All Forum Posts by: Jenning Y.

@Whitney Ortiz

I am from Texas but own rental properties in both CA and FL. All properties are located in relatively small cities, not big metros.  Here are what I got so far:

1) Insurance is too high in FL because insurances including hurricane coverage,  pretty much like my  own home which is located in Houston's  hurricane zone.  And insurance increase very fast every year in FL.

2) My  FL properties' tax rates  are about 1.9~2.4% ,  very high. Property tax increase completely offset the rent increase.

3) High repair and maintenance cost  in FL.  FL's hot and high humidity weather cause repair and maintenance cost way higher than in CA.

I own my FL properties about 6~7 years, and CA properties more than 8 years. CA properties' cash flow are become better and better while FL properties' cash flows do not improve or even worse.  FL properties' high property tax, high insurance, and high maintenance cost completely offset the rent increase, even rent increase very fast in FL.

CA is still one of the best state to invest, partially thanks to Prop 13. 

 

@Sara W.

As an OOS investor for more than 9 years, I think investing in 1~3 hours driving range  is probably a better choice than  investing far away, in your case.

I wrote my own experience here  before:

As an Out-Of-State Investor for 9 Years… (biggerpockets.com)

Living in an expensive market is a boon, not a curse. To make wealth passively, we must grab the appreciations.  Expensive markets usually mean high appreciation  potentials.  Even if the city cores are too expensive to invest, nearby still have more  appreciation potentials than lots of so-so areas.  Cash flows are for active investors, not  for passive investors.

Just finished refinancing one fourplex in Texas.  Lender moved very fast but appraisal took about 4~6 weeks,  all waiting for appraisal, closed the next day after got the appraisal,   about 2 months in total.

 Really appreciate your taking the time and answering so many questions.

Is this also true,  if the capital gain coming from one property(just sold one property) while the passive losses coming from portfolio of properties?  In another words, can one property's  long term capital gain offset other properties' passive losses, all properties are owned  by the same person?

Thanks again.

@Nicholas Aiola

I know the $25k PAL offset rules which will be phased out if MAGI (modified adjusted gross income) exceeds $150k. My question is, Can the long-term rental capital gain offset the passive rental loss which violates the passive activity loss rules?  For example,  look at two cases:

Case 1 : W-2 Income $60k, sold one property(own many properties) long-term capital gain is $200k, with $20k passive rental loss. In this case, MAGI is $260K, exceeding the $150k limit, can the $20k passive rental loss be fully deducted this year?

Case 2 : W-2 Income $60k, sold one property(own many properties) long-term capital gain is $70k, with $30k passive rental loss. In this case, passive rental loss exceed the $25K limit, can the $30k passive rental loss be fully deducted this year?

Thank you very much!

Thanks for the info.

This kind of data, especially only one year's data probably can not tell much.  Different markets behave differently.   

For example,  I bought properties in Central Valley of California at the bottom of the crisis, in the coming few years, even the home prices doubled or tripled, the rent barely increased. Only in the last two or three years the rents started to make huge leap. 

But properties in central Florida, their rent growths matched the property price increases much better. 

So if you compare the rent growth in the above two markets for only one year, I do not think you can get much useful information.

@Supada L.  As a long term out-of-state investor myself, I think your biggest mistake is not that $100 cash flow, but the property is not located in a growth market(with high population and income growth).  If  it  is located in a growth market, even at the start the cash flow is low or negative, with the property price appreciates fast, rent will catch up and lift your cash flow.

I wrote my own out-of-state investing experience here, in case you are interested:  

As an Out-Of-State Investor for 9 Years… (biggerpockets.com)

As I said  in the post,  for OOS investing to be successful, appreciation must be put in higher priority.

@Katie Greenman

It really depends. It depends on how soon or eagerly you want to get started in real estate investing; and what your future return, or how good will you do in future investing.

Money is money, as long as you add the tax factor, choose which one will get better return. For example, if stock market return is 10%, and you can get 15% return in real estate investing, I just think it is a no-brainer.

As a middle-income family ourselves, I found it is very difficult to save down payment by salary only. As I wrote in one of my previous post, I got 14 times of my initial investment return in about 9 years without any creative financing. Part of the initial cash came from by not saving 401k.

Some people said you can always use creative financing, but I do not think using creative financing is less risky than conventional financing.

So it really depends.

I just do not think there’s anything wrong with that. Our opinions are mostly based on our own past experiences. There’s nothing wrong to tell our own experiences. You just cannot let a frog that is staying in a deep well all his life to talk about what the mountain or ocean look like because he only knows the piece of sky above his head. But he has the right to talk about that piece of sky. It’s pretty normal.

Rocket Mortgage is the worst lender ever dealt with. Asked many nonsense documents, such  as  "401k withdraw term" - come on, the 401k rules are not defined by one mutual fund company or by myself, it is regulated by the laws. Why did they want me to provide that kind of documents to them?  It just makes no sense,  and took long time to close.