All Forum Posts by: Carlos Sotelo

@Bruce Woodruff

I just went through this about a couple months ago. October 2022 - Dec 2022, the tenant kept promising they’ll pay on time but was constantly 15+days late and would block my number. I honestly didn’t want to kick them out during the holidays but I just didn’t like that they avoided me. Anyways, I let her go with basically a month of unpaid rent (December) with out a formal eviction process. I told her I’d help her get a smaller place that she can afford comfortably but that I needed her to vacate my property by end of year. She ended up leaving without purposely destroying anything and I’m glad I avoided eviction process for a months worth rent.

Note that I’m in California where most laws favor tenants. Also, that property has 4 units so one missed rent still allows enough margin to cover mortgage/expenses that month without reaching into my personal accounts.

I believe it is AB 1482. It has some exceptions, such as cities that have their own Rent Control measures.

@David Torreggiani

I’d agree with a lot of the comments here. Here are some pointers I would recommend to anyone starting to get in rentals

1. Fund your own deal - “Use someone else’s money” only works to a certain extent. You’re better off saving up that 20-30% DP for a conventional loan.

2. Play it Safe - For the first deal I would always recommend to be extra conservative on your estimates. (ie. Expenses, vacancies, PM, maintenance, etc) Based your Net Income calculations on that.

3. Keep it Local - Having something close by Can make it much easier to drive by any given day to see how the property is being maintained. It’s also beneficial for those simple repairs that otherwise you’d need to hire someone for.

4. Safety Net - Aside from saving up the appropriate DP and Closing costs, add in a safety net to allow you to start in the “green” from day 1. ($5-7k is a good start for a duplex/triplex)

@Alan Bosca I like to increase rent on my units by about 1% under inflation every year. Keeps the tenant content knowing their living isn’t increasing at the same “rate” as inflation. So for example if inflation was 5%, I would increase 4% that year. However, Be mindful that in California, you’re allowed to increase rents by 5% + Inflation.

@Gene Hacker hi Gene, can you send me the link to this group as well? I own 3 rental properties in Bakersfield and would love to join sometime soon. Thanks in advance

@Fabiola F.

Intent is the driving factor here. You can depreciate assets for shorter lives (eg. 5year) but my understanding is if you sell before you will probably “pay that difference back.”

You can depreciate the property acquisition in a straight line and depreciate the improvements in various life spans itemized. In cost segregation you would also need to separate tangible property vs non tangible.

I worked for tax firm as a Cost Seg Engineer, which is pretty known for Cost Segregation, I recommend talking to someone in that specific field.

( I’m a civil engineer so I transitioned out of that practice. But yeah I recommend digging deeper with someone who knows more current tax laws regarding that. You’d be amazed at the deductions on some of the projects I worked on)

My pops always told me to go to school and focus there. Although I did go to school, I worked two part time jobs. It was tough as hell but I wanted and needed money of my own. I did, however, manage to save plenty of it along the way. I graduated in 2015 @ 23years old with a degree in Civil Engineering & found a decent paying job within 1 month. Now to the good part: I bought a property that same year with an FHA loan.. and managed to rent it partially. (18k down or so) mind you I live in LA so prices are ridiculous. I kept the property for 2 1/4 years and just sold in February 2018. My monthly cash flow was NEGATIVE $515. (Due to high PMI) When I sold, I walked out with a $130k gross profit (& non taxed since I live there partially for a bit.. just RE sales costs) Currently I’m 26, my engineering salary is +6 figures and it’s steady & stable (govt job) and I have two offers in 3 & 4 unit properties that can cash flow 1.2k monthly.. so let’s see where that goes Moral of the story: - listen to your pops, but if you don’t like school then find a good paying work field to start stacking up for an investment - don’t get turned down by a negative cash flow property so long that property is in an appreciating area (i.e Downey, CA for me) - most importantly.. at your age, I would say Is gather yourself with people with the same mindset.. saving as much money as possibly can while being in your early 20s is not your common hobby Good luck my dude!

@Anthony Malveto wow, you just opened my eyes to a whole new sector regarding buy/sell land tactics. I will definitely look into that and see how that works. If you have any info, feel free to drop some links I can take a look at. Thanks again for the input!

@Nicky Garza basically from the 13k, 11k went into the actual loan and the remaining for additional closing costs (roughly speaking) I did, I used an online service for credit and background check. Wasn't the smoothest, but the only thing I dealt with was late payments.

Raeshelle.. let me input my one and only deal in real estate that might give you hope aside from the rest here. Soo basically I began with $13k.. just a little over the amount you are beginning with. I'm in LA area in California, not sure how it compares to your area. Two years ago (age 23) I put in my hard saved 13k into an FHA loan for a SFH that I bought at $450k... it's a 3 bedroom/2bath property that I had a couple people live in the additional rooms. At the end of year one, I paid about $6500 in total out of pocket to cover my mortgage (had pmi, tax, & insurance all built in). On year 1 tax return, I got my $6500 back (pretty much). Year two is closing out now and it has pretty much been the same deal and I expect to get similar tax return for 2017. I just listed my property and now based on actual market comps (not Zillow or Redfin).. it is listed for $550k. I owe $425k on my loan so basically I have a gross gain of $125k. After RE and a few costs are paid (assuming it closes at asking price) I can walk away with about $80k. From the time I began to now, I have managed to save up another $20k.. so that's basically how I will find my next investment (100k). Stay hopeful and if you live in your own property, you don't have to worry about capital gain taxes or having to do a 1031 exchange. Goodluck in your investments.