All Forum Posts by: Michael Haas

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $822,000
Cash invested: $300,000

Contributors:
Jess Haas

Rental Type: 3+ Units Moderate
Condition @ Purchase: Fixer
Strategy: Reno + HouseHack

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $435,000
Cash invested: $37,000

Contributors:
Jess Haas

Rental Type: SFH(3bd) + ADU(1)
Condition @ Purchase: Good
Strategy: Light Reno + Garage Conversion

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $601,000
Cash invested: $450,000

Contributors:
Jess Haas

Rental Type: SFH(4bd) + ADU(2)
Condition @ Purchase: Heavy Fixer
Strategy: Dormer Addition + ADU

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $552,000
Cash invested: $322,000

Contributors:
Jess Haas

Rental Type: Small House
Condition @ Purchase: DADU (2bedrooms)
Strategy: Condoize & Hold

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $389,000
Cash invested: $30,000

Contributors:
Jess Haas

Rent Type: Cash Only
Condition @ Purchase: Good
Strategy: Light Reno + Hold

@Ell Jay Lindsey you're not wrong, you're just trying to turn a screw with a hammer - wrong tool for your goals. BRRRR is all about building net worth & equity in properties that can serve you in future purchases - not about cashflow, at least not on day one. BRRRR into a break even deal or even a slightly negative cashflow deal, and get all your capital back for the next deal. Build your stack, and let time do its thing. Rents go up a heck of a lot more than expenses do.

As a quick illustration - my current "oldest" property is a 3 unit I purchased in North Beacon Hill in late 2016. After renovating it my gross rents were about $5,000 - now, 7 years later, they're over $7,000. BRRRR lets you recycle your capital and keep buying, but its TIME that brings you cashflow.

@Yesenia Charles if you don't plan to hold the beacon hill property forever you should usually sell it before your section 121 deduction expires. This can be a very large tax savings (typically $30,000 - $100,000 in my experience) and just doesn't make sense to let that expire, unless you truly never want to sell the property. 

I just did a Section 121 on one of my Seattle homes w/ $44k in tax savings, I just DM'ed you in case you want my thoughts on how it went. Cheers!

Ownership is the way to go - if you can afford to own now (through househacking 0-3% down) do it. If you can't afford to own now side hustles, wholesaling, flipping, getting a raise at work, starting a company, etc are all viable to raise that capital. The specifics depend on your skillset, but the general formula of EARN-THEN-INVEST is tried and true. 

Hi Matt - I built a DADU on my primary residence and sold it using Section 121 (2 of 5 rule), so although I'm not an accountant and you should seek one out I'm happy to give my general thoughts here.

It sounds like you are keeping the house, and selling the condo lots, so there is no section 121 deduction that you can apply here - you never lived in the "vacant land" you're selling. You may be able to 1031 but I'm not sure you'll want to re-invest the proceeds into more real estate. 

To find the tax basis for the land your accountant will likely determine the land value for the entire parcel (using tax records or a similar source) then multiply that by the % of the parcel that is being sold. So if your land value is $300k and you're selling 50% of the parcel your DADU lot value is probably $150k or so, and any gains above that would be taxable as capital gains.

BP accountants, feel free to shred my reply and provide your professional insight!

Looks like you're focused on the Eastside + HWY 90 corridor / Suncadia in WA, is that where you're looking to expand as well?