All Forum Posts by: Berry Starnes

Glad you liked it. Thanks for the feedback!

I have posted a link to my substack post on my first BRRRR as it would probably be too long to include in this thread. Feedback is appreciated! Much love to this community.

https://open.substack.com/pub/...

OK..so if my wife isn't a REP during the year in which the cost seg is done, the depreciation can only be used against passive income. Even if my wife becomes a REP in the future.  This is my understanding on what you said. Just to clarify.  

 Can't I use the cost segregation this year for future years rent? Even though I haven't rented out the homes. I Was thinking it would be wise to do while I can get 100% bonus depreciation.  I know I have until April to do a cost seg and it will count for 2022.

Actually, I'm in Portage and Kalamazoo areas:

I am hoping someone can help me figure out if a cost-seg is worth it and on which of my two recently purchased properties I should do it on.

I have a W2 income as a medical professional and my wife is not yet a real estate professional.  Hoping to move her into this role in the near future or next year.

I have purchased two properties this year:

1) 100K purchase about 6 months ago and put in 50K+ for renovations (full gut) and is worth around 190K from appraisal.  Currently looking for a tenant.

2)110K purchase recently and in process of putting in around <10K and looking to rent in next month or two.

I know this year is the last year to get 100% bonus depreciation.  I know I could only use this currently to write off my passive rental income.  My CPA states I should do it to my second property since the first property was almost a full gut job and wasn't worth much when I bought it. He states since I'm keeping alot as is in my second home it can be worth more to depreciate. Is this correct?  My thought was to do it to my 1st property where I had to put more money into the deal.  Are you getting depreciation from the value 'after repair' or the state it was in when you purchased the property?

Thanks for the clarification!

-Berry

I just took out a 50K TSP (government 401-k) loan. ~1% loan where the interest gets paid back into your retirement fund. You can recycle this and do this yearly.

Loans are tax free

I would love to hear your discussion on this thread please. That’s what this is about! Thanks!!

BRRRR seems like a great way to use velocity of money. Being able to deploy the money, gain equity, and get most if not all of it back to repeat. Your cash flow does go down when you refinance, but you have better tenants paying down your mortgages, less maintenance due to the rehabs, more assets to depreciate due to recycling your money, more assets to combine and take commercial loans out, and if you hold long enough a ton of assets for 1031 exchanges or if you pay off to perform seller finance when you retire.

Of course you can have a bad outcome and have to come up with money to leave in the property, but you need to have either a reserve when you start for any problems that may arise or an exit strategy (flip or sell unfinished and cut losses) before starting.

About to jump into REI, so take my advice with a grain of salt. But, it sounds as if you get a good team together ahead of time (contractors, Lenders, Realtors, CPA, Attorney, Property Manager,etc) and do your proper analysis of deals and rehab costs then you should be OK.

With the market at all time highs and reality far from what the market is…..why not tap into our TSP? I'd rather have some of that in cash than watch it go down or sideways.

TSP loan is 50k (max) for 5 years at a little over 1% interest. This would be about $800 per month coming out of your pay check, but going back in to your TSP along with the interest. And, you can pay back with no penalty. Kicker being you have to wait one year before repeating the process once you pay it back.

How does this sound for a BRRRR property??…..

Use TSP 50k + some of a HELOC as cash for purchase of property. Holding costs should be lower than using all of HELOC. 50k won't cut most purchase prices, so have to use some of HELOC too.
The remaining cost-the  Renovation-will be paid using the HELOC. Then refinance and pay back HELOC and TSP

thoughts?  Has anyone done this?