All Forum Posts by: Luke Sass

Jared, Take a look at these articles and I think you will be able to make a decision. http://www.themoneycommando.com/umbrella-policy-vs-llc-asset-protection-part-1/ http://www.themoneycommando.com/umbrella-policy-vs-llc-asset-protection-part-2/ They dive into very detailed explanation as well as many risks/benefits & possible scenarios in which makes better financial sense. The clear winner is a large umbrella policy as it’s better coverage for most situations at a better price.

Alfredo, I would say landlord. A suggestion that I did on mine if your fans are suffering from corrosion they are either undersized or not running long enough to properly ventilate your bathroom. You can put them on a timer so they run for a certain amount of time to make sure you won’t have this issue in the future. I linked to a quick article of one of the many products, I’m sure Home Depot has many options as well https://www.bobvila.com/articles/bathroom-fan-timer-from-aircycler/

@Tania Strobinski quick question for you I’m assuming it’s in your personal name but I thought I would ask is this house owned personally or by an LLC ? -as that could make a difference in the amount of Insurance you should carry. -It’s hard to say that a certain dollar figure is adequate without knowing what your policy has for coverage as well as any key exclusions. I’ve found that I learn more about my policies but looking at what’s not covered. - for example you could get a bad million dollar policy that’s comparable to a well written $500,000 policy depending on specific types of coverage offered or excluded - Best advice is to find an agent that you can trust, they should be looking out for your best interests hopefully a million dollar policy without any coverage gaps and maybe an umbrella depending on your personal exposure/net worth etc

Steven, One more point to consider is that historically speaking interest rates on debt are low and there is value in the ability to lock that much money at 4.75% for 30 years as who knows where interest rates will be in the next 3-5 years it sure looks like they are trending upward.

@Tony Varao Micheal nailed it biggest concern is coming up with a reasonable way to split your house into primary residence vs rental for taxes. Couple quick thoughts; -keep detailed records of all property related expenses (I would recommend opening a separate account to avoid mingling any personal/ rental money). -Don’t forget about the security deposits and any local state laws regarding how you have to handle them -as long as you have documented everything a tax professional can help you sort it out.

Shiva, A couple things to consider; Installation costs & maintenance for upkeep and repair Noise ( certain types of flooring are extremely loud) Real hardwood -one of the more expensive options -installation is time consuming as it has to be nailed down and then sanded/finished -biggest benefit in my opinion is that if your floors get trashed at some point you can always sand them down and re finish them Vinyl Flooring -cheaper than real hardwood -easier to install ( you can either glue it down or float it) - takes abuse fairly well especially moisture -while you can’t refinish vinyl if you float the flooring it’s very easy to pull it up and replace

Jeongmin, A couple of posts here really nailed it in regards to capital gains taxation vs ordinary income. It really depends on what your goals are? If you are looking to access that capital like many investors are then your best best is a Heloc.

Cristobal, A quick search on google will turn up all sorts of excel options. -http://exceltemplate.net/finance/rental-property-income-expenses/ -There is a lot of good advice on here already especially opening a separate account to deal with income and expenses. If you pay all your rental bills thru this account (I would pay your personal portion of rent/utilities to this account each month. You should talk about to your tax man and come up with a % that your going to consider personal vs rental property as I’m sure you know this is very important come tax time. Be sure and remember your security deposits as well, you don’t want to mix that money up either.

Freddy, To add one more caveat onto the great advice from David is banks typically like to see 2 years of rental income from a property before they will allow you to count it as income. It compounds your problem because even tho you can have excellent cash flow they won’t account for it in your debt to income analysis.

Lawerence there are a lot of articles out that address this issue. I’m not a CPA but it’s my understanding that as long as you itemize your income/expenses and keep detailed records you can qualify for the section 121 exclusion but it will on a pro rata basis. For example if you occupy 50% the house (based on sq footage, #of bedrooms)than you can allocate 50% of the capital gains at the time of sale towards the section 121 exclusion - the remaining 50% will be treated as investment income and possibly subject to depreciation recapture -this is assuming you are apportioning your mortgage interest and property taxes on the proper schedules when you file your taxes ( your CPA should be able to help you with this) I would love to have CPA weigh in and maybe they can provide some insight as to why you might be getting that advice