All Forum Posts by: Sean McCluskey

@Jason Tressler Hi Jason, thanks for the input - have you ever had luck reducing your tax assessment to a number below what you just bought a house for? As in, off of the MLS?

@Lionel Li Hi Lionel, this is a great comment.

I agree that, in some cases, the tax assessment on a house will be low and thus your pre-rehab purchase price (which is used to immediately reset the tax assessment), won’t have an impact.

A refinance appraisal has no impact on tax assessment value, but a transfer of ownership does.

I guess I'm talking more about buying houses from the MLS. Those purchases will increase the tax assessment value up to your purchase price right away, and thus the 2% tax is charged on your total purchase price, making it a of drag on rental property cash flow.

@Brian Van Pelt Hi Brian, thanks for the good point - I agree that the taxes are deducted from you income before calculating after tax income. But it’s better to have lower taxes and higher after tax income in most cases, yes?

Hey BP,

I want to refinance my primary residence here in sunny Southern California. The only problem is, I have a big $700/month car loan that I took out after getting into the house last fall. The balance is about $35k and I'm only paying 1.99% APR, so it's about as cheap as money can get.

I really dont want to just pay that car loan off, because I can go out and put that money into 1-2 rental properties instead and add an asset that will pay for this liability. I'm just trying to figure out how to best work this using rental properties (OR, would a note(s) be better??)

I'd like to calculate how much rental property income I need in order to "offset" that $700 monthly payment, so that I can qualify for a refinance and reduce my mortgage payments by about $6,000 per year.

Here's my math, can someone please tell me where I'm off base?

$1,200 monthly rent (free and clear) - 75 RE taxes - 60 Insurance = $1,065 * 75% = $798.75

This would appear to immunize your DTI ratio. EXCEPT, you need to account for the fact that the $700 car payment is a larger share of my monthly debts than $800 is a share of my income. Meaning, if you have 4000/10000 = 40% and add $700 to both sides, you get 4700 / 10700 = 43.9%. To keep this at 40% you would need to take the income up to almost $12,000.

Thoughts?

Hey BP,

I'm finishing up my first BRRRR deal in Indianapolis, and I have a great team in place. BUT, I'm thinking about moving to a different market.

Indianapolis has a special real estate tax equal to 2% of appraised value for non owner occupied homes. Owner occupied is 1% of appraisal.

This 2% of appraisal can make the RE tax on a B-Class, $140k ARV 1% rule home equal 2 full months of rent ($2800)! Then you add on 1 month for PM leasing fee, the PM's % of rents on other months, repairs, mortgage, etc. and the cash flow is greatly reduced as a result.

My question for you all: why not invest in a market with lower real estate taxes? Like certain markets in Alabama and Louisiana where RE taxes are closer to 0.50% of appraised value.

For the same $140k ARV, 1% rule home, that would mean real estate taxes of $700, a $2100 savings! Even 1% would be a $1,400 savings, all of which would end up as cash flow on the bottom line.

Multiply that by a portfolio of 30-40 rental properties and you're talking about an extra $42,000-56,000 of cash flow per year!

Convince me not to change markets!

@Sean McCluskey Also, FYI, if you have the GPA in one of these majors, you can get Finance internships and then a full time job, without majoring in Finance.

I switched from Computer Science to Business and a Finance concentration, during my Junior year. Best decision I made in college because I enjoyed b school much more than designing computer chips.

Hot tip: You want to go meet the kids leading clubs (Finance club, Computer programming club, etc) in these different majors BEFORE committing, and see which group you belong to.

@Tanner Kier I agree with most of the posters. You can either go for a Business major and pair it with: Economics, Data Analytics, Computer Science or Engineering. Graduate into a job making big bucks that you would find interesting.

Or you can do one of those at a school on this list, and double major in one of those plus real estate.

https://www.usnews.com/best-colleges/rankings/business-real-estate

 Thanks! Yeah those are great rates. I would lock in the 3.25% 30 year fixed. Set it and forget it!

@Sam Shin which bank is offering a 2.75% intro rate for 3 years on a HELOC? At what LTV? Is that a VA program?

@Sean McCluskey Anyway, I’m not worried about a serious revolt because the US Govt’s 15 foot tall AI robot soldiers will be pretty intense. Should be able to handle some hungry Uber drivers... terminator, anyone?