All Forum Posts by: John Dehn

I had them contact the city and provided them the invoice from repair to help but the city said they won't credit for excess usage. They will correct for sewer fees because those are set Jan-Mar, but water usage is what it is. I'm considering helping on cost because they're potentially going to buy the property from me at the end of their lease, so trying to keep the relationship amicable. Considering offering $200 now and pay the balance as a closing credit if they wish to buy the property at the end of their lease.

I own and self-manage a property that recently had two drip valves break causing excessive water usage for January, February and March. Water bills for the property at typically in the $50-60/mo range but range $150 for January, $350 for February and $480 for March. Tenant is responsible to pay all water bills and inform me of repairs and maintenance in a timely manner. I was informed of high water bills on April 1 and had the problem fixed across April 7-8. Tenant is also responsible for all landscaping.

I covered the cost to repair the valves and now tenant is asking me to pay for excess water usage due to the broken valve ($700-800). Although I don't feel like I'm legally obligated, I'm trying to come up with a solution that works for both sides. I think one could argue January wasn't excessively high but I should've been immediately notified when February's bill was posted (March 7) so I could fix timely. To that effect, I'm thinking of offering to cover half of the excess usage ($500 for Jan/Feb - $100 Normal Usage = $400 split in 2). March would be sole responsibility of tenant due to lack of notifying me.

Does this seem fair? What would you do?

Quote from @Jack Faysash:

Hey John, to qualify as a real estate professional, you must provide more than one half of your total service (total hours worked in a year) in real property trades or business in which you materially participate, AND perform more than 750 hours of services during the tax year in real property business activities, which include: property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage services. Don’t count personal services you perform as an employee in real property trades or businesses unless you are a 5% owner of your employer. You are a 5% owner if you own (or are considered to own) more than 5% of your employer's outstanding stock, or capital or profits interest.

Assuming you aren't a 5% owner of the investment shop you work at, I don't believe you would qualify based on the information provided.

Does your opinion change if I have structured it by creating an LLC that I am the 100% owner that I provide these services through? It’s an LLC that is taxed as an S-corp so I also pay myself a W-2 and take distributions.

I am a 1099 employee for a boutique commercial real estate investment shop. I do business development, underwriting, and asset management for the company on a full-time basis and have upside opportunity if I source a deal myself and bring it all the way through the acquisition process.

I also have a couple single family rentals that I own 100% and a 2-person partnership on a third that is managed by a management company. I manage the 100% owned properties myself.

my question is, since I’m a 1099 employee working for a real estate investment shop performing all of these functions in addition to owning my own rentals, is there a likelihood that I would qualify for the real estate professional designation on my taxes? 

I’m also in the market for a real estate tax strategist to help me with items like this. I’m based out of Arizona, but open to working with a CPA virtually.

I purchased a 6bd student rental 18 months ago with renters in-place. 2 of the 6 residents have lived there 3 years with the others living there 1-2 years. Prior to that, one of the 3-year residents had the property passed to him from his older brother. For the last 5ish years, there was at least one rollover tenant year-to-year.

The tenants fully moved out this year and are sending me messages demanding their full security deposit back because they’ve been great tenants and always paid their rent on time. I just got the maintenance and repair bills back from my property manager (who I hired approximately 8 months ago because I’m out of town) and the turnover costs were approximately $8k ($3k patch & paint, $900 for a new fridge because lots of interior parts were broken, $900 for deep cleans, door repair, labor, etc). When I bought the house, I noticed significant drywall patches that were unpainted but overall the house was in decent condition. 

My question is this - if the previous landlord never did a move-in form and the tenancy has been passed down through a fraternity for 5+ years, what’s my obligation to prove the damages occurred during this current group’s tenancy? My lease states a move-in form was provided to the tenants and was required to be returned within 7 days for otherwise everything is assumed to be in good working order. The previous landlord was unable to find a move-in form.

When I was in college, I just assumed my deposit was gone the day I moved in even if I took great care of the house. Worst case scenario is I get sued and have to pay twice the deposit back in damages via small claims court.

I think my primary issue is it did cause me issues off the bat. It created immediate tension between me and the tenant. I spent $700 investigating and remedying an issue that was partially created by this burst pipe. Also, if I had been made aware of the issue during closing I would have asked for proof of the leak being fixed. I was essentially provided a bar napkin receipt for $300 on a fix that would have most likely cost $1,000+ from a reputable plumber that would warranty the work. Because none of this information was provided to me at the time, I do feel like I was slighted.

Yes, I am 50/50 partners with my friend who is also the buyers agent on the transaction. The listing agent's responsibility is to the seller, but all material items are required to be disclosed to the buyers. This issue occurred during closing and the listing agent should have advised the seller to disclose the issue to me. I had no way of knowing about the issue until I was recently made aware.

I spent about $700 for a leak detection company to come out and evaluate whether or not there was a leak on the property when they were complaining. The only think that came from that was discovering 3 of the 4 toilets in the house were running due to bad flappers (probably unrelated?). As far as I can tell, the leak has held but I'm not local. The water bills continued to be high for several months but I heard less and less from the tenants over time. This is a student rental.

I purchased a rental property with tenants in place approximately 18 months ago. The tenants just vacated and let me know that while the property was in escrow a pipe burst under the driveway (gravel) that the listing agent was made aware of by the appraiser while they were onsite. The listing agent called the local water utility and informed the seller. The seller got a "plumber" to the home to dig up the leak, repair it and cover it back up. The issue was never disclosed but the tenants complained of high water bills early on in my ownership. The listing agent fully acknowledges they were aware and should have disclosed but didn't. After bringing it up, a receipt in the form of a written email for $300 from an unlicensed plumber was provided as proof the leak was professionally fixed. Do I have any recourse here?