All Forum Posts by: Jose Fernandez

The first home I ever purchased was a house hack. It was a 3/2. I was working at a University and rented 2 rooms out to employees of the university. One was an assistant coach for one of the sports and the other room was rented to an employee from the Sports Information Department. That room had high turnover because the position did not pay very well. 

So, my advice would be to list the available rooms to faculty and staff at a nearby university/college or high school as well as the place where you are employed. 

How about keeping the monthly price where it is, but offer a $1700 first month's rent (move-in special) with a year lease or a $1000 (first month's rent) move-in special with a 2-yr lease.

Quote from @Nicholas Aiola:

Hey, guys!

I've been on BP for about 7 months now and I have quickly learned two things:

1. There is no better place than BP to talk real estate
2. The wealth of information on BP is immeasurable

I've read and learned quite a lot while scrolling through this site, and figured I'd create an open forum to (hopefully) offer some help and advice back to the BP community.

I'm a CPA in New York with a passion for real estate and I'd be happy to answer any tax questions I can!

Hi Nicholas,

Just closed on my first 2 rental properties (a 1/1 townhome and a 3/2 house)

1) What are some things I can do now to set me up to maximize my tax savings?
2) What are some common mistakes in which you see from your clients?
3) What is something that few clients know about?
4) What is the best way to keep track of milage? How detailed does the log have to be (date, departure point & time, destination & time, odometer readings, total trip milage)?
5) If I use a CPA, is there a preferred method to record expenses, income, etc. in order to make the CPA's job easier?
6) How do CPA's usually set up their pricing?
7) What should I look for when choosing a CPA?

Thank you for sharing your knowledge

Quote from @Nathan Gesner:

Try different banks. There are millions of Landlords around the country that are not registered as a business.

I did just that and I know for a fact that there are many landlords out there who collect rent and use personal accounts to deposit the rental income.
I asked the bank manager if the issue with my name in 2 spots was a "Chase" thing or a state/federal thing. He said "All I know is here at Chase we can not enter your paperwork the way it is." So, I drove over to Bank of America. It was about 3:50 PM and the one representative that opens business accounts said "currently, I am working with a client and we have another 30 min. to go. We close in 10 min., why don't you come back tomorrow." I thought to myself....I will not be back tomorrow. Then drove over to a Credit Union and opened a business account and deposited the 2 rental checks. 

Thank you for replying

Just purchased my first 2 rentals. I go to Chase bank to open a business account. The bank says "You need a business account and to open one of those, you need to register your business with the state." So, I do that. The only choices I see are LLC or INC. There is also Fictitious Name Registration. So I go with LLC. Since I'm the only one, I place my name as CEO & CFO. Three weeks later, I have my paperwork. I go to the bank and they say "You can not open a business account with your name as 2 positions as an LLC. Also, the positions must be MGR as our system will not recognize CFO or CEO." Meanwhile, I've had 2 rental checks burning a hole in my pocket since March 11th and I told the other two to hold on to theirs because I have nowhere to legally deposit them. Today, I received a $94 dollar fine for not having a Labor Law poster. So, I have a couple of questions:

1) Do I actually need a "business account" or can I just open up another personal account and just use it for business?

2) How can I register a business name without having to use LLC or INC?

3) Any thoughts as to why I received the $94 fine (Labor Law Compliance)? I may have listed the LLC as "Real Estate." What should it be to not have to display a Labor Law poster? If I have zero employees, why would I need a Labor Law Poster?

4) I have another business (fitness related) that has nothing to do with real estate. It's more of a hobby than a business. Can I just use that business account for my rentals?

5) Are there any podcasts on this site that directly speak to the protocols for setting up the business so that rent collection/deposits can happen? 

Thanks everyone....I am barely keeping my head above water with this aspect of renting.

Quote from @David Ramirez:

Hey Tatiana, 

Yes, having a property under an LLC secures you from any personal liabilities and gives you tax benefits. Not too many people now but Tampa has an STR restriction of a min of 7day stays. There are so many people that still do it without caring about Hillsborough STR laws, which is something that I would never recommend doing.

Good luck!

Regards,

David

 Hi David,

How is that 7-day minimum stay calculated. If a person books 7 days and decides to leave after 4 or 5 days, is the owner of the STR penalized? Or, if a person books 7 days and shows up a day late and / or leaves a day early, then is the owner of the STR penalized? These scenarios will show the person who booked the 7 days, paid for 7 days, but they did not actually stay for 7 days.

How does the city of Tampa deal with / define those scenarios?

Hi Nia,

I am wondering why it would take so long to close (if it is seller financing, shouldn't it be able to close quickly?). I am guessing you came up with these options. The question is...what does the seller want? Why are you unable to give the seller exactly what he wants? When you present all these options to someone (2 of them are labeled "option 2"), you run the risk of them backing out because of "paralysis by analysis." Their inability to quickly choose may end up in them feeling as though they are being taken advantage of. 

No need to overcomplicate the deal through creative chaos. If you want to cashflow year 1, then my advice is to simplify the transaction. Find out what he wants and then negotiate the "Big 4"...sale price, down payment, interest rate, and time (15 yr, 20 yr, 25 yr, etc.). 

Quote from @Bryan Devitt:

There is zero chance in hell I would take rent in a "currency" that can have 2X swings in a month. Who would ever think basing your business and income off of something so volatile is a good idea? In the next year the odds of it hitting $2k and $20k are about the same, I'll take a hard pass on it until it is stable

 As long as I can increase the rent by a dollar-equivalent swing, I might consider it. If Bitcoin drops 50% that month, then I'm increasing rent by 100% that month. 

What makes you think they would trash the property? If that is the type of tenant that is in there, then you probably don't want them renting your property in the future. So, just don't renew their lease. Once they are out, then find tenants that won't trash your property and start them at the newly increased rent. Maybe you can scoot them out as soon as you become the owner / landlord? If I rented a property and a landlord told me the rent would be increasing xxx amount of dollars, then I would find a new place to rent. No reason to trash the place.

You can incentivize them to leave by offering to return their deposit in full and an additional $200 if they leave the place clean and out by a certain time on a certain date. 

How much money can you put down? If your father owes $20K and he agrees to seller financing, then you can put down $20K so he can pay off the mortgage. If you were to finance it for 15 years at 5%, then your monthly payment would be $869.87. So, your dad would get that monthly income and you get $1530.13 (leftover from the $2400 rental income) to pay for property taxes, insurance, maint., etc. You will free cash flow quite a bit ($800 - $1000). 

Definitely start the ball rolling and speak to some lenders just in case your father does not want to do seller financing.