All Forum Posts by: Kathy Henley

@David Duron  What is in your project budget? Every expense goes to something. Did your investor agree that you would be reimbursed for daily expenses? If so, receipts must be present to please the tax man. The company would issue a check to you to reimbursement such expenses. 

Cash purchases should be avoided, you will loose credibility with your partner.

A cash withdrawal from the company account might be broken out for small supply purchases, for example, or copying a key, but each purchase must be verified with the receipt; receipts will match the total cash withdrawal.  Mileage reimbursements for 2022 will be 58.5 cents per business mile (not gas purchases). Keep a mileage log, there is an app for this.

@Kefrene Zakpa Start searching for a lender. There are lenders who lend to property investors and offer low down payments for owner occupied properties. Choose an area where people want to live - like yourself -  so that you will have a pool of tenants to keep your place full. I bought a 4 unit property and live in one unit. My tenants/neighbors pay rent and it is enough for to pay the mortgage, taxes and insurance, plus a wee bit that I set aside for repairs. Another model is to take the master lease of a single family and find roommates for each of the bedrooms, signing a lease with each person. You choose.

@Chiara Poderi We are not players, we are property investors. I don't see that you analyzed the cost of owning the property, only the cost of buying. You mention that it is a fixer-upper. Maybe you intend to sell it after rehabbing? or holding it for the income? Either way it needs more numbers to see if it is a good deal. The value may increase over time (appreciation is terrific) but it costs to rehab and sell a property. What is the cost of completing the rehab? How will you pay for it?  For holding it as a rental, one needs to weigh the rental income against the expenses, by year, with consideration of fix up costs. If it is a good deal, find a money partner by sharing your analysis.

@Katie Willcox Simple enough to fit on a postcard: What are your plans for your property. I am interested in buying it for cash.

@Carmen Ruiz Expected categories of our real estate activities are listed on the Schedule E of a personal tax filing (Form 1040). Take a look. These will get you started when setting up a spread sheet for 2022 expenses and income. At year end, the Net total (Income - Expenses) reveal your profit or loss. If an expense happens which needs tracking that isn't listed on the Schedule E, it could be captured under 'Other' (like real estate education) when filing.

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@Michael Ndjondo makadi I have property insurance, business insurance and an umbrella policy.  The expenses of each  investment property is filed on the Schedule E of my personal return. Take a look. You can see the categories suggested by the IRS. My CPA has a few more under 'Other'. The gain or loss is included on the personal return. Read any book by Tom Wheelright.

@Michael Ndjondo makadi I hold title to my investment properties in my name, which is preferred by my mortgage lender. I manage the properties through an LLC. It collects the rent, signs contracts, markets the apartments and is the face of property management. The LLC has its own bank account, which keeps track of all real estate related expenses (mileage expense reimbursement, education, and real estate related travel.) It also separates my personal living from business (my CPA frowns on the co-mingling of funds.)

@Juan Erick Rico Avalos Are you in a rush because you need to move in? Take temporary housing and give the tenant time to adjust to the facts.  What is the rental market like for them, any vacancies?  Give them a clear letter of non-renewal. One must be kind, yet firm; sympathetic yet unemotional. Yes they will be in shock, then angry; maybe they will try to make a deal. Aim for 30, but if it goes to 60, it will be done. 

Weather may affect moving day, but packing, viewing new places and signing a lease elsewhere are done indoors. We Midwesterners are a hardy bunch.

We once had a building that we wanted empty, in order to sell it. We gave tenant 60 day notice with the incentive of $30/day refund for each day that she left early. The tenant vacated in 32 days and earned some money.

Don't give any thought to a security deposit refund, as all surfaces will be exhausted from normal wear and tear. It is not an issue.

@Quinn Kane 'most expensive property . . . in the neighborhood', I avoid these. The short term income numbers change if the city changes their rules, as happened in St. Louis. Properties with short term rentals were re-classed as commercial and cash flow changed overnight. If you can still make a go of it classed as commercial, go for it. 

Is it a good deal with market rate long term tenants? Your worksheet is not accessible. The deal has to make sense with a few options, in case the best option hits a bump.

@Myles Young  This is a good question for the seller's agent. My property was reclassified as commercial because the city learned that it was listed and getting reservations on AirBnb. When I signed leases for long term tenants, the property tax classification went back to residential. Ask, why commercial.

Secondly, you may want a lender that is friendly with investment properties and knows the layout of your city. Here in St. Louis, the end caps of many city blocks are zoned commercial, just a property or two. This makes for walkable neighborhoods with pubs and coffee shops, milk markets and smoke shops, serving the neighbors. Over the decades, what was once a store front commercial building, may now be a rentable residential unit. Work with a lender who knows this and willing to say yes.