All Forum Posts by: Diran Deukmajian
Diran Deukmajian has started 9 posts and replied 42 times.
Post: First investment (multi-home) property, close to home or in a cheaper market?
- Contractor
- San Diego, CA
- Posts 43
- Votes 27
Hello Yang. Definitely as a first investment property, do not go out of state. As an early investor, it's better to invest something close to home. Get some experience with the system, learn some tips and tricks (Bigger Pockets being SUPER helpful), then once your feet are wet, start going out of state.
I made my first townhouse purchase November 2023, and had a small issue. Dealt with it immediately myself. I did not have to hire a property manager and pay them lots of money to deal with it. Being close to home, I was able to handle it myself.
Going out of state, either you hire a property manager or you fly out there yourself to deal with the issue. Both options are NOT CHEAP.
My property is in LA too, but saved some money for backup in case something major goes wrong.
GOOD LUCK!
Post: Depreciation on rental property not making a profit?
- Contractor
- San Diego, CA
- Posts 43
- Votes 27
Quote from @Glen Wiley:
You can still take depreciation, the deduction is deferred until you can use it in a later tax year.
The most effective way to fix this is to get your spouse to qualify as a real estate investor per the IRS. This will allow you to take deductions against your ACTIVE income (W2 paycheck). To qualify as a REI for the IRS you need to spend 750hrs/year on real estate related activity. You can't qualify if you work full time. Your accountant should be familiar with how to handle this.
Thank you Glen. Yes my accountant told me about this method, but both me and my wife have full time jobs. Will just have to wait it out until rates go down and I refinance as well as raise the rent a year from now.
If I can refi and get a rate around 6.5% plus put up more money, I'm good to go. Just a waiting game I guess.
Post: Thoughts On Investing Out Of State
- Contractor
- San Diego, CA
- Posts 43
- Votes 27
Quote from @Carlos Ptriawan:
Quote from @Diran Deukmajian:
Hello. I currently own an investment property in my home state/city (Los Angeles, CA), and was considering buying a rental property in another state. One main reason is because the cost of properties outside of California and much more affordable. What are some pros and cons for investing in a property hundreds, if not thousands of miles away? What should I look for? Is this a bad idea? Do I partner with someone to make it easier?
if you want to make abnormal return don't do investment OOS, invest locally in CA and develop skillsets and creative development.
Thank you Carlos. I think I will be doing just that. For now, I will be working on the investment property I have and slowly work up from here.
Post: Depreciation on rental property not making a profit?
- Contractor
- San Diego, CA
- Posts 43
- Votes 27
I have a rental property (townhouse) in Los Angeles. The amount my tenant is paying me per month only cover 95% of my mortgage, HOA, and taxes.
Because this is considered a small loss per month/year, am I still able to depreciate the property from my taxes ($20K/year)?
My accountant said I cannot depreciate unless I make a profit. If I don't, it gets rolled over to the following year ($40K) and so on, until I make a profit.
Post: Thoughts On Investing Out Of State
- Contractor
- San Diego, CA
- Posts 43
- Votes 27
Quote from @Savannah Yingling:
Quote from @Diran Deukmajian:
Hello. I currently own an investment property in my home state/city (Los Angeles, CA), and was considering buying a rental property in another state. One main reason is because the cost of properties outside of California and much more affordable. What are some pros and cons for investing in a property hundreds, if not thousands of miles away? What should I look for? Is this a bad idea? Do I partner with someone to make it easier?
Hi Diran! I think these responses so far have fit the nail on the head. Of course there are pros and cons but with a good team you can trust, out of state is a great way to expand your portfolio. I've seen many posts about Ohio- great market. I am personally local in the DMV which is also a great hub for investing. There is constantly a flood of people coming in and out of these cities around the pentagon and military bases. Happy to share contacts if you ever find yourself interested in these markets here. Best of luck moving forward!
Post: Thoughts On Investing Out Of State
- Contractor
- San Diego, CA
- Posts 43
- Votes 27
Quote from @Sam McCormack:
Quote from @Diran Deukmajian:
Hello. I currently own an investment property in my home state/city (Los Angeles, CA), and was considering buying a rental property in another state. One main reason is because the cost of properties outside of California and much more affordable. What are some pros and cons for investing in a property hundreds, if not thousands of miles away? What should I look for? Is this a bad idea? Do I partner with someone to make it easier?
You can get partners but I don't think it would make things easier. You definitely need a realtor to start. And then your realtor should be able to connect you with anyone you need from there. Have you narrowed into a city yet? My Cincinnati/NKY investors are doing pretty well here, let me know if you are interested!
No haven't made a decision yet. I am not ready to move out of state yet. Still on my 1st investment here in CA. Might do a 2nd one, or maybe a flip, before I start looking outside of my state. A little unsure on what to do.
Post: Thoughts On Investing Out Of State
- Contractor
- San Diego, CA
- Posts 43
- Votes 27
Quote from @Henry Lazerow:
Dont believe all the bs you read on here. Real life you need self manage in 2024 to make any cashflow. You can self manage if in a good area while out of state but just know the chance of hiring a manager and cash flowing any significant amount is close to 0 regardless of area. Ive sold lots of out of state buyers and still do.
Thanks Henry. Yes for the property I invested in a couple months ago is only working for me since I am the one whose managing it. It's my only property, and since it's close to home, I can save so much money by doing it all myself and not hiring a property manager. Thanks!
Post: Thoughts On Investing Out Of State
- Contractor
- San Diego, CA
- Posts 43
- Votes 27
Quote from @Travis Biziorek:
Hey Diran, I live north of you in the Central Coast.
But I invest almost exclusively in Detroit.
The pros to out of state investing are many... you can literally go anywhere. You aren't limited by what's in your backyard.
The cons are things you'd expect. You have to really trust the folks you're working with. You can't get eyes on a property easily, so you're trusting what folks are telling you, photos, videos, etc. It's tough, but can be worth it.
If you don't NEED to go out of state, don't. That means if you can still hit your goals in a reasonable timeframe, then stay local.
I've achieved my initial goals (financial freedom), so I'm now considering how I'll invest going forward. I'll likely continue mixing in some Detroit stuff since I have a great team there. But I'll probably start thinking about investing locally too.
One of my big goals is to buy two houses nearby me just in case my kids want to stay or come back to the area when their grown. What a gift it would be to be able to set them up to do that!
Thank you Travis. It seems as though everyone is investing in either Ohio or Detroit. Why is that? Are the home prices so low that investors can afford multiple properties at a time? Are they even making a monthly profit when they rent it out? If they are making a small profit, is that even worth it?
I would assume since CA home prices seem to have such a large return, why not just invest in CA and wait it out? Wait until the value of the property is way more than what you paid?
Post: Blown Away - 7.5 % with 2.25 points
- Contractor
- San Diego, CA
- Posts 43
- Votes 27
This deal was done in upland, CA.
a lot of people I spoke to a lot of people in my area and they all had the same story...over 7.5% isn't that the norm these days ?
Post: Blown Away - 7.5 % with 2.25 points
- Contractor
- San Diego, CA
- Posts 43
- Votes 27
I closed on my investment property November 2023 and my rates are almost the same. 7.75% and paid a couple points to bring that down. But since this was a new build, I was able to have the developer pay the closing costs, including some extra upgrades done on the property.
Your numbers are similar, but I have been reading the rates should be dropping a little by end of 2024. I would keep my eyes on it, and when the time comes, refinance to a lower rate and add some more cash to the deal to bring down the loan.
Unfortunately for me, in my position I am not able to pay it all off. I was able to put 35% down but need to put another 10% to make a monthly profit.