All Forum Posts by: John Anderson

I’m a W-2 employee in a high income tax state. I have rehabbed a rental property out of state, and am renting it out to long-term tenants. I was wondering if there are any deductions that I can take against my W-2 income, or if all deductions can only be taken against the rental property income?

It's the long weekend, so my lender is OOO. :)

If I buy a multifamily home, and keep one unit vacant (while renting out the others) would I be in breach of my loan agreement? I understand that you have to live in the home for at least 2 weeks out of the year. 

Thanks!

Hello, I am currently in the process of building an ADU for my parents. They may not move in for a year or two, and so I am wondering if it makes sense for me to live in the ADU, and list the primary home on Airbnb? My wife and I both have W-2 incomes, and we live in a state with high taxes.

I understand that traditionally this can be a great tax strategy, by using bonus depreciation, and a cost segregation study. However, I am wondering how it is viewed, if I am still technically on the property, though in a separate building all together.

I plan to speak with a CPA, but was wondering if anyone here had some high-level thoughts. Thanks!

Quote from @Bill B.:

Your income is higher than your cash flow if you have a loan on the property. Your taxable income is lower than your income, and probably your cash flow. 

Rent and any other income minus property taxes, insurance, mortgage interest, anything else you pay because you have this property, minus the ((value of the property minus the land value))/27.5) for depreciation. 

Although it’s pretty simple with just 1 or 2 properties. It sounds like you definitely need a tax guy. If you just want to learn, have your taxes prepared and then separately, without looking, try to do it yourself and look where it’s different. But make sure you give the “tax guy” every expense you can think of and then ask them what other investors are deducting that you didn’t bring a receipt/invoice for. Might find other deductions like cellphone, ipad, mileage< etc. 

 Thanks! Can I deduct the amount of money that I spent rehabbing the home?

I am getting very strong cash flow, on a property that I fixed up last year. I am wondering whether the depreciation and the rehab costs can be used to offset this income? Yes, I am going to speak with a CPA, but wanted to get a general idea of how the rules work from the BP community first. Thanks!

Hi all,

I am getting a little frustrated with my current property manager, and was wondering if anyone has any good recommendations in the Charlotte, North Carolina area?

The biggest concern for me is keeping turnover costs low, and regularly inspecting the property. Our current manager did a poor job of screening the tenant, and we ended up having to get an eviction. On top of that they charged me double for renovating the property. I ended up having to find my own handyman at half the price.

If anyone has a recommendation for a honest and trustworthy manager who will do a good job of screening and not try to screw me on turnover costs, I would greatly appreciate it!

Hi all,

I'm a small-time real estate investor (4 properties, 8 units to-date) looking for a solid lender to build a relationship with.

Currently, I'm only looking at conventional lenders (trying to get up to the ten investment properties that Fannie/Freddie allow me to have). 

I'm trying to come up with a list of good questions to ask, but would love to leverage the knowledge of the BP community. I've listed a few "obvious" questions below, but feel free to add anything you might believe to be helpful!!

1. Rates

2. Closing costs

3. Time to Close

4. Minimum Loan Amount

Quote from @Bob Stevens:

Quote from @John Anderson:

If I'm looking to do a BRRR on a Section 8 property in Cleveland, how do I deal with the appraisal on these properties? The cash flow is fantastic, but I'm worried about how a bank will view the value of the fixed-up property, since they are only looking at comparables (and not cash flow).

 The appraisal is based on comps, It is 100?% irrelevant if sec 8 or cash tenant, 

Tell me the address I will tell you what its worth ,I know every street in Cleveland, or ask your PM they should know as well 

Thanks! Just sent you message.

Quote from @Darius Ogloza:

Try this exercise: look up (1) the historical price of your Midwest SFR at the time of first sale, (2) the rate of inflation from the year the SFR was built until the present and (3) the market value of the property. In most cases, you will find that the long term holder lost a ton of money over the life of the property. Typical figures for Toledo Ohio are something along the following lines:

Price in 1945 - $14,000

Value today of $14,000 in 1945 dollars - $235,949

Price in 2023 - $100,000

In short, the vast majority of those properties not only failed to appreciate but actually lost you a significant amount of money over their life.  

Looking at a three or four year segment of time can be powerfully misleading.  

Thanks for your response! That’s typically what I’ve heard as well. I’m wondering though, if there are circumstances that might account for the difference in growth rate over the past 10 years. Namely - out of state investing is a relatively new industry (folks used to only buy rental properties in their backyard), and affordability on the coasts is increasingly becoming an issue. The idea that NYC/SF/LA housing is a safe bet and will never crash significantly seems to already be priced in. Additionally, investors are increasingly using valuation metrics (such as cap rate, gross rent multiplier) to price real estate, which would lead one to believe that Midwest/Southern real estate is a safer bet than the coasts.

If I'm looking to do a BRRR on a Section 8 property in Cleveland, how do I deal with the appraisal on these properties? The cash flow is fantastic, but I'm worried about how a bank will view the value of the fixed-up property, since they are only looking at comparables (and not cash flow).