All Forum Posts by: Bobby Lee

I bank with them anyway so I'm looking into it after seeing an advertisement. Not sure what it offers that will make mgmt easier tho, a side from rent collection.

@Ferrel Granda I have a couple in Merced

@Rick Pozos

Are there a couple property management companies you would recommend?

Thanks Jon. The refi mortgage payments should probably go to cash flow, not net income. That would mean cap rate wouldn't change but cash flow does. I'll take a look at the BRRRR calc.

I'm looking at a cash-out refi to use some equity to purchase another property. How should my calculations change though?

I run the cap rate calculations and found a $500k SFH with a good cap rate at 20% down. Let's say it's an even 6% cap rate. But in reality that down payment is part of the cash out refi, so if I apportion my refinanced mortgage payment to this new property, my cap rate falls to 2.5% and I'd be cash flowing just making a few thousand dollars in a year while net income would be in the tens of thousands still.

Should I be calculating differently, since nothing is coming out of pocket for me - as this would essentially be a 100% financed property? 

Hi everyone,

I'm looking at my first 5-unit multifamily. It puts me in commercial multifamily loan territory, which I'm not familiar with. I've looked a bit into getting a 30 year fixed rate mortgage but it looks like the lowest loan amount is $1M. I'm just under at $900k mortgage needed on 25% down.

I like the stability of fixed rate mortgages, but it looks like a 10 or 15 year adjustable is my only option. Anyone have any input or suggestions? The property is in Illinois.

Thanks.

I have one rental on section 8. The nice thing is they're on the straight-and-narrow since they know they lose funding and housing if they mess up. Rents are a little below market though so I wouldn't spend too much on upgrades.

She's one of my better tenants though - never bothers me except if something is wrong with the unit. Works with my contractor to make sure he has access to the unit when something needs fixing. Very welcoming when I go visit.

You'll still want to vet your tenant like normal, this tenant is younger (late teens or early 20s I think) and I met her with her mom. They clearly have a good relationship, and that points to her being a good person and therefore good tenant. That's my rule of thumb anyway.

In today's climate you'll also want to ask if the tenants are still paying, on deferment, or just not paying at all. I'd want to know what tenants I'm inheriting - are they in office jobs where they can WFH and continue to pay rent or are they likely to be furloughed/ have been furloughed and may not be able to continue paying rent?

Hi Joe,

Yes it would be a tax deduction. But if you're also using it for personal use, then only the portion used for business (rental) would be deductible. If anything was purchased to fix the rental only, it's 100% deductible. If something was purchased to benefit both the rental and your primary residence, then you deduct the ratio of benefit to the rental. Typically you can calculate this by dividing your rental square footage by total square footage of both sides - and that's your ratio. This is the type of calculation you'd do if you repainted the whole place or resod the entire lawn.

As for your office, 50% of your home is too much office space. Think about it - you probably won't store supplies in your kitchen or bathrooms so you're saying you're using half your bedrooms and most of your living room? If you are then go for it, because if an audit comes around you can prove it.

Now I'm sure you can find CPAs that will give you 100% deduction no matter what and allow that 50% home office, but you're increasing your risk for audit. That being said, these same CPAs also know the IRS is understaffed so something like 1% of returns are being audited so they're willing to paint you a rosy picture about giving you tax deductions and large refunds to get your business. Just be aware and know your risk tolerance.

I'm going to copy/paste my response from another similar question, though it doesn't agree with the first two responses:

From https://www.biggerpockets.com/...

In a hot market I'd say it's a good idea. I've done it twice as a buyer now.

Even though agents are supposed to be watching out for their clients only and not for their own self-interest, we're all human. So while other buyer agents won't know what the strongest bid is, guess whose buyer agent *does* know what the strongest bid is?

And this agent gets a bigger bite of the pie. Again they're not supposed to take that into account, but again we're all human.

Now some will say "I can't represent both parties" and I actually prefer that. They're honest. Then I ask them to recommend someone from their office, as I'm not currently working with an agent. Now who will the selling agent likely help out - some agent from another firm or their buddy they just recommended over to you? Maybe their buddy will hound them for clues as to the strongest bid and they'll play a game of "hot or cold" with the numbers so the selling agent doesn't have to feel ethically compromised. At any rate his buddy is more likely to get helpful hints than some agent from another firm.

You have to make a judgment call though, as you want to make sure you don't end up with an unethical one that will really try to fleece you by pretending there are higher offers. If someone is willing to represent both sides, you really don't have someone fighting just for you.