All Forum Posts by: Ryan H

Closed Tuesday but the previous renters moved back in Wednesday.  The place they had lined up to move into ended up being sold so the landlord returned their deposit and 1st months rent.  They had no place to go but still had keys to the place they just moved out of so they moved back into the house I now own.  I had plans to start the rehab next week.

Would you:

A. Begin the eviction process

B. Get them on a month to month lease and start cashflowing (at 10% less rent than you projected) on day one even without rehabbing.

C. Some other option

I think this could work out pretty okay or go really, really wrong.

What would you do?

@Okeoma M. - I grew up on the M Streets and it pains me to think that my parents sold that place. Granted, they sold it to my sister who then sold it a couple of years later for a nice profit but nothing like what it is worth today.  I still really like Lakewood and have fond memories. But then again living in the Sonoma Wine Valley is pretty great too!

Nice work @Jon Wright!  Your post struck me as I too am closing on a deal this week and am wrapping up taxes. Owning your own business both helps and hurts during tax season for sure.  As all the "Rich Dad Poor Dad" (RDPD) folks know, it's great being able to only be taxed on what your corporation doesn't spend (very simplistic explanation BTW) and having un-taxed income to invest until this time of year is awesome but can cut both ways.

Lots of folks are asking for tax tips so here are a few I use.

I AM NOT A TAX ACCOUNTANT OR CPA!

I just do what they suggest to help me out and keep me out of trouble.

1. Deduct everything that qualifies..... repeat.... that qualifies.  Miles to and from RE inspections, property improvement costs, airfare to check in on out of state properties, etc.

2. If you practice the BRRRR strategey, and paid cash, be sure that you take out (2) loans when you go the refi, one for the original purchase amount and one for the added value equity. Then you can combine the two to purchase your next deal and write off the interest payments on both loans. If you take out all the principal and equity of the ARV as one loan, then the IRS sees that as income. Where if you take it out in two loans, the principal repayment loan (the cash purchase) has now been converted to a loan with deductible interest. The second loan for just the increase in value is then transferred/combined to purchase the next property and is now considered a second position loan rather than income. It is similar to a 1031 exchange but different....kind of like Thailand. (foreign travel joke).

3. Find a nice place to stack your non-taxed income percentage all year so it is working for you until right about now.  Personally, I use Lending Club and option strategies (iron condors, broken wing butterflies, and the occasional DITM covered call) for that.

Hopefully that sparked a few ideas or at least gives BPer's some things to Google.

Worth repeating..... I AM NOT A TAX ACCOUNTANT OR CPA! Your mileage may vary.

Hey Jake,

I moved our family up to the Town of Sonoma a couple of years ago and was able to score a REO and renovate it for $100k. Full gut, abatement, patched holes in the subfloor, added a sun room, rearranged the kitchens, etc. and ended up with over $100k in equity above what we put into it when it was all said and done. We selectively yellow lettered up here too and got some response but no deals.

I too was looking for a vacation rental in Guerneville and got beat out on my offers. You have to be careful up there because some places are on cesspools and are basically and able to be renovated or developed due to county regulations.

Napa County is a no-vacation rental county unless you had one already before they passed the ordinance.  Lots of people still do it but they have to be under the radar.

If you are swimming in cash, go for it.  Personally, I found I could not make the numbers work compared to other cash flowing opportunities. Plus you have the tax issues if you stay at your own vacation rental. If Uncle Sam catches you.... say good bye to your write-offs and depreciation.  It is then considered a second home so you can not write it off as a rental expense.

I am not a tax accountant so do your own homework.

Best of luck and let me know if you land something... We are always looking for cool retreats to visit.

Sarah,

I recommend joining the Sonoma County REI Meet Up to talk with more REI in person as well as BP. Some of us invest out of state and can provide some insight and possible things to avoid.

Check it out: http://www.meetup.com/Sonoma-County-Real-Estate-Investors-Meetup-Rohnert-Park/events/227945200/

Just bought a 3/2 SFR in Dallas today that meets the 2% and 50% rules, has about $25K+ in ARV equity... all from my living room in Northern California thanks to my Task Rabbit remote assistant! Befores and afters to follow once I get the rehab completed.

Hey Davin,

Welcome to BP.  We are in a similar position and industry. I am an architect in the town of Sonoma and am increasing my stake in RE investing. We both have out of state investments, mine is in Dallas and I sold my condo in SF about two years ago.  If you are interested in connect with more RE investors I suggest checking out the Sonoma County Real Estate Investors Meetup in Rohnert Park. Good group of active investors and some just starting out.

I will also keep you in mind for possible SE work.

Cheers,

Ryan

@Okeoma M. , As an owner of rental property in Bishop Arts, I can say that we have had mixed luck with rent prices and tenant quality over the 7+ years. But now, our tenant knows how good a deal they have and appear that they are going to stay for years to come but who knows.

I am looking to invest in another property in or near Bishop Arts in the near future. If any one wants to talk in more detail, please let me know.

I was listening to a BP podcast w/ Serge and one of the topics was about not trying to compete with a huge apartment complex.  Well, when I bought 7 years ago, the Bishop Arts District in Dallas was mainly 2 stories max. with lots of SFRs, duplexes, and a few small condos.  There are a few new Class A 5-story apartment buildings adding hundreds of new units to the area with lots of opposition from the existing community. They have 24-fitness rooms, pool, community lounges, club houses, etc... my Class B condo ... does not.  The rents are also almost twice what I rent my 2BR/2BA condo for.

Question: Would you be concerned about increased rental supply or be excited for the growth of the area and possibly raise the rent to get closer to the new market rate?

Thank you in advance for your opinion.

Hey Manny,

I am also in Sonoma, CA (the City of Sonoma actually) and in the market for my next project/property.  I am looking in the Guerneville/Russian River area, Santa Rosa, Sonoma, and strongly considering picking up another property in Dallas. Mainly SFRs and small multi families.

If you are interested in talking "shop" please let me know and perhaps we can help each other out.