All Forum Posts by: Shawn Ab

Hi everyone,

I have a 4plex rental that sustained fire damage in 2020 and we received insurance proceeds to fix the damage (as the damage was 'medium' in that the rehab was pretty expensive, but did not destroy the property or render it unrepairable).  

My basic question is - how do I file taxes for this?  I perused some threads on here, and I see the points on tax basis, etc.. but wasn't exactly sure as for some people on here, it was their primary residence.

Quick overview - it's a 4plex in Houston, TX that I paid $212.5k to purchase in Oct 2017.  In Sep 2020, a fire happened (caused by electrical).  Long story short, the insurance company agreed to pay out damages, including ~$190k in estimated repairs and $7k in loss of rental income (and withheld $25k in depreciation).  How would I file taxes for this?

My calculation was --> (i) $215k purchase price - (ii) $22k depreciation from Oct 2017 to 2020 + (iii) $0 cost of improvements = $190k for the adjusted tax basis.  Then, (a) $190k in total rehab + (b) $7k loss of rent = $197k.  Then, (a)$197k of total proceeds - (b) $190k of adjusted tax basis = $7k of taxable gain.  Am I doing this right?  I wasn't sure whether cost of improvement would include the $190k rehab (effectively netting it out from the calculation).

From the photos, the cause appears to have been some sort of fire? It is hard to tell however, I am just making that guess based on the 'blackened/ soot covered' nature of the insulation (that fell into the unit from the roof). Other than that, it looks as if the roof ceiling has collapsed (but the supporting beams/ etc seem unscathed). There were no recent storms/ etc in the area and the only thing that I've heard is that it was 'something electrical' (the tenants apparently told the groundskeeper who told the HOA - who called me). I don't have the tenants information, I am looking for that currently. So far, I've left VMs/ emails with my property managers' emergency number, individuals from the property manager, and the insurance sales representative for my policy. I was able to speak with a handyman who I've worked with in the past and he's going to go there to take pictures/ videos, get his POV/ assessment, and put tarps over the roof holes to the best of his ability.

@Bjorn Ahlblad, @Account Closed - I'm appreciative of the advice/ thoughts.  Will continue to update as I go through this. 

Hi,

Just wondering if anyone has dealt with this or has some idea as to how to deal with this. Earlier today, I received a frantic call from my HOA representative saying there's been extensive damage to my rental property (and followed it up with photos of the roof partially caved in, including into at least one tenant's unit). For reference, this is a 4plex with 2 stories on top and 2 stories on bottom. I've been trying to reach out to my property manager but have not been able to get a hold of them so far (despite their 24/7 maintenance hotline). I also sent an email to my insurance provider but I am not expecting a response today given it's a Sunday.

Has anyone dealt with this or have some idea as to how to deal with managing this?  I've never really gone through something like this.  I was thinking, if I can get a handyman out there asap just to do some clean up and maybe put a tarp over the roof 'holes' if possible, and with the next step, coordinating my insurance adjustor and my property manager to evaluate this....and go from there?  Or is there something I'm not thinking of?  At least one unit looks unlivable (i.e., debris in the unit, drywall everywhere, etc), I'm not sure about the others... I'm not sure if the tenants have rental policies, but I believe our property manager recommends them.

For reference, the damage looks pretty bad (i.e., its as if all the drywall/ ceiling material has fallen through with debris everywhere and only the support beams visible when standing below and looking up).  You can tell from the outside that it's bad.

Sounds good, I will check and respond

The duplex is standalone and so is the 4plex. The 4plex is connected to a HOA

Hey everyone - think this has been discussed but from what I saw, mostly on the SFH side. Basically, I am looking for property management services for a duplex and 4plex in the greater Houston area. I wanted to see if anyone had any recommendations?

Hi,

My partner and I are looking for a 4-plex (we will most likely do owner-occupied for better financing) in the more Southwestern Houston area (think Stafford/Alief/etc), but open to other areas as well – the SW area just happens to be much closer to us, considering we live in the Missouri City area. We are looking for a 4-plex property, ideally with minor cosmetic issues or turn-key for a passive (we both currently work relatively demanding FT jobs) buy and hold strategy with strong cash flows in mind.

Anyways, we are looking for real estate agents/realtors to assist us with our search, so feel free to reach out!

Best,

Shawn

@Timothy Riley @Rachel Pervis Thanks for the welcome!

@Ray A. @Christopher Cousin Looking forward to networking, I requested to add you guys as colleagues on here.

Hey,

Just wanted to introduce myself – long-time reader and decided to go ahead and take the plunge and finally create an account. I’ve been reading the BP blog posts/articles/forums and reading various RE books (HOLD by Steve Chader was my last one) for some time now and I (along with my business partner) are ready to finally jump head first into the RE investment world.

A bit about my background – UT grad, with work experience in the energy investment banking and hedge fund world (as well a few business forays including e-cig's and e-commerce). I know a fair amount about financial and investment analysis. I'm just adjusting myself to the RE world (cap rates, NOI, vacancy rates, etc versus the reserves, production, NAV world of energy). I do not have as much knowledge in the operational aspect of real estate (managing tenants, the nuances of real estate law, or extensive knowledge of HVAC/water/electricity/rehabbing/etc).

My partner and I are looking for a 4-plex (we will most likely do owner-occupied for better financing) in the more Southwestern Houston area (think Stafford/Alief/etc), but open to other areas as well – the SW area just happens to be much closer to us, considering we live in the Missouri City area. We are looking for a 4-plex property, ideally with minor cosmetic issues or turn-key for a passive (we both currently work relatively demanding FT jobs) buy and hold strategy with strong cash flows in mind.

Ideally, our plan is to continue to use leverage to our advantage in building a MFH portfolio (duplexes, triplexes, 4plexes with more rehabbing/value-add as we get more experience) using various financing sources that make sense and generating a strong cash-on-cash yearly return on our investment…and later moving onto larger projects (small apartment complexes, etc). I’ve also been reading a bit about note investing which seem pretty interesting (pretty complex as well), so maybe that is something to delve into further down the line.

Anyways, looking forward to networking with everyone on Bigger Pockets! Definitely many smart, savvy investors here – I’ve learned quite a bit from just reading various threads. I’m not sure what I can bring to the table currently considering my ‘green-ness’ to the real estate industry, but if anyone wants to talk about e-commerce or energy investing, I have a bit more experience that I can bring.

All the best,

Shawn