All Forum Posts by: Michael King

Lots of good questions. A rental property has lots of tax advantages, from interest paid, property tax paid, depreciation, etc. A good accountant can help you. My accountant is in Houston; Ed Gardner is his name, http://edwardmgardnerpc.com/, IRS magic is his thing. He has literally saved me tens of thousands of dollars since I found him in 2011. But be warned, he has the personality of an accountant LOL. 

I would open up a business account and run all business expenses through it. Makes it easier to prove...but then all I do is tell Ed what I paid for and why; he does the money magic. You can mention my name if you like. I like him to know that I am a happy customer and will continue to send him referrals. 

Why wait til next year? Take action.

 Thank you Andrew, much appreciated! Right now I may be getting the loan with a commercial lender here in St. Louis, and it will be for a mortgage so for the moment, the question is a moot point. Thanks again! 

@Tim Delaney @Account Closed

Gents thank you for you replies! I do agree that it would be tax deductible since it is a legit business expense. I'm not sure I'll walk down that road yet. 

After your rehab the rent is going up, right? What are the taxes, insurance costs, etc? And are you going to pay a property manager to collect the rent? Those numbers can make or break your deal. I did a quick run on my calc and figure taxes $1800, insurance $550, PM & lease fee $120 a month. Break even on those numbers.

My home town, Newcastle, a single bed condo for $400K. If you've got a spare couple of million, Australia's a nice place to sink it. But like Iris said, be prepared for negative cash flow. It's been going crazy over there since about the mid to late 1990's. 

I also have this setup. 1 LLC per property, hopefully stop a lawsuit from taking everything. A credit card and checking account for each of the 5 SFRs. I carry one of the credit cards, my wife carries another. The other 3 sit in the filing cabinet. I submit the expenses to my CPA and he does his magic with the IRS.

I hate having 5 bank accounts, but the upside is they are all linked so I can log in and see everything on one screen. It is particularly helpful in tracking rent deposits and loan repayments. Downside is I have to meet certain criteria each month to avoid a $15 fee per account. One of the criteria is I must spend $250 a month on each account. My wife sees that as an upside though.

Someone mentioned cozy, I need to revisit that. I do have a PM company, but the office girl is an idiot; so I'm going to migrate somewhere else soon.

It's a tangled web we weave. Do you choose to be tangled sorting out who has paid the rent into a sole account, or juggling the cards. I'd rather juggle cards. 

Mike

I'd comp the new tenant a month's rent for the headache. Along with what they all said. 

I would consider keeping both debts since they are only at 5%, and treat the $55K as the means to your next investment property. 

I recently had a similar question where I could've paid off my mortgage and been (relatively) debt free, or pay off a rental property and have a good income stream, which covers my personal mortgage. Big mistake, at least for me. I'm kicking myself that I didn't use the money to buy more property and therefore more income streams. 

The interest on your rental property loan is tax deductible. I don't know if your student debt is. 

Whatever you choose, it seems like you're in a position where it's hard to go wrong. Good luck.

I'd have them vacate so I could 'renovate'.

I just did one handwritten one yesterday. It was probably too long winded, but oh well. I need to do repeat it about 5 or 6oo times. 

I got a postcard in the mail today from someone fishing for real estate. A crappy postcard with the address printed on a label (crooked), addressed to the previous owner. It was a good learning tool for how I'm not going to approach it.