All Forum Posts by: Brad Rondeau

Wow, thanks for the great replies. It sounds like my tax accountant was just plain wrong when he said "just go get your real estate license and you will be considered a tax professional and can take advantage of all losses". He said "no need to work some minimum amount of hours".

I can see now that this is terrible cash flow investment. Thank God for the appreciation. If I sell May of next year will my 1 year of living in it (all of 2010) help reduce my tax bite (I realize I should have stayed there 2 years)?

Does it make sense to try to do a 1031 tax exchange and try to get a cash flow multi-family unit? If so, is there a a website or somewhere to find people that might be interested in a swap? The property will be worth about $490,000 a year from now and I will likely have around 100,000 worth of gains after expenses. Do I need to find another property for above 100,000 or above 490,000? Thanks for all the great help.

Hello, I continue to question my investment in Laguna Niguel CA. I purchased a 3 bdrm condo for $365,000 in Dec 2009 with 20% down. I now have a 4% loan but pay $280 in HOA fees monthly. I did about $16,000 in improvements - paint, carpet, remodel kitchen etc. I lived in it for one year and then started renting in Jan 2011. I started renting at $2,175 and next month the rent will be raised another $95 to $2,340.

Looking at my 2013 Schedule E, I made $26,700 in rents and show Total expenses as $28,107 (depreciation, taxes, interest, repairs, gas). Repairs/maint are very low each year around $300 (maybe one plumber or pest control visit each year). Unfortunately because I earn to much I write off any of the loss. So I have a small negative each month but the house has risen according to zillow to $465,000. I expect the appreciation now to slow. I expect to have a small negative or maybe break even. I know I should have a positive cash flow but this will take more years of rental increases. I've had the same tenants for over 3 years and they are great. I see other investors with huge cash flows but I can't even break even or get tax advantages from loses. Would I be able to take these tax loses if I got a real estate license (would be a real estate professional). Does it make sense to keep this or sell next May when the lease is over? I'm nervous about taxes and don't know how it works since I lived in it for one year before renting. This property is held in my trust but wonder if I incorporated - would this help me tax wise.

Also, it seems it is impossible to buy a property in southern California and see it flow cash as mortgage payments are way over the monthly rent. Is this a terrible place to be a realestate investor?

Hello, I see an REO home up for bid on hubzu.com. It looks pretty rough and it appears the previous occupants are still there. The notes say it is REO occupied and up to the new buyer to resolve. How would you go about removing the occupants if you won the bid. Pretty tough neighborhood likely dealbeat/criminals in this one.

Jimmy, wanted to touch base with you. Did you complete your purchase in Memphis? How did the deal go? How did you find the property? Did you find someone in Memphis to manage the property? I'm interested to hear how things went.

Thanks - Brad

Marco and Jon, thanks for you very helpful info. You are right I have been lucky, part of that is that I upgraded all appliances, air, furnace, kitchen, bathrooms etc before I rented, so very little failures to this point. I did have a serious roof leak but HOA fixed the roof and my insurance covered the damage inside - but still a major hassle although no out of pocket cash.

Jon, to your point - it seems like the numbers do not add up in our expensive costal area of OC. I wonder how any landlords are making any money here.

Does it make sense to go out of state to start building a portfolio of properties. I guess I need to find an area where homes are affordable but rents are high in relation to the purchase cost. Where are the good markets to start in?

Thanks for your help. Brad

Hi, I'm 52 and looking towards retirement. I'm thinking about real estate investment in my area of south Orange County CA. I bought a condo about 3.5 years ago. I met my future wife and we bought a house in the same area. I have been renting the condo for 2.5 years to great tenants. After buying the condo for 365,000 I added about 21,000 in improvements - carpet, paint, new kitchen, new air conditioner/furnace etc. I recently refinanced at 4% 20 year loan. Loan balance is 273,691. I rent this for 2,225 per month. Association dues are 285. The escrow for taxes and insurance is 314 per month. The rent just covers all my payments and repairs.

I've been reading about the 2% rule. I think this is impossible in my area. Investors have been snapping up homes for 420,000 and I know those homes will only rent for 2,500 monthly - maybe they are just flipping them.

Anyway my repairs have been extremely small - about 250 per year. Mostly small plumbing issues that I can resolve myself. Currently my mortgage + escrow + HOA + repairs is about equal to my rent. I see my new 20 year low interest loan is retiring big chunks of principal each month.

I'm no where near the 2% rule as my rent is 0.57% of my purchase price + improvements of my condo (not even 1% rule). But I seem to be doing ok as the rent just barely covers all my expenses and the property is appreciating. Am I crazy for keeping this - should I get out now?

Also I am looking at purchasing a 200,000 rental home that will rent for 1,500. This is 60 minutes inland in Murrieta CA, in a very nice neighborhood. Again not even close to the 1% rule. Should I consider this. I can find single family homes inland that meet the 1% rule but usually in bad neighborhoods and in need of constant repairs. I want rentals with low maint and great tenants and good appreciation like with my condo.

Thanks for your input. Brad