All Forum Posts by: William C.

The most important one to me is cash-on-cash (CoC). That tells me exactly what [cash flow] return I'm getting on the money I invest. That's really what matters the most. But I use cap rate also in the more initial phases of shopping around... kind of the first line of defense--get a quicker gauge of where a property falls on the returns spectrum. Plus it's good to know if I were to ever own it outright anyway. But that's definitely the faster starting point. While I'd love to think about ROI, I don't because the minute you start analyzing returns outside of the direct cash flow, you're immediately into speculation (ex. property value appreciation, presumed increase % of rents annually, etc.). I don't want to trick myself, or mislead myself, on my returns should any of those speculations not pan out. So I prefer to just consider any of the speculative returns as bonuses to my bottom line. Helps me in staying more conservative and not chasing a pipe dream return that may not pan out.

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.

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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?

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Originally posted by @John Thedford:

@William C.30 year dimensional shingles.

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.

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Originally posted by @John Thedford:

I expect my new roofs to last at least 20 years and A/C about 15-18 years though I do have some units that are older and still working fine. My last few roofs cost me $9500 and A/C units in the 3500-4500 range depending upon size.

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.

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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.

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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.

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Originally posted by @Steve Morris:

In OR, yes, they ae deductible and your CapGains based on the net.

If it helps, in OR, seller pays for STANDARD title insurance since it basically is there to protect the seller from come-backs on title stuff.

If buyer wants EXTENDED title (needs a survey), then buyer usually pays the diff between STANDARD and EXTENDED. Same goes for any extra coverages besides STANDARD.

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.

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I am potentially selling an investment property in Florida. The county the home is located in is negotiable on who pays for the title search and insurance costs. Some realtors have stated it is a county where the "seller picks the title company and the seller pays for the costs." Other realtors have stated the opposite. Since it is negotiable, realtors have noted most buyers will build the title costs into their offer if they are expected to cover them. So they would reduce their offer by the approximate amount of the title fees.

The question I have is, as a pure investment property and as a straight up sale (no 1031 exchange), are the title costs tax deductible from the net proceeds of the sale? I understand any opinions given here are just opinions, and will not be taken as tax advice. Thank you all in advance.

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Originally posted by @Jed Haslam-Walker:

Hi Nathaniel,

I'm a Realtor who works with investors in the Sarasota market.

What you do will depend on your investment goals - I would suggest you think about those first and foremost. If, right now your primary concern is cashflow you will choose one path - if it is to grow your portfolio you would choose another etc. The goals you have influence your decisions and they determine, largely the metrics you choose to use to guide your decisions.

Briefly - it's a seller's market here right now - virtually every SFH I've either sold or bought has been a multiple offer situation in the past 10 weeks - inventory is historically low and rates are low and prices are projected to continue to rise over the next year at least in the SFH sector so selling right now - all things being equal would be relatively easy which could stabilise a 1031 situation - however if you plan to buy in a tight market ( Oregon) that would compromise the original impetus to increase cash-flow.

It is entirely possible to manage a small remote rental yourself if you have support locally and want to maximise cash-flow - 10% of $2150 = $215 + $120-170 extra from refinancing if you do not extract any equity = $335 - $385 extra revenue per month if you harness the PM fee and the reduced mortgage payment.

If your objective is to grow your portfolio then you might want to leverage the hot SFH market here and sell - maximise your selling price ( good Realtor and good target market asset positioning) and invest in a below market Triplex that you can force appreciate and set yourself up to pull the equity in a refinance event later down the line, collect good cash throw off and leverage the asset to speed up your portfolio growth...plus owning a MF builds your lender credentials more than a SFH if you want to scale up in the future.

I always have my clients clarify what their primary goals are with their investment portfolio - it matters and it really helps you to get clear so you can recognise what a good opportunity is for you. Without clarity you can't strike forward confidently and when you can't do that you can end up grinding your gears and not enjoying the process.

Hope that helps a little..

Wow, what a great post. I have learned a lot from it. Thank you for taking the time.

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Originally posted by @John Burkholder:

I’m a local Realtor serving Sarasota and Charlotte counties. It sounds like you’ve done your research on evaluating the value of your property but if you’d like, I’d be happy to chat with you to discuss the current trends of the local market here in Sarasota and provide you with a price evaluation. The market here as with most of Florida is one of the hottest in the nation right now and finding quality investment properties with tenants in place are in high demand and short supply.

I will be reaching out via your inbox to take you up on the price evaluation. Thank you.

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All Forum Posts by: William C.

William C. has started 21 posts and replied 62 times.

Post: Most Important Measurables/Calculations to Track (ex. CoCROI)

Post: Most Important Measurables/Calculations to Track (ex. CoCROI)

Post: Capital Expenditures in Florida (Roof/AC)

Post: Capital Expenditures in Florida (Roof/AC)

Post: Capital Expenditures in Florida (Roof/AC)

Post: Sarasota FL: Buy/Hold or Sell

Post: Tax Question: Are Seller Title Insurance Costs Tax Deductible?

Post: Tax Question: Are Seller Title Insurance Costs Tax Deductible?

Post: Sarasota FL: Buy/Hold or Sell

Post: Sarasota FL: Buy/Hold or Sell