All Forum Posts by: Mimi H.

I happen to own in a very popular area in BK as well. I wouldn't sell it any time soon as rent has been really excellent -and- the property is appreciating. Plus, like you mentioned, we don't pay for realtor screening in NYC. While I wonder if I'd sell one of my other properties, the one in BK is a definite hold. Quite simply, it would take a lot more to get back into the market if I were to sell. While $200k appreciation isn't shabby (it sounds like you'd bought in at around the bottom of the market), I don't see a lot of opportunity to own in NYC at anywhere close to what I'd bought in on back in the day... 

Also the tax rule changed as of 2009: IRS exclusion amount is based on proration of amount of time the property has been held as a rental since Jan 1, 2009. There is an EXCEPTION to this rule, which is that under section 121 (b)(4)(c)(ii) is that if you've lived there for 2 years during the past 5 and held it as a rental after moving out, that period still counts as qualified use. This would likely mean that you may get 2 years + 18 months aka 3.5 out of the 5 years. So roughly .07 * $200k => $140k.

Of course this is before you factor in things like the 6% that goes to the agents. $658-$500=$158*.7=>$110.6k that you'd not get taxed on vs the $140k mentioned above.

If you're cash flowing, you may want to consider if that rental income bumps you into a higher tax bracket. There are a lot of reasons to hold or sell and a lot of it will depend on what you're looking for and your larger strategy. At the end of the day, running the numbers will better help you make that decision. None of us here will have insight on your larger financial picture (aka other income) and that can factor hugely in planning.

Thanks for sharing @Tom Spaeth! I hope you 1031 exchanged one for the other? :)

One of the things that I did NOT do well in the beginning was look at things like tenant and rent control laws. This varies greatly from one area to the next and it can really kill what may look "great" on paper. Also, like anything else, there is a range of rental properties. What you'd like to buy in on depends highly on your own personality. Some people do great with rentals in a more upscale area, others in rentals in a more working class area, and there are still others who excel at the much lower cost area. How many units can you reasonably manage or have someone manage? Are you prepared to do evictions? How much capital do you have to work with? Do you have a partner that can share responsibilities? I've never found buy and hold to be very cut and dry. It's worth the research only if you want to make money.

Great point @Jonathan Towell personal goals wise, build a passive stream of income alongside my active income. 248 doors! wow. 

@Carole D. congrats on the upcoming baby! 

Heads up... San Francisco has very very tenant friendly laws. I only know this because I used to live there and was able to get my full deposit back every single time. Did you know that if there's any shred of proof that the landlord is holding on to a deposit in a "wrongful" way that they owe you 3x the deposit? (there's a great tenant's rights area that provides info https://www.sftu.org/ ). Plus small claims court up to $7500. This means that it's easier for tenants to represent themselves without a lawyer. 

It's worth checking out the specifics re: tenant laws in Oakland prior to purchase. 

it might also be worthwhile to run the numbers on a few deals to let BPers weigh in - also there are some peeps who seem to have done well in Oakland. At the end of the day, Bay Area real estate is like no other. You'll want local advice!

I do believe that there are deals to be found in any market but a lot of it will depend on capital. A "deal" in the bay area may still be 10x more than anywhere else in the country (I made up that number but you get where I'm coming from...).

As someone that's held real estate for some time, and have sold off others, I'd be curious to hear of other BPer's factors for holding vs selling.

As an example, the Bay Area market has appreciated massively in the past few years (even before then but serious hockey stick in the past 3!) so for any investors out there that had bought in at the low, has anyone gotten out while it's still super hot or are rents covering to the point where it's just worthwhile to hold somewhat indefinitely?

I tend to hold on but I'm curious to hear how others structure things, mostly because I'd love to know if I could do things better! (differently?)

It's a capital loss and sadly, a $3k max write-off per year. One way you can off set it is with the same period capital gain, meaning, if it's a long term loss, you can offset some of it with a long term capital gain (or a few long term capital gains).

As an example, If you happen to also invest in the stock market and there are some stocks that you've held on to for 1 year and more where you can net gains, it may be worth considering selling them. The gain from that will offset your loss + another $3k per year write-down. Of course, selling that stock will have other implications.

It's not a fun situation for sure. You'll probably want to work with a good EA (Enrolled Agent) or CPA to do some tax planning early in the year. Tax planning can save a lot of money, time, and frustration.

One other thing I'd echo, work with someone who understands Real Estate! I'm in the process of getting my EA simply because I was frustrated that many of the people I'd interviewed did not have any clients who are in real estate. Having that expertise and clean books is critical!

I've found TurboTax to vary greatly between their online version and their desktop version. I'd used the online version last year and this year, the desktop version. I'd recommend the desktop version simply due to @Patrick Liska's suggestion, to work around TurboTax bugs! Bugs in taxation software doesn't really promote warm fuzzy feelings. Or maybe I'm just alone on this one? :)

Since no one responded, I did a bit of digging, spoke to some agents here in Vancouver, etc. Here's some more info:

1) City of Vancouver sets the max rental increase per year on existing tenants. This is a once a year increase (and if you happen to have one year leases for your tenants then you would only raise rent once a year).

2) New tenants can be charged market rate. If they stay for more than a year, see item 1. 

3) Landlord provides a full month of rent in the event that the landlord evict the tenant to move themselves in or wants to sell the unit. Not sure if this is possible for any other reason.

4) if you are a non-resident, any gains will be TAXED 25% EXTRA vs a resident. 

5) Let's say you inherit a tenant, you CAN NOT reset that tenant's rent to market rate, you're still under the max indicated in item 1.

6) Mortgages tend to have prepayment penalties.

7) If you sell as a non-resident, Canada holds on to some % of the proceeds until the following tax season. 

Fantastic summary and totally spot on. Thank you for this!