All Forum Posts by: Mike H.

I am a buyer. 

I just went into escrow on a place (we'll call it home A). Then I found another home (home B) that is a much better fit. 

Is it ethical to place an offer on B and only cancel A in the event that B accepts? What if there is a short overlap in time that you are in escrow on both before you are able to cancel the contract with A?

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I am in California. No contingencies have been removed. Just trying to do the right thing.

how much would you save compared to market value?

Yas charlie said, I would stay away from collecting rent from her. Most I'd be willing to do is flip it if the deal is too good to pass

@Logan Allec, I did forgot to mention property taxes but was actually deducting them. 

I think your suggestion of using a different land/building a location than the assessor's is the only way I can reach that difference. Thanks!

And yes you're right, the building is old (1920)

@Varinder Kumar, it is a local property. I might be able to deduct a little for gas/mileage/paperwork but I won't be reaching the extra $2500/month I need to deduct through that. 

@Wayne Brooks, the tax assessments around here are roughly 50% land/50% building. If i use 80/20 I am not sure how I could explain that to the IRS

Hello,

when I make the cashflow spreadsheet of almost any house (SFH, MF) around here (San Diego, California) I cannot manage to deduct enough taxes to cover rent.

Am I doing something wrong?

Most of the properties here are 50%land / 50% building according to 2015-2016 tax assessments. 

After deducting:

- depreciation 1/27.5*50%

- mortgage interest (3.5% w 20% down)

- repairs/maintenance/capex 

- insurance

I am always left with about 35% of rent income being taxed. Am I forgetting something?

@Kevin Fox & @Dan H., thank you for your answers.

I received the inspection report from the previous owner. It seemed really complete, I am thinking not doing a second inspection, but instead paying a structural engineer, plumber and contractor to get quotes on the repairs suggested. Estimating $60k worth.
Dan, the units fit in your criteria. What cap rate is yours at? Appreciate the feedback. I was including indeed Capex in the $5k/year. A $12k CapEx would make it 15-20% of gross rents. Shouldn't it be less than 10% in California?
This would bring the cap rate from 4 to closer to 3. Uh oh.

@Samantha Klein, My CapEx calculation brought me to 5% using the bigger pocket cheat sheet https://www.biggerpockets.com/renewsblog/2015/10/1...

@Jennifer Lee, thanks for weighting in. deferred maintenance is about $50k. hoping to ask that as an allowance from the seller. I wish I could find a cap rate half as high as yours! nice work on getting the deal on the property.

@Sarah D.

Hello.

I am considering an old 4-plex (1920s), ok cap rate (4% which is typical of B/B+ in San Diego). The building is built on a steep hillside, which is a pro (private, views), and a con (hopefully it won't slide to the bottom).

Purchase price is about $1m. Estimating maintenance to be $5k/y.

I am new to multi-family. Age excepted, this would be an A-/B+ building on all other criteria (plumbing, electrical replaced 10y ago, nice neighborhood with good appreciation). 

Is it ok to think of it as an A-/B+ or should the age move it lower? 

Anything specific I should be worried about regarding repairs/maintenance?

Hello.

I am interested in a 100y old multi-family property (3 units, 400sqft, 700sqft, 2600sqft). It was conforming when built. The zoning is now changed to SF, but the property is grandfathered in and can keep being used as multi-family. In case of a natural disaster (fire), the property will be tough to rebuild as a multi-family (chances are the city, San Diego will only allow a permit for SF). I can do improvements, remodels (up to 50% market value) without issues, but no tear down.

I am having a hard time coming up with comps. Should I use SF as comps? or MF ? or SF + an extra %?

The neighborhood is 95% SF which is a plus.
Thanks in advance