All Forum Posts by: Account Closed

Think I found the answer myself:

https://www.irs.gov/publications/p527#en_US_2016_p...

Under "Renting Part of Property":

"If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between rental use and personal use.

Hey guys--

I have a semi-complicated issue involving renting out rooms in my primary residence and how the mortgage interest / property tax deduction can be applied.

I own and live in my house and also rent 2 rooms.

Here are the financials for 2017 (numbers are not exact):

Total Rental Income = $10,000

Total Expenses, Depreciation, etc. NOT including mortgage interest / property tax = $12,000

Mortgage interest = $8,000

Property tax = $2,000

Total Deductions = $12,000 + $8,000 + $2,000 = $22,000

So you can see that the $12,000 alone is sufficient to nullify the rental income.

The question then:

Can I reflect the full $8,000 mortgage interest and $2,000 property tax on Schedule A, as I would on a normal primary residence that I was not renting out?

OR

Am I forced to allocate the expenses according to the proportion of the house that is rented vs. the proportion I live in?  So then 2/3 goes to Schedule E and is wasted, and only 1/3 goes to Schedule A.

I'm a buy and hold investor looking for an agent in North Phoenix.

Anyone had success with Flagstaff vacation rentals?

Is there a general consensus on how many days per year it is feasible to have a Flagstaff place rented?

Thanks, Mike.

As far as rehabbing, I have a very busy career and I'd have zero time to work on fixing up a property.  Is it still a good idea if I'm contracting out 100% of the rehab work?

Also, don't you run into a problem with financing on a rehab project? Say I have $30,000 to invest.  If I put $20,000 down on a $100,000 house and then I want to spend $20,000 on rehab, then I'm $10,000 short even though the total cost is only $120,000 (4-times my cash).  I've heard you can get rehab loans at a bumped up rate or whatever, but that sounds like a huge hassle/mess.

I am new to real estate investing, but a big issue I see in terms of long-term profit is this:

When you have bought a property and begin saving up for the next property, what do you do with the cash you are accumulating in the meantime?

So let's assume you plan to put $30,000 down on each property you buy, and you would like any additional money you accumulate to go toward new investments as quickly as possible rather than paying down the first house.  Here are the strategies I can think of:

1) Save up $30,000, buy a house, then simply save until you have $30,000 again (with the money in a savings account or stocks depending on risk appetite), then buy again, rinse, repeat, etc..

2) Save up $30,000, buy a house on a 15-year fixed mortgage to get the lowest possible rate, then when you have enough combined cash and cashable equity in your property, immediately do a cash-out refi and buy another house.

3) Save up $30,000, buy a house, then when you have enough combined cash and cashable equity in your property, take out a HELOC and buy another house. Then aggressively pay down the HELOC to avoid as much interest as possible, but as soon as you have enough cash + equity built up between your two homes, go ahead and take that money right back out of the HELOC and buy another house.

Obviously there are some important variables here, like the interest rate on your mortgage and the interest rate available when you are ready to do a cash-out refi or take out a HELOC. I am wondering if there are any general rules of thumb here though.

I'm also a new investor to Phoenix (East Valley).  I've got a realtor and lender, just need a property manager.  Can anyone vouch for either of the two guys that posted above?

Thank you