All Forum Posts by: Alex Ballas

I will have 2 rental properties, each generating income and losses.  Can I deduct my business expenses as a real estate investor (car, office expenses, business meals, computer, etc) outside of the profit/loss sheet for each property (interest, depreciation, maintenance)

I have a full time job so my understanding is qualifying as a real estate pro to overcome the 25K loss limit is near impossible, so can i deduct regular business expenses outside the actual property expenses (to maximize deductions).  

Not trying to cheat the system, just wondering how to approach itemizing all these expenses and deductions ahead of time.

@Troy Sheets your quad has appreciated 100K in 2 years!  thats amazing, i definitely do not expect those results.  Can you tell me the makeup of your units?  All 1br?  The one i am looking at has 3 decent sized 1BR, but honestly with a to of renovations I do not believe it will be up to standards of young pros, i am thinking of keeping it section 8 and increasing rents as the area improves- this area in Philly suburbs is in year 1 of major investor influx, but will a low income house appreciate in a great area?

wow thanks everyone for your input- definitely seeing some varying perspectives- the building is in poor condition, but the area does have some serious potential- however @Troy Sheets is making me think the hassle factor is going to be very high, and the property would need serious capex to get it to an average renter's condition

@Brent Coombs Very tough to find good deals in major metro like Philly, demand and cash competitors drive prices up so a 10% cap rate is tough- 

as for interest, not much I can do about that except use as a deduction, this is an FHA loan so for 10K i can realize significant deprecation and expenses- however I do agree that price for rent roll is high, seller has had building for 10 years so he isnt very motivated to sell as his price point is much much lower (220K).

Thank you for your input!!

Details in readable format:

Rental Income 2015

41316.00 

Subtract Vacancy 5% 

39250.20 

RENTS 2015

910.00 

873.00 

860.00 

800.00

Expenses

Property Insurance 1834.00 

Taxes 3350.00 

Total Insurance/Taxes 5184.00 

Legal Legal Fees 120.96 

Evictions 177.19 

Permits 344.00 

Total Legal 642.15

Maintenance 

Labor 1650.00 

Appliances 250.00 

Lawn & Snow 307.50 

Materials 1570.00 

Pest Control 400.00 

Total Maintenance  4177.50 

Utilities Gas/Electric 1860.00 

Trash Disposal 1184.00 

Water & Sewer 2006.03 

Total Utilities  5050.03

Total Expenses  15053.68 

Principal 1410 

PMI 212

Mortgage Payment1622

Cash Flow $394.38

FHA Loan Details 310,000k

10k seller assist (covers closing costs) 

3.5% down (10,850) 

3.75% interest

Hi everyone- long time reader, first time poster. I started reading all the books, blogs, and podcasts about 2 years ago, and am ready to get into the REI game here with a quadplex!

I’ve done my best to catch all expenses and am looking at about $400/mnth cashflow, or about -300/mnth cashflow when I live in the building. The building is not in great shape, but the rents seem solid. Mostly low income section 8.  The units also not great, but they have rented for the last 4 years with an eviction, and 2 mnths vacany.  The seller has owned the building for 10 years and says he wants to invest in some other opportunities.

I will be the onsite property manager so will be living basically rent free. Is this worth the hassle? Am I overpaying? It was listed at 335K, I negotiated to 310 with all buyer costs covered by seller. FHA 3.5% down, about 11K

Thoughts? I am excited by the opportunity but need your expert opinions here--  thanks in advance!

Alex