All Forum Posts by: Chris Fusco

Thank you for the insight!

Even if repairing the property didn't "make it better". The repairs just brought it back to it's original state. So you're saying the basis on which I depreciate every year should go up by the excess amount? Let's say it's a $100K property, land is worth $20K, so you depreciate the remaining $80 on your schedule  over the next 27.5 years. In my example, that $80 should become an $82?

Would that only be the case if those repairs are considered "capital improvements"?

Hello,

Just finished my 2022 taxes but it made me realize I have a situation for 2023 taxes that I don't know how I'm going to handle. Here's the situation:

- Had a pipe freeze during a cold snap, led to fairly extensive damage during the thaw (ceiling collapsed in 3 rooms)

- Filed insurance claim, was covered

- Have a contractor that wants me to buy 3 other properties from him, so he fixed it for me at cost

- Deductible is $5K

- Actually ended up making money somehow

Math:

   - Cost from contractor $22K

  - Cost insurance came back with $29K

  - Deductible $5k

  - So I actually made $2k ( 29 - 5 = 24 [check] ; contractor cost 22)

My question is how to handle on taxes? Does the 22K count as expenses (or capitalized, depending on scope), Does $5K count as a loss I can write off? Do I report $2K income? 

Thank you in advance 

Chris Fusco 

I'm not local, and appreciate the offer! But this contractor and I are pretty far away on purchase price right now (largely based on this thread) so unless he moves significantly it likely won't happen. But thank you!

Thanks for the insight. Is that based on the area? Or what you saw on Zillow? Because it is undergoing a full rehab, so anything you can see today could be misleading

The address is 3429 East 45th St. I do not have a rent roll yet though, I've asked for it just waiting on an answer.

Thank you!

Thanks for the insight! What made you pick $250? By my math that would be better than an 11 cap & >$1,000K/month in cash flow. That's pretty high for a 'turnkey' deal, it sounds great I'm just not sure it's realistic? Was it solely due to the area / big projects? Shouldn't having it be recently completely renovated & having property management in place mitigate that? 

Hello BP community,

I'm evaluating my first Multi-family deal and was curious on people's thoughts. It is a 'turnkey' investment that is currently being rehabbed by a contractor I have a relationship with & trust. When complete it will have a new roof, LVP throughout, granite countertops. I was hoping to put out the specs on this deal and see what you would offer to see if my analysis is on point or not:

Type: Fourplex

8 bed & 4 bath (each unit 2/1)

Zip code: 64130

Total sq ft: 2550

Unit 1 & 2: 625 sq ft, no access to garage

Unit 3 & 4:  650 sq ft, access to garage

Utilities: Gas & Electric metered individually & paid by tenant. Water is common. I am estimating $215/mo, but feel free to use your own numbers

Property Management: 8.5%

Expected Rent: $3510/mo ($855 for smaller unit, $900 for larger), feel free to use your own numbers

Vacancy assumption: 8%

Capital & Maintenance assumption: 10% (obviously that's aggressive for a turnkey, but I'm focused on longer term, not the first year or two)

Taxes: $436 (but that's from before it was bought & fixed up. It was a run down duplex before that is now being expanded). I've double this in my math, but don't have a good feel for when it will be re-assessed and how much it will go up.

Insurance: $3610, but that's a guess from my contractor, waiting on a quote

Interest rate: assuming 7% (waiting on a quote) my contractor has offered to buy some points but hasn't said how much yet

Given all that info, what would you offer on this?