All Forum Posts by: Shawn Torsitano

@Adam Anderson While there is a very distinct possibility that that could be the case, what I am looking at is still in the very, very tentative stages, and I'm not to the point where I would have any communication with the tenants yet. I haven't even acquired any documentation, right now I'm still just going off the numbers on the MLS.

@Stephen G. Interesting, I never would have thought of that idea. And I'm not sure about how it would have worked with leases either, but that is still good info for me, thank you.


Again, thanks everyone for their input, it is very appreciated.

@Stephen G. When you say that you evicted them, was it just you refusing to renew their lease, was there reasonable grounds for eviction, or did you break the lease and offer up some sort of compensation? These units have also been professionally managed by a very large company, so I have a feeling there will not be a situation where no one has a security deposit.

@Jeff S. While I would like to do it that way, my situation doesn't allow for something like raising rents. The only way I can get a property at this point in time is with a VA loan. From what I've read the only exception to the 60 day move in requirement is if you can specify a later date that you will move in, and it has a reason. So while I could probably make a valid argument for waiting until a particular person's lease ended, I don't think I could leave it open ended hoping that someone would move out from higher rents.

@Jesse T.  Seller financing isn't something I had previously considered for the few properties I'm currently looking at, but I will look into it to see if it's a possibility. Thank you for the idea.

@Elizabeth Colegrove Thanks for the input, that was my main concern; whether or not this was an ethical thing to do, even though it is entirely legal.

Thank you everyone for your responses, I really appreciate it.

@Steve Olafson I would have absolutely no issues evicting someone who is causing problems. In my opinion, they are different situations. As an investor, I would be running a business. I have every obligation to make that business as profitable as possible. Losing money isn't good for me, and it's ultimately not good for the other tenants.

However, I don't have the same obligation to obtain and investment that would cause someone a significant amount of strife. And that's my concern.

@Jesse T. Yes, there are a couple of very specific ones that I'm considering, all fully rented. Working my way up sounds like a good idea, I will definitely consider that method if this all comes to fruition.

@Fred Heller Thank you, I'm glad that that's a good thing. I was actually kind of considering the payment thing, maybe offer to pay for their move or something.

@Kyle Boughton & @Jerry W. Thanks for the luck!

The ideas area helpful, if this becomes a possibility, I will probably find a way to make it work. Thank you everyone!

Hey everyone, I had a quick question that is more about morality than technicalities.

I'm currently looking to try to get into an owner occupied small multi-family property, to start trying to build a portfolio of rentals over the next couple years. My question is this: If there is a great property, that perfectly fits all the criteria... Do you kick out(read not renew lease) a current tenant so you can get in?

I get that it's business for investors, but not quite the same for tenants. Moving is expensive, it can be a huge shock to a family, especially when forced like that. Does anyone have any thoughts?

Thanks,
Shawn

@Kathia L. Following is a quotation from the webpage I linked to in my previous post. The page goes more in depth:

"Landlords must reasonably accommodate the needs of disabled tenants, at the landlord’s own expense. This means that a disabled tenant can expect the landlord to adjust rules, procedures, or services to a reasonable degree in order to provide an equal opportunity to use and enjoy her dwelling unit or a common space. Examples include providing a parking space for a movement-impaired tenant and accepting a guide or service animal in an otherwise “no pets” building. ?

However, landlords need not undertake changes that would seriously impair their ability to run their business, such as installing an elevator to the third floor to accommodate a wheelchair-bound tenant’s wish to live there.?"

Also, on the source of income, I believe it depends on the state. In California, it is illegal to discriminate based on "source of income".  See here: http://www.dca.ca.gov/publications/landlordbook/di... and here: http://www.lawfoundation.org/repository/Income.pdf

There may be laws in other states; I don't know.

I remember a section in my license course that mentioned a section of landlords that were exempt from the fair housings laws. While I feel it is unlikely that most investors fall into these categories, there are a few people out there who as far as I can tell, at least under federal law, can refuse even people with disabilities.

"

• owner-occupied buildings with four or fewer rental units?

• single-family housing rented without the use of advertising or without a real estate broker, as long as the landlord owns no more than three such homes at any one time?

• certain types of housing operated by religious organizations and private clubs that limit occupancy to their own members, and?

• with respect to age discrimination only, housing reserved exclusively for senior citizens. There are two kinds of senior citizen housing exempted: communities where every tenant is 62 years of age or older, or “55 and older” communities in which at least 80% of the occupied units must be occupied by at least one person 55 years or older. ?"
  http://www.nolo.com/legal-encyclopedia/free-books/...

An important point in my opinion is that second bullet point. While I'm no lawyer, it sounds to me that if you own multi-family and don't live in it, it is illegal to discriminate against disabled, and even if you only own a couple SFR, if you advertise at all, it is also illegal for you to refuse to rent to disabled persons.

That said, I don't think it's justified. My wife is a cosmetologist(hair/skin/nails), and I feel like refusing to rent to disabled people based solely on them being disabled is morally repugnant, especially given how many of them are veterans.

@Ross Ellington In my very simplified example, yes that would be the final income tax you would owe. In reality, there is much more involved with the tax brackets, other deductions, exemptions, children, etc. 

As far as all the credits that are available. the few that I'm aware of is the Earned Income Tax Credit, and the Child credit. For a more exhaustive list, a Google search would be able to help you much more than me, and my ultimate recommendation would be that you seek an experienced professional who is licensed. Everyone generally agrees that hiring a CPA will save you more than their fee. From what I know, deductions are also much, much more common than tax credits.

There was a good book that I read called Tax-Free Wealth, by Tom Wheelwright that was full of useful information

Please correct me if I'm wrong, I'm no expert, I just read a lot.

Ross, as far as your annual property taxes, you are playing the entire amount for the assessed value, which includes the land, and the building.

What you deduct is what the IRS sees as a "loss", kind of. The idea is that a property "lasts" for 27.5 years(residential, commercial is different), and the IRS allows you to deduct the value of the additions(so not including land) over that lifespan of the property.

In reality, we all know that property doesn't expire in 27.5 years, but that's another topic entirely.

What Jason means about the difference between the deduction and credit is a common confusion. The deduction comes from your gross income. As an example, if you made $15,000(and were married filing jointly), you would be in the 10% tax bracket. If you had absolutely no deductions, you would pay $1,500 in taxes. If you were able to deduct $1,000, it comes off the top. So instead of being taxed on $15,000, your taxed on your adjusted gross income, which is now $14,000. So you pay $100(10% of the deduction, relevant to your tax bracket) less, and pay $1,400.

A credit works on the other end. If you had a $1,000 credit, you would take it from the final amount. So if you had to pay $1,500 in taxes, you subtract the tax credit, and you would pay $500.

I haven't been an agent for very long, so take this with a grain of salt, but as far as the office I work with, we are completely allowed to represent ourselves. The only thing related to personal transactions that I remember in our policies was that our first 2 personal transactions for the year were exempt from paying commissions to the office/managing broker(unless you've capped out, of course).

This sounds like it might have some of what you're looking for(not sure what your  area is, I used mine):  http://www.trulia.com/real_estate/Corvallis-Oregon/

It also might be worth your time to get in touch with a local real estate agent. My office sends out numbers every month about listings in various price ranges, their comparison to the month prior and 1 year prior, average time on market, etc. They'll be in a better position to give you specifics for inventory for your area. 

Hope that helps some, 

Shawn