All Forum Posts by: Ericka G.

@Syed H. I agree that tax time is never super fun but know a lot of people look forward to it because they get a nice little check...I have always done my own taxes (dad is an accountant) and usually get a bit of money back, despite trying to manage withholdings so that we break even. this year was just a bit of a surprise because of all the news about a tax cut and then we turn out to owe more than ever before. I shrug it off because I know my cup runneth over and I have ample savings for situations like this, but I’m guessing for the average person who looks forward to tax time as their one big windfall, this would be a major bummer.

@Syed H. This describes a bit what I am talking about, don’t think I’m the only one since the IRS keeps making adjustments to address this:

https://www.cbsnews.com/amp/news/tax-returns-irs-again-lowers-underpayment-penalty-threshold-after-outcry/?__twitter_impression=true

@Syed H. I am both a W2 employee (by choice) and a financially free real estate investor/owner with 8 units. Since most Americans are employees I would think others are having the sticker shock since many people/employers missed the changes in withholdings? It’s nothing I can’t handle but definitely our largest tax bill ever - just being real about it. I did notice a good number of people talking about this on twitter but not many talking about it on BP, but, to your point, perhaps the business owners on here are less likely to have taken a hit than W2 folks.

@Kevin Gray I’m surprised more people aren’t talking about this...we’re definitely looking at our highest tax bill ever this year and I’ve noticed others grumbling about it too. For us, I think the change in the withholdings rules made it so that our employers somehow under-collected tax...our income also jumped up a lot due to unexpected bonuses so it was a bad combo for this new tax code :(

@Thomas Lundy take all the “sell” advice on BP with a grain of salt...I’ve found that folks here often give the advice to sell.

Before you sell, ask yourself if you can find something comparable (in terms of location, roi, potential appreciation, tenant quality, etc) for what you will make on the sale. Also imagine yourself in 5-10 years - do you think you will regret having sold right now?

If you believe you can find something comparable or better to do with the money and won’t regret giving up your piece of Austin in 5 years, then selling might be worth considering.

@Shiloh Lundahl very interesting! I like that strategy. I considered setting one of my units up as a lease option but ended up renting it out the traditional way. The prices increased a ton in that market (suburban Detroit) so I’m actually glad I didn’t do the option on that one as it is worth way more now than the price I’d been considering for the option.

What % of yours actually take the option and go through with the purchase? I think prices will start to plateau soon so this is a good time to consider about this approach for my next deal. Thanks for the reco.

@Andrew Toews I vote for SFR. I've owned both and have found renting out condos a major pain, largely because of HOAs in my case. They make everything a hassle. It's a catch22 because a good, strict HOA is needed to keep a place nice, sell-able, and running well BUT they also tend to be nosy and anti-landlord. You also have no control over HOA fees, assessments, and rule changes.

With a SFR you control your destiny a lot more, just make sure the numbers work, the area is safe and desirable to renters and you're good to go

@Lee Perry are you asking if you should pay off your primary? Can you clarify the question?

At first glance, 3.2% for 10 years sounds like a cheap loan, so I’d keep that one until it adjusts

@Kelli P.  To avoid slowing things down, do the dummy ads once the property is under contract but still in due diligence, that way you can still "scoop it up" quickly but drop it without consequence during DD if the tenant pool looks bad or you aren't getting bites for the rent you want .  

This has saved me many times and costs nothing - zillow rentals and facebook marketplace are where I usually place the dummy ads.  On a good property I will get 10-20 emails a day from prospective tenants and you can scope out credit, employment, etc from a quick email/convo (don't run actual credit checks) to give you an idea of who is interested in the unit.

@Jim D. Thanks for the input - agree that a hybrid approach might make sense since the rate is still pretty low for the next year...that said, even if I were to keep the mortgage just one more year at 5.125%, I'd be paying close to $6k in interest in the first year.  

If I pay the mortgage off and put that same monthly payment into an investment account - i'll essentially make whatever interest the market yields PLUS the 5.125% I would have been paying on that money if it stayed in the mortgage.  Maybe I'm looking at it wrong, but it seems like as long as I do better than negative 5.125% in the market I'd come out ahead by getting rid of the mortgage interest payment (on cash I no longer need to borrow)?  The more I think about this, the more I wonder why anyone would keep a mortgage on their primary a second longer than needed.

For investment properties, the tenants are paying the mortgage and interest, so it makes sense to use leverage responsibly there...but for the primary, the argument seems a bit less clear.