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All Forum Posts by: Kerry M.

Kerry M. has started 17 posts and replied 66 times.

Post: June 30 Fiscal year disadvantages?

Kerry M.Posted
  • Rental Property Investor
  • Washington, D.C.
  • Posts 66
  • Votes 5

Hi. What are the disadvantages of having a fiscal year end June 30? This is our first year having an LLC (started in April) and the LLC owns a home to be later used as a rental. When getting the EIN, I listed June 30 as the end of our fiscal year.
So if the expenses of the first year count towards the property's basis, does the first year end 12 months from purchase or in the first fiscal year? So if the fiscal year ended Dec 31, would our basis would be larger?
Our expenses have been high, higher than the purchase price of 26K, because it was in poor condition and outside our local area. We travel back and forth with our large family to work on it. Our car repair costs have actually been higher than the mileage deduction would be.
So I am meeting with an accountant next week but don't know why he recommends changing the election to Dec 31. He said only one client of his does it in June.
I do well off season. For me it is much less stressful to think clearly, prepare for taxes and make major decisions in the summer being absent of major holidays. I find professionals easier to find, relaxed and more willing to spend time when I'm not in line with everyone else. I ask a lot of questions. The holidays for me are very time intensive and it takes a lot of prep work. I don't want to add finishing up a fiscal year and getting my numbers straight to make financial decisions on top of that.
So should I keep June 30th?

Post: Is Foremost BASICS Three Dwelling Fire Insurance a good insurance?

Kerry M.Posted
  • Rental Property Investor
  • Washington, D.C.
  • Posts 66
  • Votes 5

Thank you @Bill Gulley and @Geof Greeneisen. So I guess we're on the right track. Ours is a lower priced home, older and not in finished condition. I will ask if the agent is an independent adjuster or uses one. The agent seems to be very familiar with construction, rentals and has built his insurance very consistently in his local and 5 state area. He said the Erie policy was better or cheaper, but he isn't my primary agent for home and auto (and I don't want to switch that) so we can't get that. At this point cost is not as much a concern as getting the right coverage/agent/backup if a claim needs to be sent in.
Thank you for walking me through this.

Post: Is Foremost BASICS Three Dwelling Fire Insurance a good insurance?

Kerry M.Posted
  • Rental Property Investor
  • Washington, D.C.
  • Posts 66
  • Votes 5

Our property started out in very rough condition (no running water, HUD home, some knob and tube wiring.) We are switching from a Vacant and Renovation policy for the last four months to a Fire Dwelling policy. Does that seem like a good idea? What about Foremost as a company?

We do not yet have renters but plan to later. The property used to be a duplex but was sold as a SFH. Our plan is to turn it into a 4 unit. The electric is now updated and metered for 4 units, plumbing redone in PEX and is livable. First goal is to have one of the units done and ready to be rented soon. My son is living at the property also to attend school.
If I buy the 12 month policy will I need to change it again when it has a renter? It says it is intended for 1-4 units and rentals. My question is, is this the right kind of insurance?
Thank you,
Kerry

Post: Buying first Multi-Family - LLC Help (NJ )

Kerry M.Posted
  • Rental Property Investor
  • Washington, D.C.
  • Posts 66
  • Votes 5

I read someone's advice to talk to ten banks, all in a row. Thankfully talking to bank #1 worked out for me. We bought the property cash through an LLC but plan to refinance. The banker told me I would need to register the business with the state and get an EIN number before they could do the loan. Also we need to personally guarantee the loan. I then talked to another branch of the same bank and then an accountant who verified my business projections and numbers with a commercial banker again at the same bank. It all says we're good. They're talking a 20 year cash out refi. I talked to bank #2 and they had much less favorable terms, a 7 year loan. There is a 3rd bank I haven't yet talked to who has a strong local business base. And a 4th whom I heard gives great mortgage rates, and a 5th whose billboard advertizes a local credit union's rates. As you can see, a lot of the research hasn't been done yet. I wish the best to you.

Post: LLC or not?

Kerry M.Posted
  • Rental Property Investor
  • Washington, D.C.
  • Posts 66
  • Votes 5

We used www.northwestregisteredagent.com to form an LLC. A Maryland lawyer recommended it (I think it's good for all states, however.)

Post: Why not occupied and renovation insurance?

Kerry M.Posted
  • Rental Property Investor
  • Washington, D.C.
  • Posts 66
  • Votes 5

Thank you Dion and Steve. The house still does not have heat but I talked to a HVAC guy today and I think we have a solution and an installer. Two electricians are coming to take care of electrical work. The gutters are fixed. One basement window needs fixing.
In other words, by the 30th, which is the date the policy renews, I think we will be in livable condition.
Past the renewal date we will still finish the new baths and cosmetics.
As long as the house functions, why wouldn't they count it as regular insurance? It is not a rental yet, just a house at this point. I know insurance agents cast a wary eye to people who say this will be fixed....

Post: Why not occupied and renovation insurance?

Kerry M.Posted
  • Rental Property Investor
  • Washington, D.C.
  • Posts 66
  • Votes 5

Hi - we're close to deadline on a renovation and the insurance is my concern. We have been doing large changes: the walls are still open until the new baths are plumbed. The electricity is being mostly redone and will be finished in about a week. A heating system is going in. While most will be done, what is essential for switching to occupied not vacant insurance? I need for my son to live here soon for the school year.

The original plan was to rent out portions of the house in the fall, but even if that is delayed (because of not being renter-ready and lead based paint certification not done yet,) I still need him to be here (with insurance on the house.)

What is the insurance company looking for? I think we want to transition from vacant/renovation insurance to occupied/no capital improvements/renovations still O.K. Are there any other hybrids of insurance coverage for this situation?

Thank you

Post: 3 Family Home built in 1935 LLC Insurance

Kerry M.Posted
  • Rental Property Investor
  • Washington, D.C.
  • Posts 66
  • Votes 5

I also would like to hear recommendations for insurance. We are with Nationwide for an LLC owned SFR being turned into MFH. Currently under construction.

Post: 40% loss in net worth in last 3 years

Kerry M.Posted
  • Rental Property Investor
  • Washington, D.C.
  • Posts 66
  • Votes 5

Thanks Rich and Will. Biggerpockets has been a lifesaver. At several junctions now it was the difference between losing confidence and being stuck and keeping on. Research I can do, especially with resources like this. Thanks everyone.

Post: 40% loss in net worth in last 3 years

Kerry M.Posted
  • Rental Property Investor
  • Washington, D.C.
  • Posts 66
  • Votes 5

40% - Yeah, that's right. I have been working as hard as anything and am straight at zero. I am positioned for growth but there has been no slacking here. What do you call carrying costs for life, not just rehabs :)?
I know how to buy low and sell high - I just don't have much capital.
We have moved from an area of over 50% unemployment in computer science R&D in our town of South Dakota to a high cost of living area near the nation's capital. I have five kids.
If I hadn't paid off the second mortgage with the proceeds of my previous home's sale, I'd have other options. I tried three times in 14 months to qualify for the gov't sponsored home mortgage program, unsuccessfully. The RE bubble peaked about a month before we bought our home but we weren't underwater until this spring, so we didn't qualify. It took five years of uninterrupted income to be able to afford life AND refinance an interest-only loan.
Meanwhile my food costs have gone up about 40%. I spend double on food what I spent in 2005 and that's not just hungry kids. My food bill is as high as my mortgage sometimes.
And what do you do with kids? They don't stop growing. Or needing things. I still wouldn't have done anything differently because my kids have had security in living in one place.
But it has turned out poorly for some and they will never recover in the time frame in which their children need options. I have never seen as much personal heartache as I have in the last 3-4 years. And it's hard to get a job.
Thanks for asking what's up.