All Forum Posts by: Mariah Jeffery

A lot of people invest in RE because they hate their jobs and want to be their own boss, but I love my job. I just hate the taxes I pay, which end up taking over 1/3 of my paycheck between federal, state, and FICA taxes. Being W2 slaves, my husband and I don't have many opportunities for tax deductions outside of RE. On the other hand, too many so called investors shoot themselves in the foot by buying something that actually loses money so they can save on taxes. The key is to buy something with positive cash flow that you can show to be a loss on your taxes due to depreciation and phantom losses.

More than half of my family's net worth is in RE and I only see that increasing if we continue to buy properties. I don't see any problem with this # being 60-80%; however, what worries me a little is that it's all in residential rentals in one area of one fairly small town. This particular town has a great rental market now and only a 4.2% unemployment rate. However, if something were to happen to this town (a major employer goes out of business, for example) that would significantly hurt the rental market.

On the other hand, I've invested her for a reason. I have a team in place here, my husband and I know the area well, and it's easier than most places to find good cash flow. We invest in RE part-time and have full-time jobs, so we don't have the time to do the due diligence to find a new area to invest.

Overall, I think we're better off continuing to buy property here as long as it's cheap enough. We buy conservatively so we should be ok unless the most doomsday of scenarios occurs. I do have to stop and think about whether we're going overboard at times.

Hi Alex. I'm not far from you in Hillsboro. All of my RE is in South Dakota, though, so I'm afraid I can't be much help. How was the REI meeting?

After closing on 12/31, I will own 23 rental units in South Dakota. I live in Oregon. The reason I chose to invest there is because Portland is very poor for cash flow, and also because my father in law is kind of a fly-by-night handyman. My husband and I have no desire to self-manage so it was a win-win.

14 units are managed by my father in law plus myself, to the extent I can from afar. We pay him 5%. 9 units are managed professionally and we pay 8%, which is a much better deal than what we have going with my FIL. It's worth the extra 3% to be totally hands off.

After Friday, monthly revenues will be ~ $14.5K on the 23 units. Debt service around $5.5K

I'm generally pretty happy how things are going. Not much I would change. We fly back once per year to check on things and that helps keep the team in check.

About 50.6% of my family's net worth, which is right about where we want it. 60% is probably the max, but I'm just a part-time RE investor.

No trouble at all. The longest it's taken to rent a home in 2010 is 3 weeks, but most were rented in 2 weeks or less. It's a great rental market and rents are up.

Nope, they're in South Dakota where all of my other units are. I'd be lucky to find 1% in Portland! My father in law is a contractor and has a team that works cheaply to do our maintenance and rehabs, so we have him do it all. However, we happen to be visiting for the holidays now, so we're about to tile a floor in one of our rentals while we're here.

Nope, we put 20-20% down and we use either Fannie loans if no repairs are required or our local credit union if they are. We get 6.75%/15 years fixed through our local credit union. Not a great rate, but they'll finance anything for us as long as the price is under the tax assessed value, without even an appraisal.

I bought my first renal property in March '06. Despite the hot RE market, I found a motivated seller and still got a good deal. I was excited to buy more properties, but didn't find any that would give me an acceptable return in Sept. '09. At that time, I found a motivated seller who sold me 4 properties, one per month for the next 4 months. Then I found some properties on the MLS, made 8 very lowball offers (about 70% of asking), got them all rejected. A month or so later, my agent told me the sellers had reconsidered and decided to take my offer for $155K on a 5-plex with a tax-assessed value of $190K. Another month later, the seller of a single family home decided to take my offer. The last property I purchased was in March '10.

At this point I had bought 7 properties in 8 months. I thought I was on a roll and was hungry for more. But there was simply nothing good, or I got outbid. Investors started going crazy over REOs in this area and bid sometimes 20% over asking price. I put in at least 15 offers and all were rejected.

I became so discouraged that I talked to my husband about either a) giving up on RE and investing our available cash in the stock market or b) settling for a lesser return than we had in the past. He told me to give it 6 more months before doing either.

Last week, I noticed a package of 4 single families (2 four-bedrooms and 2 three-bedrooms) come on the market for $211K. The combined tax assessed value is $310K. Two of the homes were rented at $800 and $950, and the other two need work (carpet, paint, and shingles). The seller was having cash flow problems and wanted to sell ASAP.

I offered $184K, and the seller accepted without a counter. I was blown away. These units will bring in $3,500/month in rent and will cost only about $10K to rehab. They're in a very nice area of town (unlike all of my other rentals) and should bring good quality tenants. I'll have great cash flow and built in equity.

On top of that, the seller has two more homes not yet listed on the market. She's agreed to allow me to view the properties and make an offer before listing them. If I'm lucky, maybe I'll end up with all 6.

Lesson learned: patience and persistence pays off. Determine what your minimum return is and don't settle for anything less.

I have a closing scheduled for 12/31, since the seller is one of the lucky few who will be impacted by the long-term capital gains tax increase for those making over $200K.

I think it will be a pain to close this day. I'll have to report rental income for one day, and I'll have to pay property taxes for one day (it won't be taken care of by the title co. because we pay property taxes for the prior year).

Can I ask the title co. (assuming the seller agrees) to do the prorating of rents and taxes as of Jan. 1st, and if so, can I effectively leave this property off of my tax return for the year? Or will I have to include it due to the one day of depreciation?