All Forum Posts by: William C.

We have a small portfolio of rental properties. All are SFH. The locations are spread out in the states of: Florida, Oregon, Nevada. We employ property management companies for all of them. We have noticed a WIDE discrepancy between property management fees in these three states. Florida (close to Sarasota) is the highest. See below for a summary:

Florida: On-Going Monthly = 10% of Each Month. New Lease = 50% of 1st Month. Lease Renewal = 25% of 1st Month.

Oregon: On-Going Monthly = 7% of Each Month (no other fees)

Nevada: On-Going Monthly 8-10% of Each Month (no other fees)

Market dynamics allow each PM company to charge whatever the market would bare. No complaints about that. If we do not like the service or prices, we are free to move on. We get that. Anyone else out there with similar situations and such large discrepancies from property to property?

 In our opinion, yes we do benefit from the cost seg's on the 2 LTR properties. Our cash flow from 2022 outstripped our baseline depreciation, so we will have a tax bill due on these properties for 2022. The cost seg's will allow us to cancel that out for 2022 and then carry forward for the following tax years.

We ask the question below, because we have contacted multiple (reputable) cost seg study companies and have received conflicting answers. It is hard to tell who is providing accurate info and who may just be telling us what we want to hear in order to gain our business. Posting this hear in hopes of more clarity on our situation. Thank you all in advance.

Property #1 - Purchase Date = 8/2019. Placed In Service (P.I.S.) Date = 3/2022.

Property #2 - Purchase Date = 6/2017. Placed In Service Date = 5/2018.

With bonus depreciation reducing starting in 2023, we would like to take advantage of 100% bonus depreciation in the 2022 tax year by running cost seg studies on 2 of our long-term rental properties. Because of the lag time between purchase dates (we occupied each as our primary residence before converting them to long-term rentals) and the Placed In Service (P.I.S.) dates for each property, will we still be able to realize 100% bonus depreciation if we run a cost seg and then file with our 2022 taxes?

Thank you all for the thought out replies. I did take this information to my PM company to request the rent payments be distributed as they are charged, but my attempt was unsuccessful. They ended up paying me out the full distribution. Their statement was simply that is how they have always handled these situations in the past. Based on current calculations we will outstrip depreciation/expenses and will have a tax bill for 2022 (if all stays the same). That being said, we are not giving up on this one. We are aware we can find a big ticket item in need of repair/replacement and have that taken care of in 2022, to help our tax situation. Any other ideas for ways we can object to the PM company to help them better understand the situation? Thanks in advance for any ideas that can be offered.

We have a tenant that was signed to a lease through Feb. of 2023. They have decided to break that lease and pay out the remainder of the lease in a lump sum. In the state the property resides in, we have a duty to mitigate. So if a suitable tenant is located within the lease window, we must pro-rate that lump sum penalty and kick it back to the previous tenant (we cannot double rent the property). If we are unable to locate a suitable tenant, then we will have received the equivalent of two additional rent payments in 2022 that should have been received in 2023 (Jan, Feb). These rent payments are sizeable and they will have an effect on our tax planning for the year (we will outstrip depreciation now). We do retain a property management company and after asking them, they must distribute the lump sum to us upon receipt (they cannot hold it off until 2023). Anyone out there have experience with a similar scenario? We are trying to see if there is a path for delaying receipt of the 2023 money so that our tax planning can stay intact. Any guidance offered would be greatly appreciated. Thank you.

Thanks for the reply. Would you assume the depreciation would take place over the typical 27.5 year time frame? Or would we be able to accelerate that depreciation?

We have a home we purchased and occupied for 3 years. In 2021 (while occupying the home) we spent $5,000 on fencing. Early in 2022 (this year) we moved out of the home and placed it into service as a rental property. We currently have a tenant in place with a 1 year lease. What options (if any) do we have for depreciating or deducting the cost of the fence? Since the money was spent on the fence at a time when we occupied the home, we understand we may not be able to depreciate or deduct under typical means. We are hopeful that there will be other avenues however. I will provide additional context as needed, just ask. Thanks.

Thank you for this. I will get to work on these right away and see what comes up.

A couple things to note:

- In my market (in Oregon), typical PM companies only charge a monthly fee (7 to 10%). They do not have a lease signing or renewal fee. Thus the 10% straight across figure for the PM expense.

- I did not include a separate row for CapEx (Capital Expenditures) and I realize this may be a big mistake!

- The vacancy rate of 4% for my area was gathered by surveying multiple local PM companies. I understand they have an incentive to provide a more favorable number, but 3 to 4% was consistent.

I am hoping for some additional sets of eyes to analyze my options. Current situation... I own the home and live in it as my primary residence. I am strongly considering purchasing a new home to occupy as my primary residence. The two obvious options I see are: rent out the home or sell the home. Selling the home is fairly self-explanatory. There has been good appreciation, our market is (currently) strong, and I would be able to avoid paying taxes due to the 2 out of the last 5 rule. Renting it out is a possibility, but the cashflow picture does not look favorable. I have run some simple calculations below. I AM NOT looking to fudge any numbers and magically change the cashflow outlook. What I am looking for is opinions on if I am using the appropriate numbers for my calculation and if I am missing any other avenues of thought.

The home is a 2004 build. Maintenance and upkeep has been good. It does have some of the original components still in place: 17 year old gas water heater, 17 year old AC unit, etc. The home is located in Oregon, if that helps.