All Forum Posts by: Tom Shepard

@Joshua Nunnally

I can only say what I would do in your shoes.  I am a firm believer in the MOAT principle.  Build your castle, put a moat around it, lower the drawbridge to go and conquer other kingdoms, and retreat back over and pull up the drawbridge when necessary.  A paid off home is a great moat around your castle.  If anything goes badly in your investing you can always retreat to castle.  You might take a few arrows in the backsides but as long as you can pull up the drawbridge you will be safe in the end!   All that to say, I would definitely pay off the house, then invest.  You can always go back and get another loan if you change your mind, but I bet you won't!

@Chris Modzeleski

We have a townhouse in Smyrna that took two months to rent, only because we were extremely picky, and we put it out for rent the week of Thanksgiving!  Now that's a hard time to rent.  Most of the people looking to move around the holidays have to move for one reason or another, often not a good reason!  We waited for the right person to come along after the holidays and had plenty of interest in January, with higher quality prospective tenants.  If yours was listed in Jan/Feb and has been that long, I wonder about your manager.  Also their response was pretty lame.  Want me to call them and see how responsive they are?  Just message me and I will do it!  We have to go to any and all measures to make sure we are getting what we are paying for from our PM's.  Too hard to find a good one, and especially if you are out of state! 

@Jay Hinrichs

My understanding is as long as it is under the gift tax limits then there is no tax due from your gift.  If you do give it singularly to one investor (not a couple) then YOU may have to pay gift tax on any value over the $14k exemption.  Now that is federal, may be something state wise with Indiana or Oregon...not sure there.  I'm sure your accountant will know.

Thanks again for sharing this with the BP Nation!

@Caleb Bryant

Would also be glad to meet up for coffee some morning.  Send me a PM and give me some days, times and parts of town that work for you.  I'm fairly flexible a few days a week at least but like to get an early start!

What a cool thing to do Jay!  

I'm definitely not an attorney nor an accountant, but as an investor I am a student of both!

I do know this:

Gift tax exemption for 2016 is $14000.  The GIVER pays any tax due.  The exemption is per person, so @Jay Hinrichs if you and your bride own this property jointly you can give it away without gift tax to one person as long as the value is less than $28,000 OR if you own it singularly, I believe you could give it to an investor and their spouse as well, same limits. You will likely need to have the property appraised to determine the gift value for tax purposes.  It would be in the best interest of the recipient to have the value on the transfer be as close to the limit as possible because that will set their new basis, and when they do sell it some day cost them less in capital gains.

Good luck with this! Can't wait to see the results!

@Chris Harris

I feel like this would have been a different conversation 5 years or so ago, but that ship has sailed. The most optimistic of posts here won't cashflow at that purchase price. I take that back. Cash deal will cashflow but the COC or IRR will be too low for most any investor. Also to consider that most of the appreciation in the 12 South area has happened. May be a little more room, but crossing the $1MM barrier for a 3/3 even over there is unlikely anytime soon IMO. Much better ways to spend $7-800k in and around around Nashville.

@Colin Smith

I pay cash for anything that depreciates (truly goes down in value, not the tax advantage depreciation we all love for our real estate) like cars, computers, etc. And finance things that go up in value, like my properties. 

While I get you are paying five years later on today's dolllars, you are also paying on something that isn't worth nearly the full price you are paying!

Hi @Luke G.

Listen to @JT Spangler, @Devan Mcclish and others...

...and run away!  At 2750 mortgage, plus taxes and insurance you are going to have about nothing left for expense, vacancy and capital expenditures.  Don't put blinders on, and don't let emotion rule, this is not a good deal unless you can get it for below $325k most likely.  40-50% (of rents) is a good rule of thumb for expense, vacancy, cap ex, tax, insurance, etc.  Basically all costs except the mortgage.  THEN subtract out the mortgage and see what if any you have left.  We all want to fool ourselves at times and push the numbers one way or another to make it work, especially on what sounds like a cool property with a lot of rent coming in.  Sometimes it looks like its working out for a while and then WHAM.  New HVAC...or roof, or...etc.  If you know or can determine the age of the roof and HVAC those are big costs that you may be able to factor in or out depending on the age.

One last thought, sometimes in historic duplexes they are not independently metered for electric, water, gas...will you be paying any of those?  How about trash pick up?  Lawn care?  Don't forget to factor them into your calculation if you are!  

@Nolan J Scott

Welcome to BP!  We live near Nashville, but have property in Chatt and more importantly two daughters that live there.  GREAT town!

@Tyler Hubarth

Check out the calendar from REIN.  I have not been to any of their meetings yet, but many are in the evenings, and some on the weekends.  I know some investors that have gone and this seems to be the strongest group in the Nashville area.

http://reintn.net/clubportal/Calendar.cfm?clubID=1374