All Forum Posts by: Becca F.

Hi! I'm looking for a CPA who works with real estate investors clients in S.F. or East Bay (Berkeley, Oakland, Lafayette, Walnut Creek, Concord, Dublin, San Ramon). I'm doing my own taxes for 2022 since it's a little late in the game to find someone before the April 17th deadline but may want someone to look it my return over. 

@Jarrid Weber

As Len P. said, it depends on your goal - getting cash flow or growing equity? I'm in the Bay Area and I tend to lean towards if you have a California property with a low interest mortgage or no mortgage (in the case of someone who has owned a property for a very long time) to keep it. I have a SFH with a low property tax basis and fairly low mortgage. I could have sold and taken the proceeds and bought many properties out-of-state. I chose to keep it and rent it out because I would never be able to be get a house like that again in the Bay Area. I'm keeping it because of the growing equity and also my kids could inherit the home and chose to live in it for the future (or continue renting it out).

The price points are really high in the Bay Area and surrounding Northern California area and the price to rent ratios aren't good so I'm a little more focused on getting cash flow now. I took some of that equity out (cash out refi when rates were lower) and am buying out-of-state. I'm closing tomorrow on another property in the Indianapolis metro area. Good luck!

@Johanna Kerns

I'm closing on a SFH this week. Conventional loan, 6.998%. It was 2.97% points ($3089 + $1040 loan origination fee). My loan is much smaller than yours, $104,000. I used a mortgage broker. He said I could I could get a lower rate if I had a larger loan.

 Carlos, where are you buying to flip? I'm interested in flipping but it seems risky. 

@Brian Jackson

I'm in the S.F. Bay Area. I can understand you wanting to keep a cash flow negative property. Historically California properties have appreciated a lot. How much cash flow negative are you projecting? -$100? -$500? 

I'm buying in the Midwest, which is landlord friendly. I have a SFH in an Indianapolis suburb that I bought almost 10 years ago, Class A neighborhood with great tenants. It's appreciated quite a bit, not as much as a Bay Area house, percentage wise but it was such a great value with low interest rate. The only thing in that county is that I pay a higher property tax rate as an investor vs. a homeowner. The state tax is much lower than California and I haven't had to pay state income tax in Indiana on the rental income I'm getting,

I'm closing on another SFH next week in Indianapolis, different county and property taxes are lower. For a quick analysis, I get as close to the 1% price to rent ratio rule for cash flow in Indiana when I was doing my search and narrowing down properties. I'm getting 1.1% on the Indy suburban house since it bought it a while ago. Rental comps show I'll probably get 0.76% on this new house. I wouldn't get this on a house in Bay Area if I bought an $800,000 house, no way I can charge $8,000 rent, maybe $4000 or $4500.

I've also looked in Cincinnati and Memphis. I've heard other Bay Area investors say Kansas City, Missouri is a good market. 

@Chris Lamm

I'm in the San Francisco Bay Area. That's interesting that your friend said the landlord laws in Tennessee aren't are landlord friendly as you had hoped. I've considered buying in Memphis. Nashville was my preferred location but the price points are a bit higher than I want to pay right now. I'm a little curious as to what the TN landlord laws. 

My vote is for Indianapolis. I have a SFH rental in a Hamilton County suburb north of Indy. I bought the house 10 years ago (was my primary residence). It's in a Class A neighborhood with a great school district, and appreciated a lot in the last 3 years and have great tenants. I put in an offer recently and will be closing on a SFH next week. I was searching for turnkey/move in ready and most of them at $180,000 or less. I know that I would get the equity if I did a rehab. I didn't want to do an out-of-state rehab (after doing a local renovation which was stressful). I think the value for purchase price is great in the Midwest although my California investor friends think the Bay Area is a better investment - I love the California appreciation but not the pro-tenant laws here and the high price points right now. I will likely buy another property in Indy after this one closes.

I'm also confused about getting LLCs. I have 3 properties and a soon to be fourth property, SFH in escrow right now. I called the lender of one of the SFHs and she said I would need to refinance it to put in into an LLC. I'm definitely not doing that since my interest rate is in the 3.875%. I have umbrella insurance of $1 million beyond the landlord/rental dwelling insurance. I'm considering increasing it to $2 million.

I won't be paying off any of the properties in next 5 years, so does that mean I shouldn't get an LLC? I would think most investors have mortgages. It's possible I could pay off the one with the lowest mortgage. My investor friends in California who own 1 to 4 rentals don't have LLCs, which surprised me. The only person I know with an LLC owns 11 rental properties and he said I should really get an LLC. California also charges an $800 tax on each LLC. If I get an LLC through another state, such as Wyoming using a registered agent for anonymity, I'm guessing I have to pay that $800 California tax since I live here.

@Matthijs Pol

I've done my taxes through TurboTax Premium with two rentals, one a multi-unit, where the property management team sends me monthly reports and a 12 month cash flow sheet. It takes a lot of time. I had to call the TurboTax help and one of their CPAs checked my returns and walked me through an error I found. Depending on who you talk to, the TurboTax CPA can be helpful, the last one I spoke with was also a real estate investor. Last year I did a major renovation on rental property #3 so I paid a contractor in addition to buying some of the materials myself. I'm starting my taxes now. 

No one I know has a recommendation for a CPA locally - the two people I know with rental property wouldn't recommend their CPAs, not a good sign. I know should I get a CPA. 

@Ty Johnson

Excel spreadsheet for my self-managed property. You might laugh but I'm a notebook and pen person and I actually wrote out my repairs, what I paid to the contractor, window repair etc on paper. Not a most efficient way to keep track of my books and if I ever get audited by the IRS I'll be handing them a file folder full of paper. I'm putting everything in spreadsheet now. 

@Sophie Grizzle

I'm still buying in Indiana right now, closing on a property next week, move-in ready. Sellers are willing to negotiate. Cincinnati and Memphis are on my list but it's hard to venture out into unfamiliar locations. Florida Panhandle is a distant possibility (need to get insurance quotes first). I know San Francisco Bay Area and Indianapolis metro area well so probably Indianapolis again. I'm interested in flipping to raise more capital but my realtor says margins are small so it seems a little risky.