All Forum Posts by: Rich Thomas

I have a duplex and one of the tenants is interested in buying it.  They've been excellent tenants for several years and both have good jobs.  I don't mind becoming the bank if the interest is right - for me that would be 8 to 10 percent.

We have not discussed down or term.  Am I thinking too greedy in for a 8  to 10 percent interest rate for 10 years with a balloon?  Or is that about right?  Any help is appreciated.

Background: Wife inherited a 4-plex from her mom.  Approximate value: $500K  with an $135K interest only loan.  The 4-plex is a cash cow and she has no intent to pay it off.  

1)  Should she keep the existing loan even though it's in her mom's name?
2)  If so, what are the implications of that in terms of insurance, IRS taxes, etc?
3)  If not, are there any interest only or 40 year adjustable loans available?

I just had a new roof put on a duplex.  Cost is $10K+

When I do my federal taxes on TurboTax it seems to be an "option" as to whether I send the contractor a 1099 form.  What do others do?  Do you send your contractor a 1099 or not?

I'm looking at a new roof for a townhouse (duplex) of which I own both units.  The roofing material literature given to me by the roofing company has a lifetime warranty and the fine print reads that it is for a single family residence and one owner.

My unit is a townhouse - two family residence. It looks like the material warranty would not apply to my roofing job because it is not a SFR and their are two families.

How does one handle this problem?

My bad. . .It is an original fan - probably 50cfm - squirrel cage motor and it vents to the outside. Its housing won't fit the newer fan sizes - so I cleaned it thoroughly and it does suck air to the outside.

I threatened the tenants that I would put in a really big fan - and suck the air and heat out of the house. We've reached a compromise. . .they turn the baseboard heater on in the bathroom, crack the window open, turn on the fan. Then close the bathroom door to keep humidity inside. That seems to work at the moment. It still feels humid in the house though. But I don't know if they will follow that plan with any consistency.

The unit has had 5, maybe 6 tenants over the last 14 years - never a problem until these folks moved in.

We've discussed the humidity problem - the oldest girl has sinus problems. I put a calibrated humidistat in so that they could see the effect of running the fan and leaving the window open a bit.

An electric furnace will dry out the air, but this unit has electric baseboard heating which does not affect humidity. They've admitted taking hot steamy showers - we know the source of the problem.

This unit is due for a new roof next year. . .perhaps a new more robust ventilation system?

I rented to a woman with two children. It turned out the her "children" are big strapping 17 and 18-yearolds.

The three of them like to take hot steamy showers. The rental is 2-bedroom, one bath duplex with electric baseboard heating.

Interior humidity level is always very high and condensation is problem. It's a cooler/cold climate (western Washington state).

I upgraded the bath fan to 100 cfm (double previous fan's cfm) and added a timer switch so that they could leave the fan on to go to work/school.

Even so, it is still far to humid in the house.

Is there a solution to this problem of excessive interior moisture?

Agreed. Take out at least one mortgage and use that capital to your advantage.
Owning free and clear sounds good but is a poor, if not broken, financial tool.

The object is to get cash flow . . . not to own a big pile of gold that you cannot "use".
My advice is to search hard and long for a 40-year mortgage, variable rate, with a less-than 3-percent cap on the LIBOR and a lifetime maximum cap of 12-percent or less. These type of mortgages hardly ever move - I've had them, my mother-in-law has one and loves it.

I don't know if anyone offers that type of mortgage but if they do, grab it.
This process will provide you with more free cash flow which you can use to help finance your next property purchase.

AND, you need to know - knowledge is power - you need to know what a "cap rate" is on property - know it inside out. Armed with that knowledge you can become a rental baron within a few years.

I put almost 2-years of searching for a property in Arizona - lots of expenses involved. Made two purchase offers during that time.

The third offer closed and I now own the property - we've stayed there last winter and I was planning to rent it - but have not.

Instead, I now wish to sell it.
How should I characterize the sale? As a second home or a rental?

Can I capture the two years of searching as deductions against capital gains or as a cost basis?