All Forum Posts by: Account Closed

I have a 10% down 120% ROI and about 100k equity rental so I think about it all the time....sell or keep it. I am very handy and there is very low expense to upkeep. Better numbers for you.....$600 pr mo payment 1350$ rental income 2 months go to insurance and taxes. $7500 pr year income assuming nothing goes wrong and 0% vacancy factor. 13 years payback to make my 100k equity. 23 years left on the mortgage. What would you suggest I do? .... Thinking about your situation in the same manner you have 62k in equity and make 2500 per year (2 months to taxes and insurance) it would take nearly 25 years to get back that 62k assuming you do all the work yourself and a 0% vacancy factor. I would say leverage your assets. It would take you twice as long to get back your equity as I need to get back my equity. (Not bragging or narcissistic, just trying to help) But it depends on how many years you've paid off.

Best of luck and bigger pockets to ALL!

Do whatever everyone else in your area isn't.  My buddy with 40 units paints his units something other than Navajo White.  Prospective tenants walk in and say "Whoaw this place looks great I want it....but don't know why"... because it's slightly different from all the other units in the regional market.  

Many folks don't understand their basis which the feds allow. Take purchase price (look on tax assessor site building only, not land) 100k, then take improvements (long term ones roof, flooring, etc) lets say 100k. (Assuming you know that expenses and property tax if it's in a LLC, S Corp etc is a write off for that year) you take the 200k (long term improvements and purchase price) and depreciate it over the MACRS table 27.5 years? $7,272 pr year. Lets say you sell this property after 10 years for 200k. (you bought if for 100k) $7,272 per year depreciation $72,200 depreciation so 200k building cost and long term improvements minus the cost you depreciated. $172,200....you have a $27,800 gain.

So save all your receipts in building, also if you stay at the property and make repairs that day, its all a write off

You purchase land...100k no write offs (land only pr assessor site)  Building costs $200 pr sq ft. $200k receipts for 1000 sq ft. sell for 400k = 100k capital gains   held for 5 years (200k Receipts $7,272 depreciation pr year $36,360 depreciation)   200k - 36,360 = 163,640 minus purchase price 100k = 63,640 capital gains...which is better than 100k.  With your rent roll for those 5 years and property tax write off 10k plus or minus you should be getting pretty close to a $0 tax burden

Usually a standard lease IE: California Apartment Association Standard Lease is pretty bullet proof.

Within the lease is a blank line for number of tenants. You would fill in 3 tenants and it continues to state "without written prior consent of the landlord".  You would fill out a rental agreement addendum stating that you give prior consent "additional tenants $250 per occupant; not to exceed 5 tenants" (for example).

Good luck.

ps the first offer got their EM back

Usually  there is a financing contingency, or loan contingency... In WA we just had our backup offer accepted because the original offer fell out of escrow due to their loan contingency not being fulfilled. 

It is often overlooked, or not exercised by realtors but the contingency is there; and per the terms of your contract is most often not met, but again the clause is usually not exercised. IE: $300k purchase price, 10% down, prime rate....Sorry Alabama ($60k purchase price, 1% down, a few points above prime%) I had to....sorry.  So if those terms are not met by the date of your loan contingency (is what I think it's called in Alabama) either party may back out.  If the property didn't appraise out, if you couldn't come up with 10% down or if your credit is subpar and you can't get prime, even if its a commercial and the bank charges you a point or 2% above prime it's a back out strategy.......a realtor protecting the interests of their buyer will inform you of this.... a realtor trying to collect their commission will probably not.

Good luck.

Interesting post as my wife and I just purchased (knock on wood 7 days left in escrow) a hobby farm in Battle Ground Wa and we are from Ojai Ca.  We looked for something that had sweat equity and positive cash flow within a 1 hr radius from Portland OR. (she lived in hood river and loved it)

We spoke a bit about our generation (Y) and likely hood that most of them are lifelong renters and cannot achieve the class mobility that real estate (in an appreciating market) accomplishes. .....Unless a sacrifice is made (I will be listening to the correlations of our thought process and episode #275) 

Personal advice with regards to our place; is $600 taxes and insurance; mortgage is $600 pr $100k grand total of about $3000 (assuming $0 down).  All of my peers from San Diego to Lompoc pay $5100 minimum.  Undoubtedly "But my market is too expensive" .

Having been a boat captain for 10 years (exercising hierarchy)  operating a 10% down 120% ROI rental (Crestline CA) and having a best friend with 40 units in Long Beach CA, you cannot be someones friend (ie "cool landlords" and be cash neutral. Why do it if not cash positive?)

Try putting everything in an LLC. and saying for example " I would love to install a tankless water heater for you but the owner of the company (the LLC where rent checks are paid to) is a real cheap skate, I would love to say absolutely, but we'll see!" That way you are cool and can say yes or no in a month on the water heater, depending on your situation at the time.

(With that said if I'm ever financially independent enough I always thought it would be amazing to give someone a cash neutral rent situation) .

Best of luck, lucky in love!

Evening Ya'all, thanks for the input!

I'm purchasing and developing a piece of land with residence outside of Portland (in WA)

-Cash purchase

-Current LLC. in CA

-2018 capital gains offset needed

We're (Wife and I) purchasing a SFD, remodeling and living there if we enjoy the area; flipping it if we don't enjoy the climate.

Per the 2018 capital gains sold to purchase the property, we need write offs, being a cash purchase we don't have the mortgage interest write offs that would help, (granted we're saving that interest over the 30 cost of the loan which is fortunate so we can't complain). (and yet we do!) 

A LLC seems like the logical venue to achieve an offset to this year's taxes via MACRS along with adding to the basis with this year's improvements to the home, property taxes, etc. and luckily we already have one in good standing.

My current hurdle (and I'm imagining this to become more prevalent with the federal limit on property tax write offs) is that our exposure with the LLC. having a free and clear asset is large and homeowners insurance is denying us when I ask for a LLC. Endorsement.

My questions are: 

1: With a home in a single member LLC. may I insure the property under my name or does it need the LLC endorsement? (Assuming the event of a payout. IE: payout to XYZ LLC. I take that check to my bank and they cash it as I am the member?.....Conversely AAA says Joe Smith, who's that? The deed says XYZ LLC. "No check issued".)

2: Would it behoove me to achieve my write offs this year (the year I need them) and quitclaim the deed from my LLC. to myself, converting it into a primary residence down the road (adjusting my basis with the improvements and repairs) and only allowing potential litigation to attack my free and clear title for this short period of renovations vs. the life of our occupancy at the property?

Thanks for your time, excuse my ignorance on the matter or for not sleuthing the knowledge from another post. I know, I know, consult a CPA, lawyer, and/or there is no reliance, implied or consensual on any of your input.  I'm merely seeking your input and hopefully raising questions of underinsurance and exposure to litigation which may help you in examining your endeavors as well.  Wishing you all the best and bigger pockets for ALL!