sometime leave bigger problems behind walls, under flooring, etc.

@Jeff Wharton There is no question that this was a property management company screw up.  If you win, you could likely win in court.

That said, the only people who generally win in court are the attorneys.  I have been to court in a few relatively small cases where customers did not pay me.  It is expensive and time consuming.

Unless you are talking about a significant amount of money and you have the money to hire an attorney in your pocket today I don't recommend going down this path.

What is your real objective beside not paying the capital gains?

If you are trying to get out of a particular house or trade up, have you considered a 1031 exchange?