All Forum Posts by: Charles Perkins

Many cities in Washington are adopting rental registration programs. The city of Renton, WA now requires landlord to certify the conditions of the building in great detail as well as many aspects of the landscape. This must be done annually now even for one SFR.

As retired CPA, I find it amusing to read tax advice from those who have no clue.  Those who make statements like an investor should always do this often don't know what they are talking about.  Most of the time I have to say it depends on your particular circumstances.

There isn't one investment or tax strategy that works for all investors.  Those who post otherwise rarely know what they are talking about.

I learned that numbers are only part of the story.  It is just as important to develop good due diligence practices with your skill sets in mind.  An in ground oil tank for instance can be a considerable liability.  A septic system should be inspected.

I generally don't allow tenants to do this kind of work unless I'm sure they are qualified to do it.  Just like I want to check any professional I hire to work on my properties.  Plenty can go wrong and ultimately you are responsible for any damages.

Personally, I maintain both an emergency fund reserve and capital improvement/major repairs reserves. The emergency fund is 6 months of living expenses approximately. The Capex is a percentage set aside based on nearly 30 years of experience and my current property inspections. I also maintain cash in CDs that could be utilized in case of extreme circumstances.

I use a combination of Excel and QuickBooks (Professional Version).  I also have used apps to collect payments,  but don't like cloud programs for reporting or financial data storage.

I would never consider purchasing in an area where real estate doesn't appreciate over time.  Investing with foreknowledge that property values are falling seems like a timing problem or at least a situation where my offer would be reduced to reflect this coming change.

As to how much to put in as a down payment that depends more on your numbers, your risk tolerance, ability to get financing, cost of financing, etc.  Personally I don't like to do less than 20%.  You know how many months you could afford to go without any income from a property.  Evictions are sometimes necessary.  Major repairs will come up at some point.  Family emergencies and unexpected illnesses all can come to pass.  

As an RE investor, there is much more to due diligence than what you have listed.  An investor can bring changes to a neighborhood changing current conditions in a number of ways.  

An inspection is more than the building which could be demolished, remodeled or otherwise improved.  The land, zoning, waste disposal system, in ground oil tank, elevations, liabilities, encumbrances, lot size, setbacks, and other issues that may have impact on an investment decision and any value add opportunities or lack of.  Also potential appreciation is important to investigate.

For myself in my state it has made little sense to Chase turn key or cosmetic properties.  Some parts of the country it makes sense and some investors will have different uses or ways they are willing to pursue.

An Investor has a lot to consider upfront and during their due diligence period buying real estate.

Most likely the work done in your bathroom at least in part should be capitalized and then depreciated each year.  It doesn't matter if you paid cash or not.  

You'll want to make sure you have every contactor fills out a W-9 collecting their name, address and tax id.  You will need these for the 1099.

I highly suggest that you obtain some kind of documentation of any work done.  When paid in cash also obtain some kind of proof of payment.  Without these it is harder to prove payments were made, claim any warranties or document any expenses claims.

 Great idea.  We do annual inspections and your habit sounds like a great way to further insure the detectors are operational.