All Forum Posts by: Tony H.

Hi there,

It’s been a while since I posted here. Sold my duplex 3 years ago and I just recently jump back into landlording.

We bought a single home here in Sacramento area and I have a couple tenants who are interested to rent.

During this time of year, it’s kind of hard to find tenants. So my options are limited, I have the two tenants described below.

Tenant #1.

Husband and wife, both make Ok. Just barely make the 2.5 rent requirement.

Both credit scores in the range 589-615.

Credit cards maxed out.. several late payments.. lots of credit inquiries.

Flawless Rental History though.. pays rent on-time or even early (according to previous landlords). Although they seem to mover every year or so.

Tenant #2.

Husband and Wife do not make enough..about 2 times rent. They indicated that the wife's dad living with them will help pay for rent.. senior in the 80s.. i didnt bother running his credit check. His income is from ssn and VA.

The couple filed Chapter 13 bankcruptcy 3 years ago and on payment plan for 5 years. They have 2 more years of payment to go. - I am waiting for more documentation on this one..

Credit scores and Credit history looks much better than Tenant #1. No late payments.

Also great rental history.. same place for the last 5 years.

I am leaning towards Tenant#1. I care a lot about rental history and income. 

The bankcruptcy in Tenant#2 scares me. Or should i not be worried?

Tenant#2 will not be able to pay rent if her dad is not willing to pay.

Which one should I pick?

thank you

@Brendan Garwood Look into the breakdown of what makes the $11,300 total. Each lender charge different fees and such.

$11,300 does seem very high to me. I usually estimate about 2% of purchase price for closing costs.

So far I have very good and responsible tenants. If their income is affected because of this whole virus mess, I would probably work out a deal with them.

One way that comes to mind is to use their security deposit to cover 1 month rent, in case they cant pay during furlough period.

Or maybe reduce their rent, but cover the remaining from their deposit.

I would ask them to sign something that says they will need to replenish the security deposit as soon as they are back to work. And that if they leave before replenishing the deposit, they must agree to pay any damages that would have been taken out from their deposit.

This is a short term solution though, if the furlough goes longer than 1-2 months, we have a bigger problem to think about.

Lenders always go by the Annual total then divide by 12.

So the instructor's math is correct.

 Hi Eammon,

I understand the form. Unfortunately, some of the fields in Turbotax form is "locked" with formula in it. 

I understand that when I do 1031 exchange, as long as I dont get any boot, I get to defer my taxes.

Like I mention in my reply to Will above, Turbotax somehow ignored my 24k in expenses. I can see this is the issue, but I just cant find anywhere in turbotax to fix it.

I was wondering if anyone know a workaround.

Thanks,

Hi Will, 

Thanks for the reply. Here is what I noticed with turbotax issue:

Of the $375k selling price, I spent roughly 24k in expenses. after I deduct the mortgage owed, I ended up with $129k which i used as a down payment for the replacement property.

I did not pocket anything.. in fact, I put more cash in order to cover extra expenses during the purchase of the replacement property.

Turbotax somehow did not count the $24k expenses that I incurred (even though I put it in already).

Turbotax is thinking $375k - $220k which is $155k as my proceed. This is wrong. 

I know TT had a a glitch in 2018 version. I would think they could have fixed this.

Hi BP,

I am having an issue with Turbotax Premier. I really dont think this is asking for a tax advice (I would have gone to a CPA..), but I was just wondering if any of you use Turbotax to do your taxes that involves 1031 exchange.

I called Turbotax.. the customer service cant really help and keep referring that I need to upgrade to Turbotax Live (pay more money).

Here is my issue:

In the Wage & Income Section, Under Rental Properties, I have indicated that I have 1031 Exchange (like-kind exchange) in 2019. Everything went through just fine until I got the part where it calculated that I received Cash from the exchange process ( I did NOT).

Here is what happened:

Duplex Sold price 375,000

Mortgage Owed 220,788

After all fees, I got $129k to be put towards a down payment on the replacement property.

Replacement Property

Purchase Price + closing costs $589k.

Mortgage taken $438,750

I put roughly about $21k on top of the $129k from the Duplex to cover the DP and closing.

So, how did Turbotax assumed I received cash of about 8k from the transaction?

Thank you!

@Nicholas L. Thanks for taking the time to reply.

The main reason we want to move is because we need more space for our growing family. Plus, our condo is located in not a good school district.

And my goal is ultimately want to have a few rental properties.

In regards to my estimate of $700 cash flow from my condo is after I deduct Capex, etc. (except property manager, because I manage myself).

The reason I am considering to sell the condo is because:

1. It holds a lot of equity. I estimated that if I sell it, I could bring home $250k (after all fees).

2. I could use the money to reduce the principal of the house significantly Or maybe get another rental closer in Sacramento.

On the other hand, the thought of keeping the condo (Because it's in the Bay Area!), just keep making me confused. I feel like once I let it go, I wouldnt be able to acquire property in the Bay Area anymore. And who knows if it keeps going up.