All Forum Posts by: Ed Matson

My experience in CT is that you need a triplex to actually "live free" after all expenses.  So, it does sound like a decent deal to me for a two family.  Also, I see no mention of taxes in your post.  I agree with @Aaron K. that it makes sense to evaluate the investment assuming both units are rented.  

@Ashish Acharya,  Thank you for your clear and complete comments.  They are very useful.  Maybe I misunderstood the webinar guest.  I really appreciate your reply.

I have been told that Bonus Depreciation is only applicable to "non-residential" rental properties by a CPA. I have heard otherwise on a podcast and am now a bit confused.  My situation is as follows:

Rental Condo 1: Purchased 2017.  Rehabbed 2017/2018. Put into service 2018.  Full gut rehab.

Rental Condo 2: Identical unit to #1, but required no work.  Purchased and put into service 2018.

Can I take bonus depreciation on both properties? The webcast I heard said I could as bonus depreciation applied to both "new properties" and "new to me" properties.  

Lastly, in the case of Condo 2 - How do i set a basis for the used appliances, fixtures, carpet, etc.  ?

@Chris Sherman - Welcome to BP and good luck on your journey.  I grew up in Monroe and have lived in Stratford since 1983. I've been a RE investor since 2011. Its tough to make SF homes work in Fairfield County without doing a ton of rehab. We have been doing fairly well with a triplex in New Haven and condos in the Valley. Also, there is a good meetup in Fairfield the last Wed of the month.  On hiatus for the holidays.  Back in January. If you want to talk, let me know. 

$500/month rental income for a unit with a full in cost of $7,000?  Sounds too good to be true.

@Taylor Smith - my experience is that the outcomes are accurate if the inputs are accurate.  Make sure you are putting in annual and monthly values where appropriate. 

@Taylor Smith- The BP calculators do it all for you.  Use the rental property calculator and plug in your numbers. For properties of this size, its all about cash on cash return for me. But, I am 64 and don't anticipate being around (or coherent) when a new property gets paid off.  So, its got to make money for me now. 

@Daric Myers - And, talk to your local housing authority that administers Section 8.  Make sure that they will approve the converted motel for Section 8 housing.

For me, the ability to add value is more important because the ultimate result is more reliable.  If I buy a property in need of work or improvements my after repair/improvement revenues are fairly predictable because they are based on what that market is generating today for a similar property. So, the revenue results are very much in my control.  I just need to execute properly.  If I buy betting the neighborhood will improve, the increase in revenue is totally dependent on outside factors over which I have no control.  This makes it much more risky in my opinion.  A younger person with more of a time horizon and/or a higher risk tolerance might feel quite differently.

@Samuel Yee is absolutely correct re: Fannie/Freddie SBL loans.  We just did a refi via this route and got 15 years fixed with a 30 year am.  However, we had owned/operated the property for 15 years so we were judged to be a good risk.  We worked with an excellent commercial loan broker.  I suggest you seek same in your area. Well worth the cost.