All Forum Posts by: Bill B.

Wanted to move out of my parents house. Didn’t want to pay for housing when it had been free my whole life. Got 3 friends who were already paying rent to pay for the house I bought. It was great until I met my wife. She didn’t think sharing a house with 4 guys was as awesome as I did. 

@Jason D.

It is tax free income. No one on BP seems to count loan pay down even though every webinar on BP counts it as one of the sources of rental income  

Imagine in 15 years. The property hasn’t gone up one more penny. I can pull out 75% of $620k (call it $450k) during that time I have put $6k/year or $90k in. So I have $360k extra in my pocket and $170k in equity that came from somewhere in those 15 years. If it’s not income what is it? And not only did I not paying any taxes on it, I’ve paid negative $60k in excess depreciation I use against other rental income. $530k in 15 years isn’t retirement type money, but it’s not zero or worse yet negative money either. 

But even better, it means I can I retire in a $600k-$1million (assuming 3.5% appreciation/year) lake house for Just the taxes and insurance, call it $4k/year. Because I kicked in $90k along the way. 

I could also just sell it in 15 years because I choose to retire somewhere else, then I have $620k-$1million minus closing costs for my $90k out of pocket. But then the tax guy is gonna come looking for his $80 - 140k and I only made $400-$800k in 15 years on this loser. 

Ps. Did I mention when I die someone gets a free lake home tax free? :-) wish I was there to see their face. 

@Dennis M.

Paid $450k, zero out of pocket (downpayment was from refi on existing property that this property pays, hence the negative cashflow. I count the other property as still 100% paid off.) that was almost 3 years ago, it appraised for $620k at the end of the year so I’m paying off both loans and getting one cheaper loan. In the end I’ll have zero $’s in to the deal, the original property will be free and clear again, $170k in equity, $12k in tax free income, and $4k in carry forward losses. 

Again, it’s my only negative cashflowing property and I bought it for personal reasons, the investment part was secondary. I want to pay it off before I retire there as I no longer itemize my personal expenses. The plan is a free retirement home that has given me $400k in depreciation and so far a couple hundred thousand in appreciation that I will leave tax free at my passing. 

They aren’t all about money, sometimes it’s about plans and maybe dreams. 

Again. Nobody is counting the $300/mo in principle pay down. That IS INCOME. 

Taking the tax rate off real expenses make no sense at all, that’s not income and a very bad comparison. 

I’ve told the story before but I have a negative $500/mo cash flow property that makes $12,000/year before the $16,000 depreciation. Meaning I make $12,000/year taxfree and I’m carrying $4k/year in losses forward. (I bought for appreciation and eventual retirement while it was “affordable”)

That said, I’m not saying this is a good deal, I’m just repeating that more than 90% of the experts on here found the entire mortgage payment as an expense. It’s 100% a negative cashflow event but not 100% an expense. 

You’ll also want to redefine “war Zones”. Compared to many cities Vegas doesn’t have any “war Zones”. Maybe you mean poor neighborhoods? There’s a whole complex of nice fourplexes in that gated community at hacienda @ Maryland down by UNLV. I will agree Vegas isn’t great for small multi but that’s mostly because they are the opposite of the housing stock. (Stucco siding, less than 20 years old, pitched & tiled roofs)

Maybe look at one of the little trailer parks, at least as an eventual land play. Maybe 203 houses for the same price would bring in just as much rent with much less maintenance and drama. 

Dave, “the man with all the answers”, foster. 

@Andrew Jackson @Dave Foster

Andrew. Have you lived in the duplex 2 of the last 5 years? (If so, that part would be tax exempt, even better than tax deferred.) is the gain the 1031 will delay,  15% taxes on the gain and 25% taxes on the depreciation recapture, large? if not maybe skip 1031. 

Dave. Can he do a 1031 into 3/4ths of the fourplex somehow like a TIC? And live in the 4th apartment?

Not common. Never heard of it. BUT. A $100? If that’s not a typo who cares. If it only kicks in when there’s a major problem found you’re going to be arguing over $1,000’s. 

If they don’t negotiate if major problems are found. You can remind the seller they have disclose and problems your inspection finds to future buyers because now they know about it.  

@Ricky Si

Vegas buy and hold is like a poor man’s portland. Try to hold for free or close to it while your tenant pays off the loan. Anything you make will be tax free after depreciation. If you only get 7% annual appreciation the property should double 3 times by the time they pay it off for you. I don’t know how we support every house being a million dollars but I know my parents bought their house for $25k when I was a kid and it’s worth $300k now. That’s 3 and 1/2 doubles in 30 years. They thought $100k was insane money. Of course they also thought their $180 mortgage was pushing their finances. 

Their biggest advantage is the houses and yards and the weather are all nearly ideal for zero maintenance. And no state income tax. You could also do what I did with my MN property. Buy a property you would like to retire in someday. I try to think of it as 40x my 20% downpayment. :-)

Your realtors are going to get paid 5-6% of the sales price in commissions. Plus any title/transfer taxes/repairs/Hoa fees if there are any/etc. but count on the $6-$8,000 for the realtors.