All Forum Posts by: Maximillian Engram

Hi Max, 

I am also a newbie in RE investing, and I have to say the BP podcast with Tom Wheelwright was a game changer for me. I had to listen to it a few times, and am still going through his books right now: The Win-Win Wealth Strategy and Tax-free Wealth.

I am also trying to find a compatible tax strategist that can assist me with planning for 2023 strategic investments. My head has been reeling with so many ideas.

In any case, to my (limited) knowledge, tax treatment differs whether your activity is considered a passive or active one. For example, passive would be a long term rental. Active would be a short term (under 7 days) rental.

If you go with the route of short term rental. Let's assume you purchased the property on Jan 1, 2022 and you owned it for the whole year. Come tax time, you can run a Cost Segregation Analysis. It will break down based on: value of land, building, land improvement and contents of building.

Typically then you can claim about 30% of the purchase price. For example, let's say you purchase a house for $1M, then you can claim bonus depreciation of $300k. And since this is an active expense (generated from your active participation in the business). It can go against your other active income (aka W2).

On the flip side, if this is a passive investment, such as a long term rental. Then you are allow to have this deduction only against your other passive income.

Hope that helps, please take it with a grain of salt and check out those books i mentioned above!

@Jeffrey Albaum

In our experience, the #1 mistake owners make when selecting a Property Management Company (PMC) is ASSUMING instead of CONFIRMING.

It's often a case of not doing enough research, as they don't know what they don't know!

Owners mistakenly ASSUME all PMCs offer the exact SAME SERVICES and PERFORM those services EXACTLY THE SAME WAY, so price is the only differentiator.

So, the first question they usually ask a PMC is about fees - instead of asking about services and HOW those services are executed.

EXAMPLE: PMC states they will handle tenant screening – what does that specifically mean? What documents do they require, what credit scores do they allow, how do they verify previous rental history, etc.? You’d be shocked by how little actual screening many PMC’s do!

This also leads owners to ASSUME simpler is better when it comes to management contracts.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

We have a 14-page management contract that we've added our real experiences to over the years, with the intent of protecting both us AND the landlord. Beyond the Monthly Management, Placement & Maintenance fees, all other fees in our contract are IF EVENT -> THEN fees.

We don’t know any PMCs to recommend in the area mentioned, but since selecting the wrong PMC is usually more harmful than selecting a bad tenant, you might want to read our series about “How to Screen a PMC Better than a Tenant”:

https://www.biggerpockets.com/member-blogs/3094/91877-how-to-screen-a-pmc-better-than-a-tenant-part-1-services-and-processes

We recommend you get management contracts from several PMCs and compare the services they cover and, more importantly, what they each DO NOT cover.

EDUCATE YOURSELF - yes, it will take time, but will lead to a selection that better meets your expectations & avoids potentially costly surprises!

P.S. If you just hire the cheapest or first PMC you speak with and it turns into a bad experience, please don’t assume ALL PMC’s are bad and start trashing PMC’s in general. Take ownership of your mistake and learn to do the proper due diligence recommended above😊

Hey @Maximillian Engram there are quite a few meetups where you can meet some people. It is one thing to meet online, but a whole different story when you meet face to face. I have met lots of people at my meetup, Mana's meetup on the first friday of the month, the BREW on the last Thursday of the month and at Alamo Investors Assoc.

There are a few members on here that run meetups. I believe both @Manaia Alalamua and @Rick Pozos have them regularly. I don't ever attend meetups, but would be happy to connect.