All Forum Posts by: Peter Kandra

I've read quite a few tax and accounting related posts during the time I've been on the forum and always find them helpful, especially RECPATAXMAN. My wife is an accountant, but not a CPA. She did public accounting for 5 years for a small firm and then moved to an accounting position in a small companies accounting department. I'm think my real estate investing is coming to the point where it may be getting beyond her experience and skillset, since it's not what she does every day now. I currently have 11 properties operated under 2 LLC's. I want to make sure that the current tax filings are getting done correctly and that I'm:

A. Taking advantage of every deduction / loophole allowable
B. I'm not needlesly exposing myself to future tax liabilites

To that effect, what are reasonable hourly rates I can expect from a real estate CPA to do a review of my 2006 / 2007 taxes and make sure I'm on track for the future ? I realize it's busy season now, so this is probably something for the May time-frame.

IRS publicaton 527 doesn't really give too much guidence on that scenario. I did find a reference top this exact situation on taxalmanac.com. His comments were as follows:

The whole thread is located at:
http://www.taxalmanac.org/index.php/Discussion:Rental_Real_Estate_-_Depreciation_allowed_or_allowable

Hope this helps.
Pete

You'd be surprised at what will sell. If you have an established relationship with a realtor, in addition to realistic comps, he will usually also know of changing conditions in both good and bad neighborhoods. Lots of investors purchase only in bad areas and rent to section 8 tenants only...no going to pick up the rent, etc. Personally, I specifically focus on good areas where I invest, but my next door neighbor only buys in bad neighborhoods. Every person has their own comfort level. I tend to agre with 4rmgt...there's great deals to be found in all neighborhoods, so why take the extra risk and potential costs.

FD4,

I opened business cards with both Lowes and Home Depot. Both are in the business name under it's tax ID #. Advanta and Chase also have true business cards as well as American Express.

Pete

Probably the biggest concerns with buying in bad areas are theft and security. People will notice the work you're doing and exactly what's going into the house. They may break in and steal it, along with your copper pipe. You also shouldn't leave tools or supplies there while you're working. Check with the local police too...they should be able to give you the crime stats for that area and street. Other than that, some of the lowest price houses and REO's are available in the bad areas.

I've read that book too and thought it was pretty good. Since most books are written with 20-20 hindsight, some authors do tend to over simplify things. I only own 1 duplex. The rest of my properties are all single family. I think the major pros of multi-unit are economies of scale...only 1 roof to replace, etc. You also have income coming in even if a unit is unoccupied. As the building becomes larger, they also usually end up with even better cash flow, since the cost per unit isn't usually linear, so you'd pay less, sometimes much less for an 8 unit building than what you'd pay for 8 single units. Of course your expenses would be higher as well. I'd eventually like to start acquiring more and larger multi's. Some potential drawbacks are that larger buildings may need to be registered and / or inspected by the state. In NJ, you get what's called a Department of Community Affairs green card for apartment buildings. You also can sometimes have 1 tenant affect the quality of life for the rest of them and may need to put on your referee hat.

Rob,

I did talk to my neighbor about investing in New Brunswick. He bought his place in 1989, so he's in for pretty cheap and has some great appreciation. He said they are constantly buying properties and tearing them down to make room for the hospitals and college. He did say that prices are high and to be very careful to check city plans for that area...he mentioned the evil eminent domain. Hope this helps.
Pete

Aly,

I was actually thinking about joining MREIA and going to that meeting. My day job is in software development and I work in Raritan Center in Edison, so I'm only 5 minutes from the Hilton.

Pete

Rob,

You have to look long and hard in NJ to find properties for the 2% rule. Trenton does have a ton of them, but they are in area that aren't too good. Most properties I'm finding are between $60 and $70K and will rent for a minimum of $1000.

Pete

Hi Rob. I heard Alpine was great for rentals..if you're a millionaire !
Seriously, maybe Hackensack or Lodi may not be too bad for rentals. I really only know the Trenton area. I grew up in Essex county though and wish I had invested in certain parts of Newark 15 years ago. As far as New Brunswick goes, one of my neighbors has had a multi-family unit for years and years since he was in college. I'm playing cards with him tonight so I'll pick his brain a little on the area, etc.. Personally I think there's potential all throughout the state for rehabs and wholesales. You have the shore area, Fort Dix / Maguire AFB, tons of urban areas for rehabs, etc.
Pete