All Forum Posts by: Steve N.

Ned,

You are right, I've been looking at numbers until I couldn't think straight.

My depreciation losses did in fact reduce my taxable income. Nothing to do with my standard deduction.

I have 2 rental properties. I have mortgages on each and am depreciating each. I am taking deductions for everything including travel (relatively local) and meals, plus the obvious like repairs, cleaning, etc.

When I do my taxes, I am seeing that my itemized deductions are slightly less than my Standard Deduction.

I gross about $125K., I have my 401K maxed out.

I have a very modest positive cash flow on both properties, but less now since I have no tax reduction.

Assuming I have done my taxes properly, this means that the miracle of a "real gain" but a "paper loss" is not working for me. This hasn't reduced my taxes a bit.

Any thoughts?

p.s. - Yes, if you look you'll see my post from last year challenging whether one should ignore tax consequences when calculating calculating cash flow. Irony noted. Lesson learned, make it a Quick Tip, let's move on :)

Thanks for your info J.

I think it is important for me to determine the cash flow I am looking for after taxes and use that.

And when I have discussions with others, I'll keep in mind that unless they specify otherwise, they are likely referring to pre-tax benefit cash flow.

Where can I find an analysis that shows cities/regions that are identified as being those for "good cash flow" vs "bad cash flow"?

For instance, I have heard that Memphis has great cash flow, as does much of Ohio. Is this anecdotal or is there an analysis that shows this?

I appreciate the fact that the advice here is very conservative. It puts the work "up front" to find a good investment, rather than the work later to recover from a bad investment.

I do question the idea that the cash flow is before the tax benefits though. I thought that the tax benefits are one of the reasons RE is a good investment, so to ignore them seems odd when assessing a deal.

Thanks for the input guys!

Man oh Man! How to find anything with cash flow with the criteria around here?

The 50% rule was hard to get used to. Now the expectation of cash flow is before including tax benefits.

Maybe my market just isn't good for rentals.

My bank sent me a closing costs estimate. This is for a conventional loan of $142,000 30 yr. 5% interest.

I am wondering if there are any costs that can be negotiated down, i.e., any charges they add that may not apply to me, or any overcharging on things that should cost less.

Here are some line items:

1. Loan Handling Fee - $675
2. Settlement/Closing Fee - $675
3. Appraisal Fee - $425
4. Title Insurance - $353
5. Owner's Title Insurance - $374
6. Recording Fees - $119
7. Courier/email/wire fee - $30.00
8. Credit Report - $18
9. Flood determination fee - $7.00

If this is typical, I'm happy to move on and accept it as a cost of doing business.

When people discuss cash flow, are they referring to the cash flow before, or after, the write offs for depreciation and interest payments?