All Forum Posts by: Tom Degroodt

If it is a true duplex then anything that is going into the other side is 100% rental and has all of the tax advantages of a rental.  If you are house hacking "your" side of the duplex you can write off the sq footage % not used by you.  We have had good luck getting used appliances from FaceBook marketplace, sometimes craigslist.  There is always someone moving that is selling good appliances....  Be careful though, people also sell stuff that looks good, but needs repair.  Make sure it works before leaving with it.

Is this a property for you to live in, or an investment?  What would the market rent be?  The park rent is $1,200 per month?  What is the $619 mortgage?  Interest rate, number of  payments?

You may try and call the police department, give them the street only and let them know you would like to have a patrol come thru the area. If you can get a patrol to just drive the area 3 times a day it may make the squatters nervous.  Not asking for police intervention, just asking for eyes on the neighborhood.  

I was in close to the same boat, and choose to stay pat and keep the house.

I see your numbers different .  Bought house for $340K, could sell for $630K.  That would leave you with a capitol gain of $630-340 = 290K.  If you have done any improvements/repairs to the house since purchase, they also come off the capitol gains side.  I.E.  10K for a new deck, new HVAC, HWH, windows...

Cap Gains will likely be much less B/c 6% commission on the way out.  So the $630 becomes $592.2K, so Capitol gains would only be on $252.2K @ 25% your tax bill would be $63K.  That is if you hold it for another 36 months.  Holding for another 36 months will get you Call it $600 in cashflow + another $1,000 a month = $1,600 * 36 = $57,000 in loan paydown and cashflow.  That is close enough to call it a break even.

If you take the money now you will need to figure out what to buy and your interest rate will suck.  Whatever appreciation happens will likely be the same between old and new investment.  

I would think about taking a 100K HELOC against the house. That will make you less cash poor. Rent the house and if you find something in the new state you will have 100K for down payment or purchase outright. The HELOC $$$ can stay so you are not paying interest unless you need it. The one I got, they forced me to take 5K of it out and keep it for 12 months, so they could waive the closing costs...

Then in 2 years you will have $38,000 in cashflow and paydown.  Sell the house then, or revisit the Capitol Gains question.

We are hoping to sell ours with owner financing, wrapping the underlying mortgage in 2 years.  That way we will get the benefit of not paying capitol gains tax and picking up the spread from the low interest mortgage and a higher market mortgage rate as well as market rate for our equity position

What does someone need to do to have a SDHSA?  I know there is a local bank that I can setup an account with. Is there a custodian that needs to be involved or can you DIY?

Number 1 thing is to make sure whatever you buy can stand on it's own as a long term hold (rental). I have seen people but turnkey STR's where the seller and agent have advertised it as "unit made $XX,XXX.00 in income last year" selling price is $XXX,XXX.00. All of those numbers make sense to buy the place, except the place 2 down sold last month for 80% of what this unit is on the market for. If for whatever reason, slow economy, city or county outlaws STR's, local economy takes a hit.... Whatever the reason... If conditions change and you need to use a different strategy it will effect the income the place brings in. If income is reduced by 80% you don't want to have to dump money in every month to keep it afloat. Managing STR's is both more work and more costly then managing long term rentals, that is one reason there is more reward. Don't let someone bamboozle you to turn the extra profit that should come from a STR into being the same as the profit required if it is a LTR.

I see that you are on the West Coast.  Typically where I am most renters are renters because they don't have the means to have a down payment, or own a home.  Going after them for $2,500 in lost rent due to non-payment can take years to get back.  In this area, even if you got a judgement for a substantial amount you would still need to cover the cost and then wait for them to pay.

I am sorry you are going through this, obviously you are doing this to bring income in, not to receive a huge repair bill. With you canceling your insurance makes me think that you may not be plugged into your local REIA group. By plugged in I mean you are networking with other housing providers in the area, not just going to the meeting. We were told early on the Real Estate Game is a contact sport. You need to see if you can find a local mentor to help guide you. Also we love the book Landlording on Auto Pilot. It helps with the relationship between you and the tenants.

Early on we found other investors and volunteered our time on a Saturday to help with sheetrock, strip wall paper off, install trim or paint.  We didn't just ask for free advice, we wanted to make sure they knew we wanted to help where we could, while working full time W2 jobs.  Most folks who own and manage their own stuff will jump at the chance of having someone help when a tenant moves out.  If a tenant moves out on a Monday and 2 rooms need a fresh coat of paint before marketing the property again it can be 4 -10 man hours.  If my wife and I both come over and there are 3 of us hammering it, we can be done and at the pizzeria by 8-8:30 on Monday night and the place can be shown the next day.  If we were not there the owner may have 2 or 3 long nights after work.

We tell our tenants that water is EVIL.  Any plumbing issues get the highest priority.  We have, and will, spend money on plumbing issues without batting an eye.  I never want my tenants working on plumbing.  We had 3 days of freeze warnings here in Georgia at Christmas this year.  I reached out to every tenant before to warn and ask them to take precautions.  I followed up with each one after the weather went back to normal to verify there were no issues.  We had 2 homes that had issues with outside hose bibs.  We paid thru the nose to have plumbers complete the work, but since we have them work on all things thru the year we were bumped up in priority.

We had an investor friend who was not proactive.  Their tenant was away until January 2nd.  Pipes in the ceiling likely froze and broke on December 24th and water rained down until the tenants came home on the 2nd....  Very bad mess for all involved.

We had/have a huge problem with the stock market. With the Fed having a desk in Chicago in the same building as the options house I see it as a completely rigged game. Some entity (s) has the ability for AI computers to hammer prices up, or down and that entity has enough liquidity to move markets enough to trigger stop orders on us consumer investors. While big players can also effect the housing market and real estate I think the pool is too big for them to move SFH prices efficiently. If you are 50% leveraged in your income producing RE portfolio, my theory is that you are 100% hedged to what inflation will do.

Here is my math. If you need $10,000 a month to live on and $5,000 a month comes from your portfolio cashflow, and it is 50% leveraged, your numbers should look something like this.  monthly rental gross = $18,000.  monthly expenses before debt = $7,000, debt $6,000 , cashflow $5,000.  If inflation and rents are close to equal and both go up 5% -  monthly rent = $18,900. monthly expenses before debt = $7,350, debt $6,000 , cashflow $5,550.  So your personal budget = $5,000 from other income + $5,550 from cashflow.  You are now making $10,550, so you purchasing power went up 5.5% with a 5% inflation across the board.  As you own more of your portfolio and get less leveraged, inflation will take a bigger % of a bite from you. 

My first reaction is why can't they see the keypad.  We have motion activated flood light right next to our door.  It is actually a Wyze camera flood light, that will alert me when someone is at the door.  The lock will also ding me if the wrong code has been input.  We have only had 1 issue with someone not being able to get in.  We were able to call them before the lock would not respond and corrected the issue.  The flood light camera is the only camera on premises.  I like to make sure if folks say there will be 2 guests, there are only 2 guests and no pets in the property.