All Forum Posts by: Sean Gallagher

I'm in a 35% tax bracket which is why I'm considering doing this strategy. In the end I will consult with a tax strategist but I still like getting input from everyone on the forum. 

Great replies, much appreciated!  And if I understand this correctly I wouldn't be subject to any penalties if I decided to go from short term 7 days or less to a long term yearly lease after having offset my W2?  I wonder if there is a waiting period before changing from short to long term. 

Please chime in if you have done this.. Short term rental with cost seg study/ accelerated depreciation to offset W2 income. Say you're doing this on a 4 unit that appraised for about a million. And you do a cost seg study, If you plan to hold this property long term does it make sense to do this? Meaning will it wipe out the majority of your write-offs moving forward? Because you wouldn't be doing 27.5 years anymore. Say you do 5 years. Once the 5 years runs out you'll only be able to offset your cash flow with mortgage interest? Unless you do upgrades to depreciate, like another roof, large appliances, AC unit etc. I guess you would have to buy another property and do the same thing to keep chasing write-offs. Seems risky? 

I use purchase price including down payment minus the land assessed value / 27.5

I currently have a SFH 3/2 1800 sf out of state where I used to live. I got a great deal and the plan was always to turn it into a rental after rehab..and then move onto the next. Then I got a job, moved, and manage it from afar.

PITI comes in around 730, rents for 1340/mo, renewed lease just before everything exploded so it's a little below market. I have a large 30x36 shop on property not being used since all my junk is in it, if I gave tenants access to this space I don't see why current market wouldn't allow for at least 1700/mo+.

So to recap

SFH 3/2 = Rents below market for 1340.00 - PITI 730 = 610/mo

110k owed on mortgage, appraisal around 260k

My current plan was to sell the property at the end of the year 1031 it and use my other funds to purchase a small apartment complex. There seems to be an argument with successful REI's much more experienced then myself on keeping this property. I feel like cash flow gets us freedom, not tied up equity. So wouldn't it make sense to always maximize borrowed funds and focus on cashflow?

There's so many ways to go about this.. 110k isn't a ton of money to put on a property that would flow 1700/mo, around 20k/yr of course not taking into account any possible repairs... but shoot I already have a new septic & AC unit.. then all that equity just sitting there.

A)  Do a cash out refi pulling equity, creating little to no cash flow, hold for long term appreciation, use the $ for next deal. (Seems risky)

B)  Sell property outright and roll all equity into next investment.

C)  Work toward paying the property off and reap the benefits of getting as much cash flow as possible... but have a lot of equity tied up just sitting.  

My lender used a formula. Amount the property rents for x .75 = _____ and then take that number and subtract the PITI from it. From my understanding my lender considered it as further income.

Thank you all for taking the time out of your day to contribute to my posting, much appreciated!  

I'll stay the course, syndication does sound like an option to scale.  I'll get my first multi without syndication and see if it is something I will move forward with in the future.  

Thanks again! 

I'm saving up about 300-400k for a down-payment on a small multifamily 10 unit or so.  My thought process is the multifamily is the way to go but at the same time I could scoop up sfh's all cash, rehab rent and refinance, get all my money out and keep going.  Seems so much more powerful to scale if able to find the deals.  It would take some time to scale up with multifamily if having to gather 300k at a time.  Anyone else think deeply on this?  I only have one single family rental atm. 

Any update?  Hope it went well!

I rented a room in union city, home was worth about 1m-1.2m, just your standard home, nothing crazy, no pool, no yard, etc.  Total rent was 4500ish lol.  5br like 3ba