All Forum Posts by: William C.

This is big time! The example is great. One of the many reasons why the BP community is top notch. Thank you for taking the time. My CPA is not an "expert" in the real estate niche and I often wonder if finding a CPA that specializes in RE would be worth it... I'm not sure if I am a big enough player to make it worth it just yet so I try to understand this stuff on my own.

That being said, we are fortunate in that our W-2 income is decent. We are above the $150,000 threshold, so using paper losses from our rentals to reduce our overall AGI is not something we are able to do. At least that is my understanding of our situation. Do you know anything about this $150k threshold and if I am interpreting this correctly? 

Thank you for the reply. More details: My properties do cash flow positively each month and my BiggerPockets education is to thank for that. Similar to you, my rental properties produce a paper loss after depreciation is factored in.

Is the carry over to reducing your AGI via paper losses on rental properties something that essentially takes care of itself when it comes to tax time? Allow me to explain further. Is any type of entity (ex. LLC) needed to insure that these losses carry over from the rental property side of things to offset income made from a typical W-2 job. How do you go about making sure the paper losses from your real estate work get carried over to offset the income you make from your normal job?

I understand this has the potential to be a complex discussion and consulting with my CPA will ultimately be the thing to do, but I am very curious what other's are doing in this space, thus coming the forum. After reading much of Amanda Han's work, tax strategies are top of mind for me. I have a normal W-2 income, but I own/manage rental properties as another stream of income. In a typical year, after factoring in depreciation and other expenses, we run at a net loss for the year. My question is: Are there mechanisms for passing-through the losses from the rental properties to offset the taxable income gained through my normal W-2 job? I understand there may be some questions that follow and I will be ready to answer them! Thank you for taking the time to read my post, take it at face value, and offer any experience you may have. Looking forward to seeing where this will go.

 This is great. Thanks for taking the time. I can see the value in eliminating the speculative factors. At that point cash flow is top dog and any appreciation is an unexpected bonus.

Just curious what metrics people are utilizing to track their rental property investments over time. There are many different factors we can all track, but which are most relevant to you and why? From The Book on Rental Property Investing... Total Return ROI, Cap Rate and Cash on Cash ROI are mentioned quite often. In you opinion which calculations give you the best idea on the current performance of each of your properties?

Thank you. Yeah, I need to ask around more for my CapEx calculations. My PM company has to be coming in well above where a new roof should be.

 Thank you for the input. I'd like to ask more about your roofs specifically. My PM company is telling me to expect about $17,000 to replace my roof! I thought the number was high. The home is 2,000 sq. ft. Standard asphalt shingle roof. The home was built and bought brand new in 2017, so we hopefully will not need to replace for a long time. But the $17,000 figure was not an adjusted for inflation figure for the future. It was based on today. How do your roof projects compare since they are half the cost and Naples is not too far from Sarasota.

For any members that invest in the state of Florida, when it comes to calculating capital expenditures (specifically a new roof and AC unit), how long do you estimate the lifespan of these items to be? If you go off some examples in the The Book on Rental Property Investing a roof is estimated to have a lifespan of 25 years. An AC unit is estimated to have a lifespan of 20 years. I have always been told these figures are certainly different in Florida (for obvious reasons). I am just curious what well-versed professionals in the area use for their calculations. My property is specifically in Sarasota. So on the Gulf side, near the middle portion of the state. Thanks in advance for any insights you can share.

I have an update on the situation. After some back and forth between the current tenants and some realtors, there are some new factors in play:

The original selling scenario is unchanged. But the rental situation has an update...

The current tenants would like to re-new for another year. They are open to a rent increase to $2,300 (up from $2,150). They want some security. Although the feel is this will be a 1 year play for them. We are likely looking for new tenants after them (vacancy, turnover costs, etc). This scenario improves cashflow, and will do so even more if we refinance (currently at 4.125%, but there has been talk of that we could knock off one whole percentage point in our situation).

Of course with the closing costs to be paid in a refinance scenario (est. around $10,000), we would be semi-committing ourselves to a more long term hold scenario. The breakeven point is estimated at around 4 years (this does not factor in the rental income and potential home appreciation).

We are now leaning towards holding, continuing to be landlords (through the PM company of course). I'm looking for someone out there that can poke some holes in my thought process. Maybe uncover some important factors I may be missing. I am here to learn! If you need more information or numbers, just say so. Thank you all.

Helpful. Thanks. I am located in Oregon, but the investment property is located in Florida. My research has said the title costs would be deductible nationwide. Thanks for the answer and verification.