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All Forum Posts by: Adam Smith

Adam Smith has started 9 posts and replied 83 times.

Post: Recommended lender on20% down on Investment property in Colorado

Adam Smith
Pro Member
Posted
  • Civil Engineer
  • Firestone, CO
  • Posts 85
  • Votes 21

@Daniel Lao Brad Lyons with Independent Bank in Longmont, CO has done all of our loans and refi's for our instate and out of state rentals. You can Google him or PM me for his info. Great guy and really knows his lending with great rates as well. I believe there are 20% down still available but he will know for sure.

Post: Indiana State Taxes For Out of State Investor - Short Form?

Adam Smith
Pro Member
Posted
  • Civil Engineer
  • Firestone, CO
  • Posts 85
  • Votes 21

We purchased a rental property in Avon, Indiana (Hendricks County) last year and we live in Colorado.  Is there an Indiana state tax "short form" for out of state investors who's only income from Indiana is from rental property or do we have to fill out Form IT-40PNR and all the schedules that go with it?

Thank you in advance.

Adam

Post: Hendricks County Indiana Designated Rental For RE Taxes

Adam Smith
Pro Member
Posted
  • Civil Engineer
  • Firestone, CO
  • Posts 85
  • Votes 21

I have talked to the Hendricks County Assessors office a few times and it sounds like if you designate a property as a rental with the county they say it can (depending on the area and the current assessed value) save you money on real estate taxes.  There is a form you have to fill out the includes all the information on the rental (beds, baths, etc.) and the current rent.  

The county has different rental districts or areas of the county (from my understanding) that have a set lower assessed value.  If you designate your rental as a rental then you will pay the lower of the 2% of the non-rental assessed value or 2% of the rental assessed value.

For example:

  • Non-rental assessed value: $124,000, therefore RE taxes are $2,480/year (2%)

If designated as a rental with the county then:

  • Rental assessed value: $100,000, therefore RE taxes are $2,000/year (2%)

Has anyone that has properties in Hendricks County, Indiana ever designated their rental as a rental to lower the taxes?  I can see the benefit with lower RE taxes but is there a catch?

Any input is greatly appreciated.

Post: Brownsburg, IN Realtor, Handyman & Property Management Recommend

Adam Smith
Pro Member
Posted
  • Civil Engineer
  • Firestone, CO
  • Posts 85
  • Votes 21

I am looking for an investor friendly Realtor, handyman and property manager in the Northwest Indianapolis area.  I am out of state and looking to expand my rentals in the Brownsburg or Avon area.  I have family in Zionsville so I am fairly familiar with the area and part of the reason I started searching in this area.

Any recommendations would be greatly appreciated.

Post: Tax Question - Investigating New Markets

Adam Smith
Pro Member
Posted
  • Civil Engineer
  • Firestone, CO
  • Posts 85
  • Votes 21

@Matt W.  Thank you for the quick reply.  Your information makes sense.  It would be for looking for a new market but probably can't justify a business expense for my wife and 9 month old as well as myself.  It is not really a tourist place but it is sort of close to my wife's parents, which could raise flags.  We are just looking at out of state markets and thought there might be a small tax incentive while looking.  We have limited vacation time so it would not be excessive....at least in my mind.

Thanks again.

Post: Tax Question - Investigating New Markets

Adam Smith
Pro Member
Posted
  • Civil Engineer
  • Firestone, CO
  • Posts 85
  • Votes 21

Happy New Year BP!  We have two rentals locally and are looking into new markets since our local market is higher priced vs rents.

My question is, can we write off (for taxes) the cost (or some of the cost) of traveling to a new market (out of state) to look at properties to purchase and rent, meet with property managers, etc?  We obviously do not have a rental yet in the new state so we would not have a property in that state to write it off against.

Based on my research I don't think we can but I thought I would ask just to make sure.

We are meeting with our CPA in January which I plan to ask as well.

Thanks in advance!

Post: My first possible deal, need advice

Adam Smith
Pro Member
Posted
  • Civil Engineer
  • Firestone, CO
  • Posts 85
  • Votes 21

@Ryan Blake

Without knowing more details it is hard to say what to do.  I will say that you should look into why is it hard to rent?  Bad area, no jobs?  Not a high rental market vs home ownership? To high of rent? Needs repairs?  I don't know much about the Jackson, MS area though so take that for what it is worth.

I would start out by learning the area.  Learning what comparable rentals are renting for. Learning more about the property and property management if you are in California and the property is in Mississippi. 

Once you know all of the details on the property as far as fair rent, condition of property, property management (if needed) costs and services then I would look at if it makes sense to try and buy it.

Since it was your great grandmothers home it could be tricky.  We only have two rentals and we have no connection to them.  They are nice homes but we have no emotional connection to them.  If a renter puts a hole in the wall then we will take it out of the deposit, if the house is messy then oh well, they are not breaking the lease.  This being said our renters are very clean and have taken very good care of the homes. 

We personally would not rent out our personal home that we live in now because it is where our daughter was born, we have great memories here.  We landscaped the entire front yard.  We would be devastated if we rented it and the tenant let it go.  We remodeled bathrooms and we would not want to see them destroyed....not saying they would be but a renter will not treat your great grandmothers home like you would.

Hope this helps.  Get more information and keep us posted! 

Post: Capital! Capital! Capital!

Adam Smith
Pro Member
Posted
  • Civil Engineer
  • Firestone, CO
  • Posts 85
  • Votes 21

@Cheryl Tatum

I can only tell you what we did to get our first two rentals. For the first we took out a HELOC on our primary for the down payment. We did a lot of research on the property but we didn't know that prices and rents were going to increase so much, therefore is was a lot better investment than we originally thought. We made more than minimum payments on the HELOC. Almost 2 years later we refinanced the first rental with a cash out refi, took money out to pay off the HELOC while still cash flowing pretty nicely. Then we used the HELOC again for the down payment on the second rental. Now we are paying that off with the rental income from both rentals. Hopefully we can continue this process for future rentals. It does help that we have a fair amount of money from our paychecks to pay extra on the HELOC. It snowballs for sure.

It is pretty addicting having rentals for us.  We absolutely love providing quality homes for renters all while making decent profit every month and so far (hopefully continuing but not counting on) equity in the home.  We have great renters that we are firm with but more than reasonable.  We have found with our limited experience that you should trust your gut and treat others how you would want to be treated.

I know that there are other ways to finance the down payment but I would caution borrowing from hard money or friends or family.  Like @Gerald Miller stated, if you borrow short term money to buy a rental (which is slow wealth building) without having a solid plan to pay it back quickly it increases risk in my opinion. Personally, our income allows us to pay back the HELOC pretty quick which is why we chose that route.

The other thing that we have not done but may be an option is owner financing, just make sure the terms work for you.

Not sure your future goals but it is our opinion and experience that rentals may start slow but if your goals and personal spending are aligned right, then it snowballs and you reach your goals faster the longer you grind.  Stay focused and happy investing!

Not sure if this was any help at all but this has been our experience.

Post: One Furnace In Duplex

Adam Smith
Pro Member
Posted
  • Civil Engineer
  • Firestone, CO
  • Posts 85
  • Votes 21

@Victor N.

Thank you for the suggestion.  I have checked with the Town and I was told it was ok to rent.  I do need to do some more research (i.e.-zoning and what is allowed) because I need more than it is "ok".

This specific property went under contract today while I was doing my research.  It was not for nothing though.  I feel like I know a little more what to look for and possible options when I run into it again on another property.

Thanks for your help!

Post: One Furnace In Duplex

Adam Smith
Pro Member
Posted
  • Civil Engineer
  • Firestone, CO
  • Posts 85
  • Votes 21

@Account Closed @Deanna McCormick @Thomas S.

Thank you all for your input.  I agree that tenants do want to be able to control the thermostat, which I understand....as we were renters at one time. 

I will take a look at some options and talk to the appropriate people to get estimates on different scenarios to get separate meters and the ability for each unit to control the heat and meter each utility separately.

Thank you all again!