All Forum Posts by: Nick Janovich

I live, work, and invest in the Wheeling WV market. I'd be happy to talk more about the area. I currently have two duplexes and a garage unit. I'm looking for another multi-family by the year's end. Rental property prices are increasing as rents increase due to oil and gas workers. I would caution someone not to count on the high rents though; it is great while it lasts but when analyzing be sure to use non-O&G rents. I've kept my rents the same and simply charge a short-term fee. O&G guys think that's fair and it covers the costs I have with increased turnover. I haven't had a unit sit vacant longer than two weeks. My expenses YTD in this market are currently 44% of revenue YTD. @Joe Hughes might be someone to talk with. He's more experienced in this market. I'm just the little guy trying to figure it all out!!

I'm happy to report that my attorney straightened it out. The seller was not too happy but he paid what was owed. It took some time but was rather painless. 

I'll try to make this quick and easy to understand.

I closed on my 2nd rental property in October 2015 (yes!)

The closing firm told me that the seller paid taxes until July 2016 and I owed him about $1,000 for Oct 2015 - July 2016. Sounded logical. This was reflected on the HUD. I did not call the auditor/treasurer to verify this. (Lesson learned.)

Turned out taxes were only paid until December 2014. 

This means $2,400 is due to me from the seller.

I discovered this today when I received a tax bill for 2015. A few phone calls to the auditor and treasurer and it was obvious what happened.

I emailed the closing attorney about how to resolve this. I haven't heard back yet.

What would you do in this situation? I'm assuming this happens more often than it should. I saw another post on here about an error and the seller easily paid up. I hope its that easy but I'm skeptical. If not, is this something title insurance will cover? Will the attorney's insurance cover it? Or am I just going to end up eating it?

Does this sound like a plan: I won't worry about the bed bugs. I will decline the application solely because they answered "yes" to smoking and this is a smoke free property and advertised as such.

I just emailed my attorney though I do not suspect he is in today.

Had applicants today that are moving due to bed bugs in their home. 

I'm in the hospitality industry for my "real job" so I'm well aware of bed bugs.

What I'm not aware of is if I can decline the application based on their belongings being infested with bed bugs?

Also, they are smokers. This property is smoke-free and advertised that way. They claim they only smoke outside. I don't buy it. Legally, can I decline based on smoking? It isn't a protected class so I'm assuming yes. This property is in OH if it makes a difference. 

 Thanks, Jason. The property in question is 2 units. So I guess that means I can look for commercial coverage? I was searching residential. Any favorites?

Is anyone working with a private flood insurance company? As you may know, FEMA is adding a $250 surcharge to NFIP policies that are not occupied by the owner. I found a private market flood insurance underwritten by Lloyds. Exact same coverage as NFIP except without the investor surcharge.

Is anyone using another company for flood insurance?

Thanks so much Brandon! I have no idea how I missed the change from $500 to $2500. I've been reading and searching for days. I read your comments in that blog post. My question would be what is considered a component of tangible property? I would assume this means mechanical components such as furnaces and hot water tanks would be included?

As my first year of real estate investing winds down I'm starting to think of pending tax preparations. I had a lot of questions, found a few answers, and am generally left with more questions. 

I purchased two properties in 2015 through my LLC.

I've identified my currently deductible expenses.

I've calculated depreciation expenses of the buildings.

I've identified obvious repairs for the properties.

Where I'm struggling is with some of the larger expenses. I've read, re-read, printed, highlighted, and re-read Brandon Hall's Safe Harbor blog post hoping to make it simple. While his post was a HUGE help I still have a few questions.

So here is where I stand: 

1) I'm going to apply SHST to property #2. I've spent $800 on repairs to that property. That is under the 2% rule which, in my case, is $1,200 for that property. Done. That was easy!

2) Property #1 is a lower-priced property. I've spent $5,000 on repairs/replacements/improvements. It is not eligible for SHST as 2% of the basis is $700. Most repairs are under $500 and eligible for De Minims Safe Harbor. Two are not. A furnace replacement for $1,800 and a hot water tank replacement for $600. Do both of these get depreciated over 27.5 years? Or can I use a shorter length somehow? It just doesn't seem logical to depreciate a $600 hot water tank over 27.5 years when it will likely last 5 years. I realize I can deduct the remaining amount the year it is replaced but that doesn't help now. Am I thinking about all of this correctly? I've seen others treat a hot water tank as an appliance?

3) Closing fees. I found a great article that goes line-by-line of the HUD1 talking about how to treat each cost. Fees for the loan, appraisal, etc are deducted over the life of the note, in my case that is 15 years. But then I read other places that closing costs are part of acquiring the property, should be added to the basis, and depreciated over 27.5 years.

Anyone want to help?

I have two applications on my desk for the same property.

Person A:

571 credit score. 3x rent in income. Same job for 11 years. No criminals or evictions.

Person B

785 credit score. 5x rent i income. With current employer for 4 years. Her boyfriend will live with her. He has a drug possession charge from 6 years ago and a DUI from 7 years ago. Says he was young and was "growing up."

I'm leaning toward B. Thoughts?