All Forum Posts by: Shawn Wilson

Thanks for the information. I'm still debating on whether to do my own taxes or pay someone. We did a lot of renovations before the tenants moved in and I know we can include those as well. I've done our own taxes forever, even when my wife had a small business (very small). But I just want to make sure that I get every tax advantage with this new venture.

I'm new to the world or real estate investing and have a quick question about taxes. I purchased a home in August of 2002 that I lived in until July of 2016. We moved into a new home and leased our old home. I'm doing my taxes and I'm in the portion where you state if you've placed property into service (for the sake of the depreciation benefit). It asks for a date for the property your are converting from personal to rental and I've read you need to enter the date your home was built, not the date it started being a rental. Is this correct? Sorry if this is written in a confusing manner, I'm a little overwhelmed with the whole tax preparation, usually I have two W-2's and I'm done. :-)

@Dillwyn Mathurin

@Eric Jones

@greg h

I truly appreciate all of the information that you all shared. You are correct in that I am a first time ever investor and feel excited and nervous at the same time, but not letting it stop me from going down this road of investing. I spoke with a Realtor who has a lot of experience in investing and mentioned the idea of selling and buying multiple homes. I mentioned the Temple/Belton/Waco area and he didn't shoot it down, but said forclosures are sky high there and it is a millitary town (Ft Hood) and tenants can and do break lease and walk away as soon as they get orders to leave on duty.  That, coupled with the fact that this is my first time taking a shot at this is enough to make me put that idea on hold. It may be something I do in the future, but not right now. He mentioned that I could sell my current home and get TWO homes in the same neighborhood that I'm currently in, but the cashflow would be very close to what I'm getting now, with double the risk in the case of a downturn. It would take every cent of my equity to get into two homes in my neighborhood ($250k homes). It's something I'm considering. On the other hand, I have a person that wants to rent my home that I have now and I know they would be a great tenant. I'm thinking of going that route for one year as I save more and get the feel of being a landlord. Thanks again.

@Eric Jones

I understand the upfront option amount/down payment (in this example $13k) would act as the buyers down payment if they obtain financing within the agreed upon timeframe, but what about the monthly payments they are making? Does any of that go towards the purchase or is it essentially rent money until they pull the trigger and get the remaining amount financed? Seems crazy for someone to pay $1750 for a couple of years with NOTHING going towards the purchase and THEN pay full price (minus the down payment) for the home. Just asking because this was an option I had never researched. Unless I'm looking at this wrong, the best case scenario would be to have someone do this every two years and never come thru on the financing. Get your down payment/option money, then two years of rental payments, then rinse and repeat if possible. Thanks.

I REALLY like the sound of the lease to own. Our home values have gone up a lot lately and I don't know how much room there is to grow (not too much more ). I'd love to lock something down like what you proposed. How do I go about setting something like that up since you mentioned thay no Realtor is involved?

I also like the idea of $1500 a month cash flow. What is the best way to partner with a good Realtor that is knowledgeable about investing? I see I have some reading to do. Thank you for the help!

Wow...lots of great info here. I'll try to answer everyone's questions in one post. As far as the Homestead Exemptions goes, the taxes will be closer to $5k a year instead of $4400 and I will have to switch that to my new home. I can only have one Homestead exemption and it has to be my main residence.

As far as expenses...I know there are unforseen events but we are replacing carpet with new vinyl planks (not glue down), painting interior and exterior, and replacing complete a/c with better, new unit (it had a leak in the coil and is 14 years old). The foundation is something we WON'T have to worry about unlike the homes just miles away on the other side of IH-35. We have very little soil and then total rock (we are literally adjacent to rock quarry). I have Zero settlement cracks after 14 years.

We do have a HELOC on the original house (zero balance) but it only has a $15k limit. I'm sure that can be increased...it is with our local credit union.

Like some had mentioned, I had thought of selling and going after multiple properties as well.  I figured long term it would be much better. But I work full time and don't plan on quitting and kicked around the idea of paying off the first home completely before venturing out to other investments. Obviously, you can't accelerate your payments AND still save for future investments so it's something I need to think about. So glad I found this site and podcasts!

Thanks for the help...like I said, newbie here so excuse me if I don't have the correct terminology but here is a breakdown:

$690 monthly mortgage payment

$500 monthly escrow payment (taxes and insurance)

Homeowners insurance is $974 annually and tax rate is 2.34% (the lowest around us) and I paid $4400 in taxes after Homestead Exemption last year.

Not an upscale suburb, but quality homes and we benefit from being the "lowest on the totem pole" around us. We were first back in 2000 and EVERYTHING that came later is substantially higher.  We are connected to various neighborhoods that are all quite a bit higher ($350k - $500k) There are ZERO apartments or duplexes around us and the Elementary and Middle schools are rated "Exemplary" so renters wanting to get in for schools have to rent homes.  Rent is a little above average for the same homes. We will list ours for $1700-$1750 as soon as work is complete. Does this help? Thank you again for the help.

I just moved this to the appropriate area....thanks

Here's my current situation...we have a home that we lived in for over a decade. It's worth $255k and we owe $140k. Monthly mortgage (escrow included) is $1188. Great interest rate of 3.25% and it's in a wonderful area with great schools. Average rent in our neighborhood for our home is $1650-$1750. We just bought another home which we moved into which is in the same neighborhood but is a little larger and has a pool. We are fixing up the first home (new flooring, a/c, paint) and should have it leased quickly. We have zero debt except the mortgages and roughly $20k in cash available. My only "plan" was to continue to buy homes once I could save enough for down payment/closing costs and lease them out hoping to cover the mortgage and still make a little monthly income ($150 - $250 minimum). Is there a better option for going forward as an investor? This method won't increase my monthly cash flow much in immediate future, but as loans are paid down and hopefully appreciation occurs, my overall situation should improve dramatically. I just recently got on this site and have been overwhelmed with all of the new information and investment tactics. I plan on reading everything I can get my hands on but welcome any and all comments here. Thanks in advance for your time and help.

Here's my current situation...we have a home that we lived in for over a decade. It's worth $255k and we owe $140k. Monthly mortgage (escrow included) is $1188. Great interest rate of 3.25% and it's in a wonderful area with great schools. Average rent in our neighborhood for our home is $1650-$1750. We just bought another home which we moved into which is in the same neighborhood but is a little larger and has a pool. We are fixing up the first home (new flooring, a/c, paint) and should have it leased quickly. We have zero debt except the mortgages and roughly $20k in cash available. Is there a better option for going forward as an investor? I just recently got on this site and have been overwhelmed with all of the new information and investment tactics. I plan on reading everything I can get my hands on but welcome any and all comments here. Thanks in advance for your time and help.