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All Forum Posts by: Pavan K.

Pavan K. has started 11 posts and replied 41 times.

Post: When does it make sense to do a Cost Segregation?

Pavan K.Posted
  • New to Real Estate
  • Posts 42
  • Votes 22
Quote from @Natalie Kolodij:

Several notes: 

1. $50k land value on a $600k property sounds very low / possibly incorrect 

2. That price for a cost segregation study is on the high end for a single family home 

3. "I would need to get a cost segregation study done  in the first place" Need to get it done for what? 

4. Without a cost segregation you depreciation the building value of your property across 27.5 or 39 years. It's not required in any way. 

With a cost segregation study your building value will be broken out into many detailed components which will have lives of 5,7,15 and 27.5/39 year  lives instead. Allowing you to accelerate some of the depreciation. (and utilize bonus depreciation on the assets with lives of 20 years or less)

5. Possibly most important: can you utilize any losses generated by the rental property? Or will you be subject to the passive loss limits? 

Without a specific use for losses generated; utilizing a cost segregation study to generate large losses you can't use won't benefit you. 

- Are you or your spouse an IRS real estate professional? 
- Is this a Short-term rental? 
- Do you have other passive income sources? 

-Is your Adjusted gross income under $100k which would allow you to use some amount of passive losses?

Thank you Natalie.

1. $50k land value on a $600k property sounds very low / possibly incorrect.  " 

"This is a new suburb,mostly farmlands ,converted to residential zone . I did check county records for the land value."

2. That price for a cost segregation study is on the high end for a single family home. 

" Noted. I'll shop around,when its time " 

3. "I would need to get a cost segregation study done in the first place" Need to get it done for what?"  

    " I might have understood it incorrectly. The study needs to done for tax filing purposes?"

Unfortunately, we don't qualify for RE professional and this is a long term rental. Was hoping to find if cost segregation could offset or reduce tax liabilities on W2 income , which looks like it won't unless we are RE pros or it's a short term rental. Kind of in the higher tax bracket and finding ways to reduce our tax burden .

Post: When does it make sense to do a Cost Segregation?

Pavan K.Posted
  • New to Real Estate
  • Posts 42
  • Votes 22

I'm new to investment and rental properties. This will be my first year filing taxes which will include 1 rental property. 

i do my own taxes since it's straight forward with one W2 and now a investment property. 

Would like to understand if a cost segregation is necessary in my case. 

Single Family home ,Property value $600k ( rounding off for easier calculations) land value $50k . Property was in service( for rent ) since October 2024 but was vacant until Jan 2025. 

i reached out to a CPA and was told I need to get a cost segregation study done in the first place which would cost around $5000 and also told it's not mandatory  to get it done. But all the articles I read , says it's best to use cost segregation(which will eventually be recaptured when sold or do a 1031) Given it's vacant for 3 months in 2024 . Do I really to get a cost segregation done ? 

Thanks much 

Post: House not rented for 100+ days

Pavan K.Posted
  • New to Real Estate
  • Posts 42
  • Votes 22
Quote from @Adam Bartomeo:
Quote from @Pavan K.:
Quote from @Adam Bartomeo:

Why would you ever consider taking a listing down when it’s not renting? You are losing thousands of dollars a month in potential rents and actual expenses. Vacancy is the biggest killer of profitable rentals.You’ll never be able to get it rented if it’s not listed. It is better to lower the price and shift the lease ending date late spring.


 Umm!! Not sure what you meant. The listing is down because it's rented. I have got the security deposit as well .

Please see your post… It says nothing about being rented and asked if you should take down the listing.
Gotcha!!

 The latest comments have the updates . Thank you for your inputs though. 

Post: House not rented for 100+ days

Pavan K.Posted
  • New to Real Estate
  • Posts 42
  • Votes 22
Quote from @Adam Bartomeo:

Why would you ever consider taking a listing down when it’s not renting? You are losing thousands of dollars a month in potential rents and actual expenses. Vacancy is the biggest killer of profitable rentals.You’ll never be able to get it rented if it’s not listed. It is better to lower the price and shift the lease ending date late spring.


 Umm!! Not sure what you meant. The listing is down because it's rented. I have got the security deposit as well .

Post: House not rented for 100+ days

Pavan K.Posted
  • New to Real Estate
  • Posts 42
  • Votes 22

Thank you for all your inputs. This is a large single family new construction house(3000sqft+ 1200sqft basement unfinished). 

I was able to rent it out from next month. I would blame it on the season , winter is brutal here and no one would be willing to make a move.  As the season gets better , there is more interest. 

Post: Lending cash for interest

Pavan K.Posted
  • New to Real Estate
  • Posts 42
  • Votes 22
Quote from @Randall Alan:
Quote from @Pavan K.:

I'm very new to this and would love to get your thoughts on this and are there any downsides to the process? What kind of documentation I need to get so I don't lose my capital.

A neighbor of mine came with this ask of funding for building houses . He is one of the partner ,there are many others In this partnership,as in, they all pool the money to buy land and build large single family homes . As of now , they have the land , the permits and city approval to build the houses. Grading is set to begin once weather gets better.

Bank loan is also part of this but  they also are asking known friends to fund the project in return of higher interest rate .  There will be a promissory note drafted for the amount and the duration and interest rates.

Is there a risk involved? 

@Pavan K.

Risks?  Let me count the ways!

First - if there is a bank loan - they will insist on being in first position.  So now if anything goes wrong, you are not at all guaranteed to get your money back - or put another way the bank gets first dibs.  Lots can go wrong... It could be anything... a mistake in estimating, a cost overrun, or something like the place burns down and the insurance wasn't properly taken out, or theft (of the money outright) or theft of materials along the way.    

My buddy just got burned by someone borrowing from multiple people where the others weren't aware of each other and they thought they were the only one lending, etc.

It all comes down to how well you REALLY know each person in the deal, and then, "do you REALLY know them?"  It is hard to even know where the problem could come from.  The fewer people involved, the better.   I would be asking, "If there is a bank loan involved, why do they need MY money?  I'm guessing for the down payment?  Which translates to, "I can't afford to really do this, let me spread the risk."

My friend who got burned would say, "Don't lend any money that you can't afford to lose."  I would say, "Deals like this go fine all the time... until they don't!"

All the best!

Randy

Thank you Randall for the details. I'll ask further questions and probably come out of this contribution.

Post: Lending cash for interest

Pavan K.Posted
  • New to Real Estate
  • Posts 42
  • Votes 22
Quote from @Jeff S.:

If they want your money, @Pavan K., why aren’t they offering you a stake in the partnership? This sounds like it could be a good deal for the partners, and perhaps the bank, but a terribly risky deal for you, with little upside.

What exactly do you mean by, “There will be a promissory note drafted for the amount and the duration and interest rates”? This is not even close to the documents required for a properly drafted loan. Do you think the bank’s loan will consist of one document, drafted by your borrower? Did your borrowers mention securing your investment with a recorded mortgage or deed of trust, personal guarantees, lender’s title insurance, or anything else? Of course not. Even this is an incomplete list.

Worst of all, the main reason not to make this loan is that you will not hold a first position-lien against the property. This means that if the bank forecloses, and you can’t pay it off, you will lose all of your money with no recourse to anyone.

One option to secure your loan is if one of the partners has a free and clear property worth significantly more than your loan. In this case, you could use it to cross-collateralize your loan with a first-position lien. If their deal goes bad, you could foreclose on that property and hopefully recover your funds. If not, don’t even think of this.

No matter what, consult a qualified lending attorney to understand your legal options and ensure you have proper loan documents in place to protect your investment.

Thank you for this. I had no clue on what questions to ask . I'll take dig deeper on this and ask the questions you stated. 

Post: Lending cash for interest

Pavan K.Posted
  • New to Real Estate
  • Posts 42
  • Votes 22

I'm very new to this and would love to get your thoughts on this and are there any downsides to the process? What kind of documentation I need to get so I don't lose my capital.

A neighbor of mine came with this ask of funding for building houses . He is one of the partner ,there are many others In this partnership,as in, they all pool the money to buy land and build large single family homes . As of now , they have the land , the permits and city approval to build the houses. Grading is set to begin once weather gets better.

Bank loan is also part of this but  they also are asking known friends to fund the project in return of higher interest rate .  There will be a promissory note drafted for the amount and the duration and interest rates.

Is there a risk involved? 

Post: House not rented for 100+ days

Pavan K.Posted
  • New to Real Estate
  • Posts 42
  • Votes 22
Quote from @Dan H.:
Quote from @Pavan K.:
Quote from @Cari Sweet:

I'm not sure I understand your question. But I think this might help?

Zillow tracks all listings for all periods. When you re-list the property, it will restart the counter for "days listed" (assuming it is down for a reasonable period of time, I'm not sure their exact specification, I know we've been down for 24-48 hours and it did not restart). But, people will always be able to see the prior listing history under the Price History section of the listing. It will show when it was listed, at what price, and when it was delisted. I actually look at this section when I'm doing a market analysis. A property that has been on the market for months, with no price reduction, isn't a property I want to compare to. Clearly their pricing strategy isn't working for some reason. 

If you are asking about taking it down because winter is slow... That depends on a lot of personal factors such as your finances. Can you afford to have zero possibility of a tenant for those months that you don't have it listed? Are you available to monitor the property during vacancy? (Ensure no trespassing/squatters/maintenance issues. I go to vacant properties at least weekly unless they are multi-family with active neighbors.)

Generally speaking, if a property isn't moving (and others in the area are), either you are priced too high or there is something lacking with your property. For example, I've had a couple of 3+ bedrooms sit for a longer period of time because they only had one parking space available (and no on-street options nearby). Almost nobody that wants a 3-bedroom has only one car, except the occasional single parent with small children, or solo professional that wants a home office and guest bedroom. That's a small pool to pull candidates from. We got a ton of leads, but the parking was the dealbreaker for almost everyone. The owners refused my advice to reduce price and they both sat vacant for months. (One went with another manager eventually, and the property is listed for $400/month less than we listed it, and the other finally got rented to a solo professional.) Are you getting leads? If not, price might be the first problem. If so, what is their feedback? Don't be afraid to ask them why they don't want to apply.

When I'm having pricing discussions with owners I work with, I always remind them: a month of vacancy costs your bottom line more than a unit filled with a rent reduction. For example: if your rent is set at $2,400 per month. One month of vacancy has cost you $2,400. If you reduce to $2,300 and are able to fill the property faster, yes, you are "losing" $100 per month, but even at that rate, it would take two whole years to equal the loss of the $2,400 vacancy month. People get stuck on "this is my bottom dollar rent" and shoot themselves in the foot refusing to make adjustments. 

I hope that covers your question(s)


 Thank you Cari. I'm guessing it's the winter and the location. It's a new suburb just starting out ,there are no large single family rentals ,it's mostly townhomes that are being rented out, which falls in 2500-2700$ . I'm priced up by another 1000$ considering the size of the home. 

I did delist the ad and relisted in approximately 4 hours , to my surprise, the days got reset . Like you said , anyone can check the history,  I do have cameras installed and I do check twice weekly, it's not too far from my primary home . 

im a first time investor, is it ok to DM the listing to see if I'm missing something? 


 In most markets it is not a linear price increase.  By this I mean much larger home do not rent for significantly more than the smaller home in that area. 

Note 100+ days ago was late September.  This means winter is not your only issue.  You failed to rent it in October before the holiday season. 

I am confident price is your issue especially if you are deriving the price off a poor comp (smaller unit, etc) and then applying arbitrary adjustments.  

You may want to bring in a professional to get this rented.  They should be able to provide a market rent range.  Note with over 3 months of vacancy, a professional that placed a tenant in one month would have saved you money.  

Good luck 

 Closing of the house was in late September. Probably we should have considered this( closing timeframe). at the time of purchase and looked at properties that would complete before the school season starts. 

Post: House not rented for 100+ days

Pavan K.Posted
  • New to Real Estate
  • Posts 42
  • Votes 22
Quote from @Kyle Mccaw:

@Pavan K.

Winter is indeed tougher for rentals, but taking your listing down isn’t the solution. Instead, focus on improving your marketing and responsiveness. How many inquiries have you received? Respond within minutes to each one, as tenants often go with the first responsive option.

Ensure you have high-quality photos that make your property stand out against the competition. Compare similar listings—are they renting while yours sits vacant? If so, consider adjusting your rent or offering incentives like flexible lease terms. You also need to accommodate tenant schedules for showings.

Relisting later might reset your listing's visibility, but delaying could cost you more in lost income. Optimize now to fill the vacancy quickly.

Thank you Kyle. I made sure I followed everything you mentioned. There hasn't been much traction . I'm told the screening criteria credit score is on the higher end .But most of the listings I see are also on the same league. I do have a prescreener and it's hardly ever answered. 🤷🏼‍♂️