All Forum Posts by: Frank Chin

@Phil Shelton

The company I use is Homeserve, and the link: Homeserve

I use them for my Boiler and hot water tank, but they cover home appliances as well. 

@Phil Shelton

I owned triplexes in Queens, looked into it, and found it totally senseless for a number of reasons.

I had a boiler and hot water tank for each building. Having 3 furnaces and 3 hot water tanks would take up most of the room on the ground floor where I had a small one bedroom collecting much less rent if none at all.

I would have to replace 3 boilers and 3 hot water tanks when it's time. Thirty years ago, it cost me $600 in labor and parts to replace a 50-gallon hot water tank, currently $1,500 and often they only last 6 to 8 years. 

I currently have service contracts on the boiler and hot water tanks, and I need 3 service contracts for 3 of them, for each building. I pay $571/year for one, and times that by three for a triplex. Originally, I didn't use service contracts, but with the cost of labor in NYC, it's far safer to use a service contract than to take a chance that nothing happens. With 3 boilers and tanks, chances of something happening is much greater. Plumbers charge $150 just to come out. 

Now for water. For a 3-story triplex, you need to redo the plumbing as you have to run water pipes, for hot and cold water to each unit. With 3 times of many pipes on the walls, chances of leaks and ruptures multiples by 3. For multis in NYC, especially multi units, the hot and cold-water pipes would run through neighboring units. 

I had discussions with a co-worker all bent out of shape that his landlord who had a duplex, takes the gas bills, and divides it by half, and have him pay his share. He said, all she has to do is add a meter and let me pay my part because she uses more gas than me. She has 2 kids, I have none and I should only pay less than half. The total gas bill at the time, 30 years ago, was $31/month for the landlord and him, so his half is about $15/month. However, almost $18/month is the service charge from the gas company and only $13/month for the use of gas. If the landlord adds a meter, he will have to pay a separate monthly service charge, $18.00 plus his use of gas, maybe $5.00 for a total of $23/month. With his logic, the landlord would spend money to re-pipe the building, add another meter, and he would pay $23/month to get a separate bill, instead of paying half of the landlord's bill which runs about $15/month. Does it make sense? There is a separate charge for each meter for providing service to a particular unit, and only one if there is one meter.

Having owned MF in NYC for nearly 40 years, discussed this issue with tenants. it's not a great idea. In the case of the co-worker mentioned above, had the landlord added $25/month to his rent, covered the gas, he would have been fine with it.

@Marty Rogachefsky

No, you don't depreciate a new refrigerator over 27.5 years. Normally, you would only depreciate based on the life of the equipment, which could be as little ten years nowadays as a recent article mentioned new refrigerators now last 10 years or less.

However, for taxes, you can do a section 179 election for equipment purchased for less than $1,160. Then there os a "De Minimus" deduction amount that you can do for $2,500. So it depends on the amount of the equipment.

I have a CPA handling my taxes, and years ago, he set a $1,000 limit originally for deducting equipment which had been increasing over the years, so I no longer ask him annually. I don't know the cost of your fridge, but my CPA would simply expense it.

The funny story is a rehabbed a house, bought appliances in a refrigerator, hot water tank and depreciated the entire rehab over 27.5 years.  Then, several years later, the hot water tank broke, so we depreciated the second one. Then the second one broke over a few years, and we depreciated a third. One year, I was looking at the depreciation summary my CPA printed out and I remarked, wow, are we depreciating 3 water tanks. The one combined with the total rehab we couldn't touch, but we zeroed out the depreciation for the 2nd and 3rd tanks when we booked the 4th one.

@Errand P Braithwaite

I land lorded for nearly 40 years and had been requested such accommodation 3 to 4 times. Keep in mind if you looked through your NOO mortgage, it might state in its conditions, prohibitions on collecting advance rents, in my case, beyond 2 months. Reason is there's been scams where landlords collected rent a year in advance, then disappeared without paying the mortgage.

I had a nun's convent downsizing, from 500 nuns to less than 100. They planned on renting out the entire convent completely in a high rent area and use the proceeds to rent apartments for their residents. They proposed to pay a year's rent up front. At the time, I wasn't aware of the mortgage limitation, but was concerned with my financials, as I was financially on a cash basis, and the sudden surge of income would affect my tax brackets. The nun's explained that they proposed the advance payment to cut down on the work of their AP department, simplify their finances, as they would be renting a number of rentals, and having the AP department prepare checks monthly would overwhelm them. I most likely would be paid, but most likely be late and have to chase after them, and the nun tenants would have to chase their AP. I proposed that in that case, give me 12 postdated checks. They happily agreed. I'm told it would not only be a strain on me, but a strain on them to process that many payments monthly. This occurred long before automated advance electronic payments.

Interestingly, I never rented to nuns before, I learned that this nunnery doesn't issue paychecks, as the convent provide jobs, housing as well as food at the convent. Then, once I mistakenly deposited the September postdated check in August, it went through. So all the normal credit, job checking goes out the window in this case. I checked with my bank and was told that yes, I can deposit postdated checks. All of them if i wanted to. Told the bank I had 6 more and was advised I can bring them all in and deposit them all if I want to.

I had other such requests, after checking, did not rent to most of them after vetting. 

 Hello Jim:

My wife's mom died 2 years ago and she served as executrix of her mom's estate. My dad served as the administrator of many of his friends' estate as they had problem with English. While the sister serving as executrix may or may not have ownership, suggest you show her some respect going through her if the intent is to gain ownership. Even though my wife is executrix, she shared the estate with two siblings and one thing she had to do before proceeding is she has to obtain a letter from her siblings that they had no objections to how the assets are distributed. In other words, she's in charge. 

Hello Jim:

Trustees and executor may or may not be the same individuals. See Trustees vs Executors 

I am not an estate attorney, My home and real estate are placed into a trust. Me, my wife and daughters are named as trustees. Separately, we have wills written and my wife named as my executor and me as her executor under my wife's will. 

Someday, after my death or my wife's death, we would have to name another executor, either one of my daughters, or someone else. If we name someone other than our daughters as executors, that person cannot make a deal with you as the authority to sell the property passed to our daughters, the trustees, as the property is now in their hands. It's not part of property or assets under probate as explained by our attorney.

In your case, you don't know the details of the estate, so the deal with the executor may or may not work out. The road forward is that the executor would have to work with the trustee or refer you to a trustee. Separately, there may be issues if the executor resides in a different state from the decedent depending on state laws.

Anastasia Papyan

If you have insurance covering this rental. an SFR, and it's insured as a NOO property, normally the property cannot be vacant for over 60 days. Your policy would be voided due to non-compliance. Make sure you check this aspect out before filing a claim. Sounds like it's been vacant for a while based on your narrative.

 Banjamin:

My mother in law was adamant that her view of a true house hack is if the tenant rent totally covered the mortgage which is why it took me looking at 80 properties before I found one suitable. To prove her point, she put money down on the first triplex we bought, while I was living in a SFR but had to sell and move due to a job location. And we bought another 3plex a year after, and living rent free in one, and having free cash flow of $1,500/month on the 2nd one which enabled my wife to quit her job 2 years later. Most of our friends needed 2 incomes in NY, and the rent cash flow and house hacking provided one of them.

Originally, I was going to save up while living in my SFR and do it when I had the money to invest which would have taken another 10 years. Looking back, if we waited 10 years, prices doubled and quadrupled, and be out of our reach and out of luck.

Finally, someone with a mortgage free triplex can live off of it after retirement, not even relying on social security. My dad retired early, at 60, and my mother-in-law had enough to pay all cash $100K for a triplex in 1980. both of them collecting enough rent to live on, not relying on social security at all. 

Neil:

Just to add to my above comments. I wrote a post a few years ago here mentioning housing prices rising up more than twice the price of rent. Result is I was able to house hack for free back then living in one unit, renting out the other two, I am not able to do so now. 

Back in the 1980's, the GRM (annual rental vs ARV of building) was about 6 vs GRM of 10 to 20 in recent years.

It depends on where you're investing. I invested mainly in the New York City area, and despite the high rents, buyers of duplexes and triplex will have a tough time house hacking for free with property ARV of $1.3M to $1.4M even with rents of greater than $4,000/month, but with a million dollar or greater mortgage.

There are too many variables involved. When I started in 1983, triplexes went for $225K. If I put 20% down, with market rent, I will have to pay substantial contribution equal to or greater than rents due for a unit. I decided to do extensive house hunting, partnered with my mother-in-law looking to invest $50K and I found a triplex with ARV of $150K after looking over 80 properties. With a $100K, 33% down, mortgage instead of a $180K mortgage, 20% down, I manage to snag a property where the rent of 2 units covered the mortgage and taxes, and I house hacked for free. I repeated the process in 1984, bought another triplex for $180K with ARV of $250K a year later, after almost 100 searches, this time partnering with my M-I-L investing $100K, with each of us contributing $50k each. She's the silent partner, and 10 years later, under estate planning, it was turned over to my wife and I. This second property also produced an income equal to a months rental.

So it depends on the ARV, the rent/building value ratio, down payments and how much the mortgage are. Then in the real estate crash in 1986-1993, I picked up my current home, a MF, and several investment condos at auctions in 1993, and managed good cash flow on all of them.