All Forum Posts by: Frank Fiore Jr

If you can provide insight into any of this I would be grateful, I have read GnuCash help / tutorial, and did some searching online, I have not found the necessary information to understand this. Maybe I need to take an accounting class!

I am trying to sort out how to enter data for my existing 2 family house in GnuCash an accounting software. (If I can understand the basic accounting I don’t think the software is going to matter)

Current I have set up: (in the software)

I have Asset: Home (Need to know what “value” to use)

I have Liability: Mortgage (I am using outstanding principle)

I have Expense: Interest (expense monthly split entry from Mortgage payment in checking account)

Notes / Questions:

N: I have owned the house for 10 years but want to start tracking from this New Year 1/1/2014

Q: When I enter the “Home” as an Asset how do I determine the value to enter? Current Market Value? Or Amount I have paid to date (principle, repairs, etc…)?

Q: Don’t I have to somehow track this as equity? Tie it to Equity?

Q: Liability I am assuming is the remaining Principal? (Opening balance equals existing principal balance)

Q: Interest: monthly payments are made from checking account (split entry (Mortgage & Interest)

Q: Do I add rental income under expenses?

Q: How do I handle the Escrow (taxes and Insurance) they are rolled into the payment, maybe just split entry the Mortgage payment each month to include Loan, Interest, Taxes, Insurance? I think that should do it.

Its a termination of the existing agreement with an new offer. It is my understanding this is the "proper" method of increasing rent for a TAW or month to month tenant in Mass.

After a not so good experience I am trying to do everything "by the book".

The security deposit refund was a way of easing the blow of increasing the rent. They have been very good tenants for 4 years; I have never raised the rent; and they take great care of the place, Between you and me, I was not keeping the security deposit properly (as outlined by Mass state law) and I did not want that to come back and bite me later.

If they contest the handling of the SD they can win 3 times the amount from the court.

In short it was a gesture of good will, and a way to get out of a potential problem. They are legally responsible for any damage as outlined in the TAW agreement, security deposit or not.

Not expert advice! In Mass. I am rather sure we have to provide a "30 Day Notice to Quite With Offer to Establish a New Tenancy"

Sounds ominous doesn't it? I handed my tenant this letter and she looks at me and says; "Are you kicking me out"..... I explained; as the letter does I am raising the rent, and I also have in there some information about taxes, insurance etc.... (most of the info I cut out from below example)

This is basically what the form looks likes, provided as a reference only... I would check with your state laws as to the proper method.

30 DAY NOTICE TO QUIT WITH OFFER TO ESTABLISH A NEW TENANCY
(TENANT AT WILL)

Date: XX/X/2013

To: XXXXXXXXXXXXXXXXXXXXXXXXXXXX Lowell Ma XXXX

Please be advised that I am terminating your tenancy. You are notified to quit and deliver the premises you now hold as my tenant on or before _01/03/2014. If you fail to leave by that date, I will go to court and seek permission to evict you from the premises. This is not a judicial document.

Unless you accept the offer of a new tenancy as stated below, any payments that you make after you receive this notice will be accepted for use and occupancy only and acceptance of any payments will not create a new tenancy with you.

I offer you a new tenancy with the following terms and conditions to be effective 01/03/ 2014 ;

[x ] The Rent will be $ __925.00_______ per ___Month , and an increase of the Security Deposit of $ __Zero Dollars.

XXXXX, due to the rising cost of insurance and taxes I am raising rent.

IThe average market value for an unit similar to 139 Andrews St. Is 1000 – 1100$ a month. I am sorry for the increase but it is necessary.

I will also be returning your Security Deposit as a show of good faith, I know you take great care of the place and will take responsibility for any damage as outlined in the TAW and additional paperwork. If you accept the new terms I will be providing you a new paperwork including a TAW agreement.

Please indicate your intentions by signing a copy of this notice and returning it by 12/15/2013 .

Landlord: XXXXXXXXXX

[ ] I will be moving, and will be out by _____/_____/_____ .

[ ] I accept the offer of a new tenancy as stated above.

Tenant: __________________________________________________ Date: ___________________

Tenant: __________________________________________________ Date: ___________________

Tenant: __________________________________________________ Date: ___________________

@Joel Owens , I am still learning a lot of what I should have already known so I'm going to ask questions 1 at a time.... if you don't mind....

1. Why 60% cost? I pay for water, tenants pays all other utilities

Negative Cash Flow, 2 Family - Advice & Analysis

Introduction

The following information is a bit painful to post; pride I guess; embarrassment for sure. I will be outlining the details of a current 2 family property I own. I think it would be best to part ways with this property.

It has never been positive cash flowing. I was living in one unit for all but the last 2 years so it was my primary residence.

Long Term

Believe it or not; I want to establish a buy and hold portfolio of cash flowing properties. I need to correct this problem before I move forward; it is killing my savings and causing me some personal discomfort to say the least.

Goals for this Post

I am asking for advice on the following:

1. Can I make this a positive cash flow property and actually make money long term?

a. How long to do so?

b. Factors I am not including?

c. How to formulate data?

2. How do I project numbers for the following?

a. Property value, 10, 20, 30 years out

b. Rent, 10, 20, 30 years out

3. Ideas to make this a positive cash flowing property?

a. I have outlined a couple below

The more I get into this the more numbers I have to dig up and project going forward.

Background Information

· Purchased 2003: 250,000 (no down payment)

· Refi 2006 timeframe (money out for improvements)

· Refi 2009 (to avoid drastic increase in payment and rolled in prepayment penalties) I signed the papers so I have to live with it

Unless it is absolutely necessary I would rather not discuss the above mistakes in great detail. Let’s just say I have learned from them.

Notes

· I do not qualify for HARP I missed the cut off date; I believe it is May 2009

· I have great credit and on time payments (780ish) at least I think it’s great. (That and 25 cents get you a gum ball)

· Current property market value is 200,000 +/-

· Current mortgage balance (280k, and 30k) 80 / 20

· With both units rented I pay 500$ a month +/- out of my pocket

Questions

1. Should I be including future rent increase projections? Where would I get this data? Or how would I project it?

2. Should I be factoring in a property value increase? How to I project that? Historical data?

3. Looking for short sale advice, I think this may be my only way out. (I’ll take the hit to my credit score for a couple years)

Ideas to Improve Cash Flow

I see these as non starters as they are going to increase my out of pocket expenses.

· Adding a studio in the attic, below average chance of getting a variance from the town, and it will increase expenses.

· Adding a 3rd bedroom to the 2 bedroom unit, again need town approval and will increase expenses Lost rent during work, construction cost, but would generate about $300 more a month in rent.

· What about short sale? This place has bled me almost dry trying to do the right thing and hold on to it. (I realize I did this to myself but I have to think of my long term survival here.

Let’s Go to the Numbers

I can provide more detail if necessary

J, Just wanted to say THANK YOU for spending your time and energy documenting and providing all this information. I can't even imagine how much money your saving existing and future investors. Thanks again.

@Al Williamson I have no useful input at this time but I just wanted to say, I have been thinking about this most of the day; I listened to your PodCast this afternoon; where as you no; you touched on this subject a bit. I enjoyed your cast and your approach to being a land lord.

OK, how or who fixed the typo in the title of thread? It was "accpet" and obviously it was a typo but it has been corrected?

Thanks again for all the input, obviously i was not the only one with questions around this subject. @Bill S. and @Shaun Reilly and @Duncan Taylor

Shaun see you at the next local meeting! Spoke with you for a short time @ the unofficial BP meeting in Woburn Ma.

Shout Out to anyone in Lake Worth FLA, nice area, I was down there for the Pat's vs. Miami game! Looks like the market came back and is coming back strong in that area.... from the little investigating I did....

(Thanks for all the input) This is really just a reply to myself for future reference.

So the bottom line / question here is....

In the state of Massachusetts is Section 8 a voluntary program for landlords or not!

Secondary questions depending on the answer to above question

1. Can I legally state in the advertisement I do not accept Section 8 vouchers? 2. Can I legally state my apartment is not Section 8 approved?

3. Do I have to make an attempt to have the unit approved, if an inquiry is received? If this is the case than the program is not voluntary.....

I understand all the comments regarding 3x rent etc.... and I have all that outlined.

My goal here is, eliminate the application, phone screen, showing on the front end Can I just say "I do not participate in the Section 8 program". This is what I am trying to determine is legal.

There is a difference between discrimination against individuals with Section 8 and not participating in the program.... At least I hope so....

When I have an apartment for rent; do I have to accept applications from individuals that are utilizing or qualified for Section 8.

Can I just state I am not renting to Section 8, or that I am not Section 8 qualified?

Or do I have to accept their application and run the full background as I do for others?

I don't want the hassle of going through the process of having the place inspected and approved etc... but it seems like I have no choice in this matter?

"In Massachusetts, it is against the law to refuse to rent to someone just because the person has a Section 8 voucher. See M.G.L. c.151B, §4(10). "