All Forum Posts by: Rawn Wilson

I’m in the middle of a few projects and hitting a creative brick wall. I would like to meet up with others in the Pearland / Friendswood area that have recently completed or are in the middle of projects to share ideas and strategies. Coffee, lunch, happy hour....whatever. I am into buy and hold for rental properties but open to other strategies. Maybe we can eventually start a local meet up and get something shaking around here. Let me know. Thanks.

Being in the military and deploying around the world, I used free software offered to military members.  It was fast and easy but did not ask the right questions.  I started using a CPA 4 years ago that has rental property.  That is why I started the depreciation.  He did not know of a way to recoup the missed years (2006-2013).  I looked into the 1031, but want to use this cash to become debt free so I can start to concentrate on building cash reserves and be in a better spot to work with lenders. 

Looking back on what I typed and reflecting on my spreadsheet analysis, I realized I may have made a mistake.   I still owe 95K on the house.  Do I still have to use a depreciation recapture value less than what I owe?

I bought a house in 2003 and lived there 3 years.  When I deployed to Iraq in 2006, I rented it out and have been renting ever since.  I was new to real estate and did not depreciate it until recently (maybe past 4 years).  It is time to sell and think I have the tax stuff figured out.  Can anyone help confirm my thinking:

1.  Bought the house for 132,000.  Paid 3,000 in closing costs. Invested 15,000 in roof, kitchen, and bathroom upgrades.  So it becomes a Cost Basis of 150,000

2. Selling for 190,000.  Paying 5% commission (9,500). Selling basis is now 180,500.

3. Even though I just started to depreciate, I understand I have to claim what COULD have been claimed.  So 12 years of rental history at about 4,800/ mo = 57,600 of depreciation.  This brings my NEW cost basis to 74,400.

4. My gains are now 180,500-74,400 = 106,100

5.  I will be responsible for Recapture tax of 57,600 at 25% rate and long term capital gains tax on 48,500 at 15% rate.

Does this sound correct?

I expect same rent as in report for a year until I do some upgrades on interior and raise it about 200 each. I have looked up current tax info. At 265k, they pay 6k. I budgeted 12k at a 400k purchase price. All in all it looks to me like 100k per unit and each bringing in over the 1% rule. In Pearland or Friendswood that is pretty good in my opinion.

View report

*This link comes directly from our calculators, based on information input by the member who posted.

I live in Pearland, TX and drive by this property all the time.  It is right off a busy street 2 houses down from a fire station.  It is a large 4 plex with all units rented.  Some with same families for years.  Almost a turn key property.  It will need a new roof and all wood siding replaced with something more durable (has rot).  I figure 30K for rehab.  I have walked the property in all units and they seem solid.  The owner is a local realtor who bought the property in 2006 for $265K and is now asking $485K.  Pearland is a very looked after area, and the High Schools are awesome.  If your a little league ball player, you have to be here. I worked with the calculator and the numbers seem to work at 400K.  I have 2 single family homes and a triplex in my portfolio and would like to add another multifamily, but don't want to get too excited and jump in too fast.  Not even sure they will take $400, but I want to get everything right and looking good before I try.  All separate metered and tenant pays all utilities. 

@James Call I figured it was something like that. Thanks for the info.

I have been evaluating smaller apartment complexes in the area and ran across a deal that looked interesting.  It fit the mold.  Built in the 80's and need updating, rents under market, etc.  Its a 10 unit deal.

I contacted the broker to get financials and they told me that the property was under contract, but at title it was discovered that they do not own the covered parking attached to it.  Apparently it is a city easement.  The buyer backed out.  They would not send information unless I accepted that issue.

A big part of real estate is solving other peoples problems, so I was wondering what the creative solution is?  The parking has been there forever with no issues.  Do I just say, "So far so good" and roll with it, or can I contact the city to see if an agreement can be made?

I will try and attach a picture.  It is the long tin structure that parks maybe 8 cars at the top of the complex in the picture.  Besides that area, there is really no parking for tenants. 

Thoughts?

Yep. I have an appraisal on Monday. Pool is due a replaster. That is 4K easy. Time to stop loving the house and move on.

My thoughts exactly. Take the 27 owned homes and offer to sell to current tenants. $1000 down and 250/mo for 3 years. Loose maint costs. Keep lot rent at $250ish. Add homes to 9 vacant pads and do the same. Have a parking lot in 3 yrs that makes $250/lot. It still has a pool and 2 small homes on it I would have to keep up and rented. My numbers put me around $750k. Think that have been trying to sell for a while. After I close on my commercial auto shops in Oct, I’ll be investigating this deeper. Just listened to both of Jefferson’s podcasts about MHPs. AMAZING info.

Thanks. I’m closing at the end of October. Paying all cash $265k. I project 25-30k in quick renovations to make house and both apartments rent ready. Auto shops just need a deep cleaning. Once all 5 spaces are rented for an estimated $6000/mo total I want to refinance at a projected cap rate of 9%. That should put me way over what I have into it. I just need to find the right local lender willing to do that.