All Forum Posts by: Ryan Sun

As a new real estate investor, I recently bought a SFH and hired a PM company to handle it. I'm wondering if it's common for PMs to provide detailed receipts for each project, and if it's reasonable to request them. I need to prepare for tax filing and potential audits, but I'm unsure if receipts for every expense are necessary.

I had an incident where the PM mentioned a referral fee of $350 for a tenant, but the bill showed $400. They later corrected it after I pointing it out, but now I'm unsure if the referral agent actually exists. Should I request a receipt for this charge, even though it's below $600 and may not require a 1099 form?

Any advice would be appreciated. Thank you!

Based on my understanding, purchasing points typically necessitates holding the mortgage for 5-6 years to reach the break-even point. Given the current scenario, there's a high probability that mortgage rates may decrease within the initial 2 years. Would it be advisable to sell the points, receive closing credits, and subsequently refinance when the rates drop?

We've learned that each individual can secure up to 10 conventional loans with favorable interest rates. To maximize this opportunity, it is recommended to utilize the full allocation of 10 loans per person. As we proceed with the implementation, several questions arise regarding an investment property, where we intend to use the husband's name for the mortgage. Here are the questions:

1. Can the down payment be sourced from a joint checking account? Will the underwriter require the wife's involvement in the process?

2. We have a family trust, and we would like to use it on the title. Is this acceptable? If so, will the mortgage still be considered under the husband's name only?

3. In the future, if we decide to refinance the mortgage, is it possible to transition to a mortgage solely under the wife's name?

Hi @Michael Plaks

I have two questions.

Could you elaborate the capital gain calculation on year 4? It seems to me, you use the distribution $200k plus the $15k cash distribution minus the cost base, which is $100k investment minus all the deductions ($10k+20k+5k). However, from my understanding, only the depreciation part should be applied to the depreciation recapture. The year 1,2,3 deductions are very likely not all depreciations, such as interest, improvement etc.

Question 2 is when you mentioned "It's a common strategy to offset losses and gains between multiple syndications". From my understanding, the gains from syndications are mainly capital gains (portfolio income). However, the losses are passive loss. For a non REPro, one cannot deduct passive loss for portfolio income, right?

In 2020, I bought my previous primary home with a 20% down payment and a 2.5% 10-year ARM mortgage. Since then, the housing prices have risen about 50%, reducing my leverage from 5x to around 2x. I'm considering purchasing a new home but unsure if I should sell the old one.

My plan is to retain the old home and rent it out. Taking into account my current monthly expenses, including potential vacancies and maintenance fees, it should break even. Considering I'm new to real estate investment and don't own any rental property yet, I believe this is a great opportunity for me to enter the field and learn how to manage rental properties. Additionally, I have sufficient funds to buy another rental property if a favorable deal arises. But not enough for an extra. 

I'm located in California, where the property tax yearly increase is capped at 2%. I'm hesitant to let go of the 2.5% interest rate, given that current rates are around 6-7%. 

The main reason I'm contemplating selling is the advantage of no capital gains tax for owner-occupied properties, allowing me to access the equity. And also the current leverage is only 2X, there are opportunity costs. Once I convert it into a rental property, I can either sell it with 3 years (there might be some complicated depreciation recapture and mortgage payment tax issue?) or through a 1031 exchange after that. A cash-out refinance appears unfeasible due to the present rent-to-value ratio and the  much higher interest rate, as it would lead to considerable negative cash flow.

Is the reason for this the low inventory or the higher interest rate? According to my calculations, many current properties could generate positive cash flow with a 3% interest rate. However, with the interest rate doubled, the home prices have not changed much, which has resulted in almost no cash flow on most properties now.

My question is, currently the interest rate is much higher than it was two years ago, and housing prices haven't dropped significantly. As a result, it is very difficult to find a property with positive cash flow right now.