All Forum Posts by: Ron P.

@David Oldenburg 

That's my understanding about usury as well...that a broker is exempt.

This doesn't apply to you because you are a broker but I was making the point that in California you need to have a broker's license if you make 8 or more loans even if it's from you own funds.  Folks sometimes think you can make as many loans as you want from your own funds without a license, that's not true, you need a license if you make 8 or more. 

If you are lending in California you are considered brokering if you originate 8 or more notes secured by re in a calendar year ... even if it's from your own funds (CA B&P Code 10131.1(C)).  And of course there is the usury issue to deal with when you go over 10%.

Unless you're doing volume, why not just download a note & dot from Fannie/Freddie, it's a .doc file so you can make changes.  Good note software can be $10-$20k.

 I have a situation similar to Mark's #2 above ... purchased and rehabbed sfr last year and into Jan of 2015 with no renter actually in the property until Jan of 2015 when the rehab was complete, the difference being that I actually received rent in 2014 from a tenant (vacation rental) that didn't actually stay in the property until 2015.  I do cash accounting.  Do I set this up on my tax return as if it was rented in 2014?

 104.1 is still around.  I recently did one.  I sent the assignment of deed of trust to the title company that issued the original policy along with $150, they issued the 104.1 endorsement and recorded the assignment.  That is like a new policy as far as I know.

 I thought a 104.1 endorsement took care of subsequent encumbrance problems, what's the point of getting a new policy?

 Agreed!

I'm simply saying the charts don't indicate we are back on the pre-bubble appreciation trend line.

 I'm comparing the boring period from 1996 to roughly 2004 with the period roughly 2010 to present, observing based strictly on the charts that the boring period is a positive slope and the 2010 to present period is a flat slope, indicating to me that we have not " ... made it back to the trend line that was established early in the chart."  I am by no means a market analyst, real estate or otherwise, but I have looked at a lot of charts and to me the appreciation slope pre-bubble looks positive and the post-bubble slope looks flat, for the most part, based on your charts, probably most evident in the Hillsborough County chart, but present in all the charts.

@Greg Rand 

" ... and made it back to the trend line that was established early in the chart."

Looking at those charts, it it appears appreciation didn't make it back to the trend line post correction.  For the most part I see a positive trend line pre-bubble and a flat trend line post-bubble.

 Side note to your side note: Boy, your statement about Dr's not having basic problem solving skills really brought back memories of when I was an engineering student at ucla many years ago.  My (i think) mechanical engineering professor (we had to take core courses in all different engineering disciplines even though I concentrated in electrical) told us a story about how ucla at the time had a program where medical students were able to take and get credit for some engineering classes.  His overall assessment ( he was a prof in the program) was that medical students were very intelligent and good at grinding through the equations but lacked for the most part the ability to setup and formulate the problem at hand.  Wow, I think your statement is right on.  Stick to your guns, do  your own taxes.  Although I have tremendous respect for Steve's advice, I believe us regular folk (me included) are able to do our own taxes, with a little help from our (CPA) friends of course.

@Jon Holdman 

Bingo!

I think I found the answer to my question in IRS Publication 527.  I basically says what you said that all improvements prior to rent-ready must be capitalized (added to basis), and it goes on to say 'current expenses' and 'carrying charges' can be deducted.

"Adjusted Basis.To figure your property's basis for depreciation, you may have to make certain adjustments (in­creases and decreases) to the basis of the property for events occurring between the time you acquired the property and the time you placed it in service for business or the produc­tion of income. The result of these adjustments to the basis is the adjusted basis."

...

"Increases to basis. You must increase the basis of any property by the cost of all items properly added to a capital account. These in­clude the following.

The cost of any additions or improvements made before placing your property into service as a rental that have a useful life of more than 1 year."

...

"Additions or improvements. Add to the basis of your property the amount an addition or improvement actually cost you, including any amount you borrowed to make the addition or improvement. This includes all direct costs, such as material and labor, but does not include your own labor. It also includes all expenses re­lated to the addition or improvement."

...

"Deducting vs. capitalizing costs. Do not add to your basis costs you can deduct as cur­rent expenses. However, there are certain costs you can choose either to deduct or to capitalize. If you capitalize these costs, include them in your basis. If you deduct them, do not include them in your basis.

The costs you may choose to deduct or cap­italize include carrying charges, such as interest and taxes, that you must pay to own property."