All Forum Posts by: Matt Leonard

@Antonio Yang  The recessed lights are much nicer than standard surface mount light fixtures.  Are you doing other high end finishes to maximize rent and class of tenant?  If so, I'd take the extra day and cost to get the lighting recessed.  If you are trying to get average rent and tenant class, it probably doesn't matter.

Originally posted by @Chris Clark:

My understanding of it as it is right now is that it is only being taken from homeowners. If you own a property and rent it out it's still deductible (both real estate taxes and interest).

 Does that hold true if someone owns a rental property in their own name as opposed to an entity?  

While its only a couple hours old, everyone probably hasn't had a chance to fully digest it, and isn't finalized... does this new tax plan help real estate investors?  A couple key areas that have me concerned;

Let me preface by saying that I am not a CPA and invite anyone smarter than me to rip me to shreds :) 

1.  Eliminating some tax brackets and lowering the rates.  Win all around. Go Donny Go!!!

2. The cap on property tax exception at $10k.  I'm unclear if this is per property or total.  If you own 10 units and have 20-30k a year in property taxes, will you be capped at only $10k or is it $10k per property or entity?  This could really suck.

3. Capping the pass through entity (LLC) tax rate cap 25% and corporate (c-corp) tax rate at 20%. I think this is good for those that own in an LLC since the income will be taxed at no more than 25%

4. Eliminating the SALT (state and local tax) deductions.  BIG kick in the junk to us blue-staters with high state income tax.

5. Limiting the mortgage interest tax deduction to the first $500k.  Same as #2 above, is this per person or per property/entity.  Same as #2 above, not sure if this is per person or entity/property.  If it is the former, that is another HUGE kick in the junk.

What are your thoughts?

@Jing H. Cameras are my bread and butter.  Since it is not a separate dwelling, you aren't leasing the outside of the house, your landlord could take down any cameras on the exterior.  He'd be a total jerk for doing so, but he is not breaking any laws that I know of.  As others had mentioned before, if you have a camera looking out one of your windows, at the front door area, there is nothing he can do about that.  There are many "wireless" cameras out there, but most need to be plugged into and outlet, so while there is no data connection wire, you will need a power wire.  There is a product called Arlo (recently acquired by Netgear) that make battery powered rechargeable cameras that work over wifi.  As a renter, I think that is your best solution since you can self install, you can put one literally anywhere since you don't need to be near an outlet, and you can take them with you when you move.  Let me know if you have any other questions on them!

I don’t think section 8 would make it a bad deal. Not to say that all Section 8 tenants are great, but neither are all market rent tenants. I would put in an offer subject to inspection, financing, and proof of full and timely rent payments for the past year. There is nothing inherently wrong with section 8 other than the annual inspections, which keep owners from letting their properties deteriorate. If you were planning on keeping up with it anyway, it shouldn’t be an issue. If you haven’t already, pick up The Section 8 Bible vol. 1 & 2. Great info and very entertaining!

@Peter Yun you want to call some local banks & credit unions and talk to their commercial lending or commercial banking department.  If you are talking to a mortgage lender, they are most likely looking at residential mortgages.  Having a great relationship with a local bank or credit union is an awesome asset to have for any small business.

@Michele Carney Do you have a security deposit for the tenant and will it cover some/all of the cost of a new furnace?  You could save your self the time and effort of chasing down the tenant and trying to collect/remedy, and thereby recoup your loss and flip the burden of a suit on them.  I would still file a police report so that you have that for documentation/evidence if it does blow back on you

An Duong 2 hours? Get in the car and go see it! How much is your time worth? 100/hr? For $500 of your time, you could save yourself tens of thousands of dollars and hours of headaches if it is a bad deal.

@Lukas Zupan I don't know the ins and outs of self storage deals.  If something seems too good to be true, it either is or needs more investigating.  If it were me, I'd want to see some pro-forma's or other numbers on paper that could be heavily scrutinized.  Also, how would the deal be set up?  Anything to keep this guy from taking your investment money and never building anything?

Remember Warren Buffets rules; 

1. Never lose the money! 

2. Never forget rule #1

@Luke Cachia looks like you need 30-40k for down payment and closing costs? Do you have a primary residence to re-fi or get a HELOC on? How about finding a hard money lender in your area?

For your value add, are you sure you can divide and sub meter the utilities?  Some areas require the landlord to pay for water and sewer.  Also, depending on how it is piped, you may need to do some plumbing reconfiguration to separate the units.  Do you need to provide W/D in units?  If you have any common area space, you could put in coin-op W/D's to recoup your electrical and water costs.

For you expenses, have you accounted for landscaping/mowing, CapEx beyond normal repairs (roof/HVAC/etc), and property management? If you aren't figuring in property management and planning to do everything yourself, be aware that you are buying a job, not an investment. That may be fine to start, but it's not scaleable and the wrong tenants will drive you bananas!