All Forum Posts by: Jake Hottenrott

@James L.yes, you can still deduct the interest on the loan.  It is the cost of doing business.

https://www.biggerpockets.com/forums/79/topics/207533-success-path this thread talks about it

@Anthony Drew Gary Congrats on starting your journey into real estate investing.  The first place to start is the IRS website which has a great resource for detailing rental income and expense https://www.irs.gov/taxtopics/tc414.html .  Secondly, you'll want to look at the expense categories on Schedule E, https://www.irs.gov/pub/irs-pdf/f1040se.pdf which gives you the main IRS categories that you will need.  If you have any questions about if something should be deducted, write it down and talk to a CPA.  I'm always happy to help my clients with quick "is this a deductible expense" questions.

Additionally, @Account Closed brings up a "cost seg".  That's definitely an option if you have a more expensive property (I've always heard $250K or more, he may have a different number).  The essence of a "cost seg" (or cost segregation study) is that it breaks down the property from just one asset "The residence" which is depreciated at 27.5 years into various 5, 7, etc year property categories.  This accelerates your depreciation and allows larger depreciation deductions in earlier years.  It works great when used properly.   

I hope this answers your questions and if you have any additional questions feel free to ask here or send me a message!

Analyze, Look, Offer.  Get a plan of action on what you want to accomplish in the next 6 months.  Figure out how to get to that that, whether it's sending out mailers, dialing or knocking on doors.  The key to getting started is to get off of Start by taking an action.  Good luck!!! 

@Paul Fagot I'd advertise both ways.  If I was local and looking for a multi-use building for a personal business and added cash flow with the apartments I'd be all over it.  If I was from a distance, I'd likely be looking at it solely as an apartment just because it's "easier" to value apartments for the normal investor vs an added commercial area in an area where I would then have to not only properly value the apartments and that market but also know the commercial market to properly value it.

What's it's highest and best use?

Also, give us some particulars of the deal? Sounds like not only myself but @Alpha Diawara had some interest.

I'm late to the party and jumping on the train that @Brandon Hall got going and @Dave Holland got on as well, but I wanted to add one piece of info that may be beneficial.  The only reason I'm adding this is because you mentioned the ~$3,200/mo in rent and that potential gift "may" exceed the $14K depending on expenses, etc.

That $14K that your Mother in Law may give is to each person.  So she may give her daughter (your wife) $14K and then she may give you $14K as well.  

Good luck and hopefully the pack of CPAs on this thread answered all your questions! 

@Tony Fendick congrats on making the decision to start on the path to real estate investing and thank you for your service.  First, I would make a decision on what type of real estate investing I was going to do.  Fix and flip, buy and hold, whole sale, etc.  From there find a mentor in the field, talk with people, read a lot, add your key words here and build a team that has some experience and can help you achieve your goals.  Good luck!!

@Craig Fitzsimmons is correct.  It's definitely a useful indicator to start a conversation on a rental and it is where I start my calculations as well.  There are many ways, methods and theories to evaluate a property.  There is also Cap Rate, Cash on Cash return, etc.  

If I were you, @Adam Avinger, I'd start by finding 10-15 properties on the MLS in the area you want to invest in and make a best guess what they would rent for and apply the 1% rule to see how they shake out as far as value, etc. If want to estimate repair costs on each property and add that to the property cost in your dataand see if that changes the "best property" to invest in. From there it should at least narrow down to a few properties what would be the best investment on paper.

@Koritas Jones the answer depends on many factors.  What is your business plan? Buy and hold, wholesale, flips, etc? Do you have partners?  Do you have outside investors? What is your exit plan? I'd sit down with a CPA and an attorney as @Patrick Liska said and plot out what will be best for you.  

Eric P. You can throw numbers out there all you want, but without back up or context they are just numbers. St Louis city renter percentage is 55% which is close enough to your 60% for me you give you credit for. Here's the rub, without knowledge of the local area you would miss the fact that the city and county are separate entities. The city's population is 315k to the county's 1M. The county has homeownership of 71%. That would give a blended rate of 35% renters in what out of towners consider "St Louis". The more you know. Sources: 2015 US Census