All Forum Posts by: Account Closed

Yes, I've experienced this and it can be frustrating.  I find that after 2-3 years paint colors sometimes won't match well anymore.  We use a stock color from Kelly Moore, but often we have to fully paint the walls if it has been more than just a couple years. 

I agree with those that have previously stated that a primary residence is a mediocre investment, but I think the original question is what is an investor's approach to primary residences.

I have devised a plan that I have yet put into action, but I believe is a solid approach to tax harvesting a primary residence equivalence.  It would go something like this.

Agree with a friend that an exchange will be made.  I find a suitable house for myself and loan the down payment to a friend who purchases it in their name.  They then rent the property to me for a nominal amount and write off all depreciation, interest, and expenses.  Similarly, they find a property for themselves and loan me the down payment, I purchase it and charge them the same rent amount.  I take all write offs with the property in a similar fashion.

I am not really sure what the best exit strategy would be. Ideally the ultimate sale should take into account the $500k capital gain exclusion.  Maybe 1031 exchanging it to one another, and then sell, but I'm not sure if that can work without renting it out for a period of time to someone else after the 1031 exchange. 

Other have hit on a lot of good topics, but I can add one as well.  It was only in the fall of 2019 that many of the local zoning ordinances were forced by state ordinances to allow for Adu's on investment property.  Prior to that in my areas (Alameda county and various towns within) had restrictions that the main house had to be owner occupied.  This also blocked it from occuring on multifamily property.  Both of these restrictions have since eased, but that doesn't make it an obviously good choice for many.  I have one adu in plan review and my sites set on two more eventually.  These processes take a while to get off the ground, especially with covid slowing down every planning step along the way.  A process which might have taken a few months before is now taking twice that at least.

My father was the money partner on a new construction project, his good friend was the builder and subsequent property manager.  To my knowledge my father did nothing but provide the funding and the friend built the place from the ground up and has done all property management since (about 25 years and counting).  They split the rents (after expenses) 50/50, and when/if they sell the proceeds will be 50/50.  Both parties were highly experienced in their roles and I believe they are both happy with the project, the process, and the returns.

If it was me I most definitely be setting the rent price low and the utilities as a separate item.  I don't want you to be missed by the prospective renters that put a rent filter on their search at $2200 (or whatever price) and are seeing and considering places that are effectively more expensive than yours because yours includes utilities and the $2200 places doesn't include anything.

Often, I am already face to face with a prospective tenant handing them an application before they even start asking about if any utilities are included.  

I'm truly shocked by the varied responses in this thread.  I consider the yards to be 10% the value of the property, so all my properties are well landscaped and maintained professionally weekly.  I have hundreds of trees throughout my rentals.  They add value, both for the resident and resale.  They will take some maintenance, but that's property for you.  I might have a tree service to a property once every handful of years.  Landscaping takes some thought, don't plant too close to the buildings, try to avoid the sewer line, consider the variety of tree with regards to size, shape, leaves, etc.

I would not recommend discounting a feature to make a nice property as I want my rentals to be the most desirable places to live in my area.  

Thanks for this link.  I tend to be continuously bullish on real estate, so I appreciate a well put together counter example.

A commercial loans are a different beast, but I believe conforming 1-4 unit loans are not callable based on asset value.

I also use Ally for the ease of their interface, a fairly decent interest rate, and high transfer limits.  I also use Vio Bank, which is just ok.  Their current interest rate is .76%, so slightly better than Ally.  Vio doesn't have extensive requirements like regular direct deposits like some online banks require, my one beef with them is their transfer limits are low so I don't store lots of money there because it is slow to get it out if needed quickly.

I'd go the co-signed route.  My first two properties I had my mom co-sign on the loan.  I put her on the deed as joint tenants during the purchase and, years later, removed her from title once I could qualify without her (through a refi).  She didn't contribute any cash to the property, but there was no way a bank would lend to me being an inexperienced 19 year old with questionable income sources.

If you have a person who could do this for you it might be all you need to help make a bank have faith in the situation.