All Forum Posts by: MATT WARDEN

What amount of gains are we looking at, here? Is it really so significant that the exchange cost and risk would be more beneficial than just playing it safe eating the tax?

You didn't state this, but I assume you are saying that you agree with my statement in the case of call to action ads, but not brand ads. In fact, I would suggest that this does not matter. The reason traditional web advertising is not effective is because users learn quickly to ignore these ads. It's our own fault. We tried so hard to grab as much attention as possible that our ads became annoying and disruptive. The only things users could do is learn to ignore them.

Your real hope is to place highly targeted ads where the ads (dare I say) actually help the user find what they are looking for, rather than what you want them to be looking for.

There could be a lot going on here. The easiest explanation is that he has gotten lucky. Operating expenses are not fixed; they are highly variable and it only makes sense to discuss them as a long-term monthly average. It is possible that he has simply not had large expenses yet and has been able to get by without losing a lot of money. But, if he is following the plan you outlined, it is a ticking time bomb and he will lose a lot of money.

Alternatively, he could just be in denial. He could be rationalizing the situation by saying he is building equity or that his property is appreciating or he's getting tax write-offs. Who knows.

Bottom line: do your own research and talk to successful landlords who have been in business for a long time with many properties. You can find many such people here on these forums.

Don't waste your time. Your attitude is backwards. People with your attitude put Google ads and Amazon affiliate links on their site, and then sit back and wait until they can retire off the income.

Don't hold your breath!

Flip your attitude around. Why would I, as a consumer, pay money/time/whatever for anything on your website?

Can you expand on what is requires as far as the contents of the denial letter? Must you provide the reason for denial? This would seem to be a point of liability and something one would want to avoid if it is not required. I asked my lawyer the same question and he said I am not required to disclose the reason for rejection, but I did not phrase the question about credit check specifically, just tenant screening failure in general.

Just the application from the applicant, correct? Or do I need to archive the documents that supported my decision as well?

Thanks in advance.

Hi, James. Why do you say that he must file a DBA before these are deductible expenses?

Sure. I'm not even sure what you're disagreeing with. Surely the "institution called lending" recognizes their method of projecting expenses is an estimation method developed for a specific purpose, so there is no disagreement from me.

This does not change anything, and it certainly doesn't change the fact that your method produces estimates as well. Estimation methods are created for specific purposes. The 50% method is intended to have a certain balance between accuracy and speed of calculation, the latter of which is very important. No one has ever said that due diligence is not required.

Not to mention that no one here has been able to show that the more complex methods are more accurate.

Yes, if you have to purchase a new roof, you will likely have negative cash flow on that unit for that month. This is not the point of a cash flow analysis and this is why cash flow analysis for short-term holds is pretty pointless (unless you have a warranty, or the term is so short that you know exactly what expenses you'll have, or something along those lines).

If you purchased right, you will have an average of $100/unit/month cash flow. That means one month you will have $+325, and the next $-284, and the next...

Sure. And I know a property with an excellent REAL APPRECIATION RATE (calculated by looking at appreciation rate of 50% between 1995 and 2006). Would you like to purchase it?

Scott, I don't mean to be harsh, but your post is hogwash. Your method might be okay to estimate fixed expenses, but 1) those expenses will need to be multiplied by some factor to project future expenses, in which case the accuracy is at the mercy of your factor, and 2) this ignores all variable costs (or, even worse, you assume that past variable costs are a good estimate for future variable costs... if so, I hope that sounds a little off when you actually hear it out loud).

As far as I can tell, the main beef people here have with the 50% number is that it seems too easy. Repeat after me:

There is no way to deterministically predict future costs.

All you can do is estimate, and just because your estimation method is more complicated sure doesn't mean it's more accurate. I have pointed out a couple times that the 50% number is mathematically flawed. There is no discernible dependency between gross rents (set by market) and expenses. However, there are a lot of models in economics (and statistics in general) that work even though one can't quite tease out the logic behind the numbers. (In fact, if you want to get technical, the entire scientific community is built upon these situations, with very few exceptions. But I digress...)