All Forum Posts by: Charles Perkins

I'm happy someone is buying in Detroit.  Personally I don't want to invest there myself for a variety of reasons.

Detroit was hit hard during the housing bubble.  I remember seeing homes that could be bought for 3,000 perhaps less.  Doesn't take much to increase greatly from there. 

Quote from @Caleb Brown:

Another category is the home that needs lot of work.  It might be overpriced or might be correctly priced but is not generally desirable because of the work involved.  A knowledgeable investor might see a beautiful opportunity hiding under a worn facade.  Knowing what you are capable of and/or having proper resources can lead to great deals in any market.  

I found plenty of deals on the MLS over the years. Probably the reason was, I wasn't looking for turnkey investments. I had one overall criteria and that was could I create additional value and could it pencil. There were newly listed properties that were worth looking at and most often properties that had been listed for awhile. One property I eventually bought listed at 400K, but wasn't worth that much in it's current condition I offered 300K and it sat for 2 months before they sold it to me.

I'm currently at 87%.  The remainder is primarily in annuities, bonds and cash related vehicles.  I have a very low risk tolerance for stock and many other market driven vehicles.  We do have a few other investments besides RE, but they are baby investments.

I'm very comfortable with my RE investments which have proven themselves over the last 30 years.

First things first.  You want to be sure your collecting all receipts, properly tracking all income and expenses and your basis for all assets properly documented and recorded.  You will need to determine the level you participate in your investment as well it makes a big difference.  Not knowing your situation, you may or may not benefit from a cost segregation study.  Investing in real estate can open the door to many different tax elections as well.

A good tax professional can help you collect the information you need, guide you preparing well in advance for year end reporting.  While you can probably do your own tax return and might get the full benefit of your investments, you might not.  TurboTax like so many other tax software is only as good as the information put in.

My goal is reviewing retirement options.  After 30+ years investing it is to enjoy the hard work.

Absolutely agree.  I'm taking a break now only because I'm retiring.  Over the 30+ years my wife and I have walked and pencilled well over a thousand possible deals.  That was after vetting many properties eliminating them before starting out.

The more you do.  The more experience earned, you gain insight into comparables, learn neighborhoods, get better and better in determining a real deal from a stinker.

Quote from @Daniel Baker:

 You are mixing apples and oranges.  If you want to look at total expenses over the years, you need to look at total income received as well with your potential sale price.  Then you can determine if you made a profit, loss or broke even.

Determining your sales price can only be determined by the market.  You can get an idea yourself looking at comps in the area.

As a retired CPA, I saw plenty of tax returns by these firms that clearly were done poorly.  Finding a good tax professional familiar with real estate investments is simply a good investment.

Quote from @Sean O'Keefe:

This depends on if you are using the Cash or Accrual method of accounting for tax purposes. For most taxpayers it will be Cash. 

I would agree if we were talking about financial statements, but as I understand it, we are talking about tax basis reports.

For tax purposes, one can use a modified cash basis when filing. Publication 336 (cash method section) gives a clear example very similar to the situation described where constructive receipt was made because the agent of the taxpayer received payment for the taxpayer.