All Forum Posts by: Kristen Haynes

That's great! This market cannot keep up the pace that it has since 2010- but itusually starts in the West (California, Arizona)- watch those markets, because when they start to stop appreciating and give back gains, you know that change is a' comin'! :) 

Yes. I have single family rentals and a short term investment (beach) rental, and multi family is one of the things that I am looking at actively, but our zoning here doesn't allow much of that in Charlotte, although zoning loosened up wiht a City Council vote here, September a year and a half ago, to allow for more higher density housing- finally! MF offerings here up until now are either waaay old and overpriced (you pay double what you would expect for only one SIDE of a duplex) or they are big complexes that cost millions of dollars). Right now, I'm going to watch the market talk and see what comes out in the wash for a good deal in a declining rental rate market. But, just like anything, it's location, location, location and real estate is so super, hyper-focused. And the MF rates aren't stagnating too much (yet)- and, in cities like Charlotte, there's a lot of room for competition is a growing city like ours- we have over 140 people moving here per day, and they all need places to live!  So it'll be okay. Staying steady wins the race! :) 

That's why I copied and pasted it, though it didn't seem to 'take'- though it is more difficult to read- it is Realtor-protected content. Try this shortened version of the article: 

MULTIFAMILY RENTS END YEAR WITH ANOTHER DECLINE

HOME INDUSTRY NEWSBy RISMedia Staff January 12, 2024 Reading Time: 1 min read

According to the latest Yardi® Matrix National Multifamily Report, 2023 ended without another upswing in the multifamily rental market; in fact, December was the fifth month of declines in a row.

The average U.S. asking rent was $1,709 in December (a $4 decline), with year-over-year growth at 0.3%. Occupancy remained unchanged at 94.8% in November. Multifamily rents fell in both the Lifestyle (-0.2%) and Renter-by-Necessity (-0.1%) segments.

Of the top 30 metro areas surveyed by Yardi Matrix, only six experienced growth in multifamily rent prices: Columbus, New York City, Atlanta, Minneapolis + St. Paul, Detroit, and San Francisco.

The report concludes that “Discounting the 2020 pandemic year’s 0.1% gain, 2023’s full-year rent growth of 0.3% was the weakest rent performance since the 0.2 percent increase in 2010. And rents are likely to remain stuck in neutral during the early part of the year.”

However, there are some encouraging signs for those invested in the rental market. Sngle-family rents actually increased in December 2023 (up to $2,123). The report suggests demand has and will be sustained by the job market and immigration.

For the full report, click here: 

https://www.rismedia.com/2024/01/12/multifamily-rents-end-ye...

As of December 23, 2023: https://www.rismedia.com/2024/01/12/multifamily-rents-end-ye...

This actually DOES apply to short term rentals, which are usually done as a commercial property on a 39 year basis! I just got $79 K back for mine, and another $129 K back last week on another short term rental- plus $125 K on one of my long term rentals. This company that I use does the analysis for FREE- and if you save no money, you lose nothing to find out. Can't be more simple.

Yes, I realize that short-term rentals are considered commercial at 39 years- igger Pockets would not allow me to amend my post. Not all engineering Studies DO require an on-site inspection- Northstar Marketing Group doesn't, except in special circumstances- they have a Zoom or conference call with the client and together they fill out a questionnaire, send supporting documents and past depreciation scheduled, and they are done in usually two weeks with the amount of the discovery, and they come with free Audit Defense, as well. I'm sure most CPA's do straight-line depreciation, and you are correct that it depends on what is in the client's best interest. But of my real estate investor clients can get a big chunk of money back NOW, to infuse into their bottom line, versus a 'dribble' here and there- 99% of the time, they want that. It's always up to the client and their CPA how best to use that money- and when- once it is put into the proper 'buckets'. 

Yes, Anthony, it is. It is very different- basically, it is accelerating the benefits, instead of getting a 'dribble' here and there, over 27 or 29 years, like typical CPA's use. Basically, an Engineering Cost Segregation takes everything that is renovated, updated, or done to each property for the past 15 years, and puts each and every item into the proper classes- for example- if you took basic, straight-line depreciation for carpet, for example- carpeting that you put into a rental home- it doesn't LAST 27 1/2 or 29 years- it lasts maybe five- so that is put into it's OWN classification area, using exact guidelines from the IRS for each and every item. Most CPA's don't do anything other than straight-line depreciation, because it is very time-consuming to do and they don't have the experience nor the knowledge to even be able to DO accelerated depreciation, like an Engineering / Forensic Accountant has. 

With the group that I use, it's a VERY easy process- basically, it starts with a scheduled call, where the Engineering Accountants ask simple questions about each of your properties- when you purchased it, what improvements you have made to it over the years, and approximately WHEN you made the improvements and the estimated cost thereof of any additions or improvements. Then, they involve your current CPA to get the past depreciation schedules for each property, so that they can know what has already been captured in any straight-line depreciation. At that point, you may have your CPA get on a call with them, as well, if you'd like- this does not replace your CPA who basically files your taxes- this is a complement TO their work- so it's not 'cutting out' your CPA. In fact, this company encourages your CPA to be part of the process (if you and they want to be). Using the information given to Northstar about the above, they will complete a 100% FREE audit and determine what, if anything, they can save you in tax offsets, using the Engineering-based Cost Segregation. If there are savings to be had, they will give you the amount that they can save you, along with what their fee is (this group charges less than most, up to 10% (and less than that if you have multiple properties to Cost Seg- they basically offer a volume discount). For example- they saved my client with two rental properties (one beach condo, one a mountain house) $275K on the beach rentaL, and $89 K on the mountain rental (she owned the mountain house for less than a year, and she made fewer improvements during that time- so the savings were not as high as the beach place). Basically, if you save $100,000, your fee would $10,000 to get the full $100 K back, and even less if you are able to cost-seg more than one property. Who wouldn't pay $10 K to get back $100 K? 

Once you know what the savings would be and want to move forward, they will complete the full audit and generate the proper tax form for you and your CPA to utilize, with everything being put into specific categories. It generally takes around two weeks or so to get that back. If they cannot save you money, or if you decide not to move forward- you just got a free audit and there is no fee to check. Then, if moving forward, this group could file the proper form for you with the IRS- or you will give that study and your CPA would file it for you. This particular group uses Engineering Accountants and past IRS Agents to do this, so they guarantee their work with true Audit defense- something no other CPA offers. So it's basically a win-win, all of the way around. 

On my properties, I took a big chunk of that money when filing extended taxes last year for 2022- and I saved a bunch to take in future years, when I need it to offset future taxes (you can take some now and some in the future, you don't have to take it all at one time). Does all of that make sense? Reach out to me if you would me to put you in touch with them to see what they might be able to save you. Happy to help! :) 

Absolutely, Julio! 

I used the Northstar group- they do many things besides just Cost Seg for their business owner clients. I would be interested to see what your company offers and the basic fees for your firm's Cost Seg studies. I have found that many firms charge pretty exorbitant rates, so definitely would like to have a feel for how your firm compares. Feel free to email me, so I may compare the product offerings and fees for those services for my other real estate investor clients. Thanks, and have a great week! Kristen

Hey, just checking in with my fellow real estate investors! If your Accountant has not done an Engineering-based Cost Segregation study on your investment property rentals, you may want to look into having one done. I just completed mine and I saved $275 K in taxes for just one of my properties (a short-term vacation rental). I was blown away and wanted to share this with the group.

I have a company that I found that will run a 100% FREE audit for owners of rental properties, to see if and where they can save you money and put some cash back into your pocket with your rentals. They use the very confusing/detailed IRS guidelines to save your company money over what a ‘typical’ CPA does (incorrectly keeping everything in the 27 ½ year or 29-year depreciation schedule- which is the 'easy' way to do it, yet it loses you a LOT of money that you could be using NOW to re-invest in your rental portfolio). You can also use this on vacation rental properties or even on any commercially leased or owned buildings. And the best part is, you can take this money anytime that I need it- a chunk now to lower taxes if I had an exceptional year, for example, I can save it for future tax filings. You definitely need this as a tool in your toolkit for income-producing rentals in your portfolio!

This company works WITH your existing CPA to take the benefits (unless you want this company to file them, instead, which they can do). I had my CPA take their audit and directed him to use it as he needs to, based on the income that I have each year- he did take some this year and we're saving a big chunk for future years.

They will complete a free audit for you for your rental properties (or on any small business that you may also own), and if there are NO savings, there is NO fee for the 'free look'. If they do find that you have a substantial sum of money that you can take immediately, they will tell you how much you can get back, give you their fee to recover that money- and you could decide to move forward- or not. They go back 20 years, and the fee to do all of this is only 10% (and even less than that, if you own multiple properties). It takes about an hour phone call, and they will work with your existing CPA to get the depreciation schedule already filed, to see what can be ‘tweaked’ to give you back a substantial sum of money NOW, rather than a dribble here and a dribble there over 27 or 29 years (will you have a need for it then, or would you rather have a big, lump sum now, to re-invest)? Three of my real estate clients over the past two months saved $650 K, $285 K, $189 K, $540 K, and $275 K- and none of them had huge rental portfolios. You can do this with just one rental property- even commercial buildings. Hotel and motel owners (and other small companies) save a lot more, because they have such large portfolios with a LOT of write-offs. some of your properties may not offer a lot in savings- but if they don't, they will tell you it's not worth doing- no harm, no foul. I have had one real estate client who bought a vacation rental property with me, and they ran the audit and told him that it wasn't worth doing, as he wrote all of his income down so that he effectively had a zero tax bill already- but that is pretty rare. 

A nice feature that they offer, too,  is that all of their work comes with 100% Audit Defense- unlike with other CPA’s work. My own CPA is now using this company to do Engineering Cost Segregation for his other Investor clients!

And if you are also a business owner, this group also offers other programs, like the Employee Retention Credit, which amounts to $26,000 per employee in 2022 (plus $5000 in 2021). 98% of businesses that qualify for it have not even taken it. My business didn't qualify, as an owner themself cannot take the credit, but it's nice to know that it is out there for those who do qualify.

Bottom line: if you haven’t had an Engineering-based Cost Segregation study done yet for your rental properties- you may be leaving some serious money on the table. Reach out to me and I will help you get in touch with them for a quick call to see what you might save. It’s surprisingly painless and you might be surprised by what they get back for you- I sure was! Happy Real Estate Investing! 😊Kristen Haynes

Quote from @David P.:

Long story short. I got into contract for a duplex 80k off list price with the listing agent who had me pre-approved with her preferred lender. She has a long working history with this lender and at this point I'm sensing they are very buddy buddies.

We start escrow and the lender says he can get me 5.875% with 1 point. I was okay with that until I talked to my neighbor who referred me to another reputable lender (they both got steller reviews) and he quotes me 5.5% with 1 point so a fairly significant difference. 

I first brought it up the the listing agent who claims a big part of getting my offer accepted was because I got approved by their preferred lender. She seem a little flustered at first but after telling her the other lenders name and credentials she cooled down and said ultimately it's my choice.

I did go back to the preferred lender to see if he can match and he said 5.625 with 1 point is best he can do. It nets to about $70/month difference versus the 5.5%. 

My question is it worth it starting off on wrong foot with the listing agent who is representing both sides over this difference in rate? We are just starting the process day 1 with many steps and potential hiccups along the way. I definitely want her to be in my corner.

We have a 30 day close with contingency in place but I do worry now base on the verbiage and almost like a threat in how they both responded. They both replied back it was a team effort in getting my offer accepted and made it sound like without the preferred lender they may have gone a different direction.

David;

I am a Realtor / Broker, Broker In Charge and owner of my firm (selling real estate in Charlote, NC and Charleston, SC for 32 years now). Whenever you  are a buyer and are using the Listing Agent as your Realtor, that Realtor and her firm are responsible to treat BOTH parties as a Dual Agent ethically and fairly. She referred you tto her preferred lender because she knows that this lender can 'get the job done' and get you to the finish line, as she has years of experience with him or her. It's illegal to get kickbacks, so I doubt that was the reason that she sent you in that direction. I have a handful of lenders that I work with specifically because they order the apraisal on time, they have local underwriters that they can walk down the hall to talk with, and I give them hundreds of deals, so, they aren;t just looking at "one" deal with a buyer- if they 'scrw up' they will lose ALL of my business. However- dor that business, they give my clients the best rates with no extra junk or BS fees, and everyone is happy. As long as you have time to switch lenders without a contractural delay, aND this lender is proven, with many years of a great track record, and the Realtor feels comfortable also with this other recommendation- switch and take the lower choice. If the original lender wants to keep your bsuiness, he or she can always 'buy your rate down' with their own points to keep it- if they are willing. Usually a local lender will do whatever they can to be competitive. And it is always YOUR choice for whom to use for your loan, so don;t worry about it 'upsetting' the Agent. As long as she feels comfortable with this option- gof for it! Just make sure that the new lender will LOCK IN that rate to v=co ver your full contract time, and any extra if your state allows the parties to have an extension due to no fault of their own (some states have 7 days, some have 14, some none)- ask your Realtor about your contract, and try not to have to use it, lol.  Let us know how things turn out!