All Forum Posts by: Henry J.

I have had this problem for a few years and have been 'saving' those tax loss for future year when I sell properties to reduce capital gain instead of 1031. Talk to your CPA to understand it better since I'm not one. Also, look into qualifying you or your partner (husband/wife) as a real estate professional - then the passive losses can be written against your active income. Again, talk to your CPA to get the specifics. I know there are hours requirements but I don't think you can pass the smell test if you only have 1-2 rentals. Both my wife and I work too many hours on our day jobs so we are not sure how we can pass the hour requirements - thus we can only save it up for the future. Good luck!

I'm not an expert on this but I'm curious if the form is a standard IRS form (instead of a specific form from your software). If it's an IRS form, google that form # to get more info. Also, if it's turbotax, I thought premium version has tax support that you can call to clarify questions?

Not sure if this helps but I can think of a few sections to break it down. If a lender can chim in then you can get a professional's perspective - Lenders fee portion - Appraisal & lender fee Any points you purchase Closing / processing / underwriting fees Credit report Tax services Tax / transfer tax / professional fee portion - Flood cert Survey if any Transfer tax Government fee Property tax if you include it in your escrow account Title insurance Escrow fee Notary fee Property insurance - If you include it in your escrow account Inspection - Property inspection Termite inspection Property tax and insurance are dependent of the local area. TX and TN have higher % property tax because they don't have state tax. Dallas has high tornado hits so my 2000 sq ft house can cost $1200 to insure. I can find other insurance company to insure as well.

Matching personality and work ethics. Trust level / keeping his or her word. Communication responsiveness (turn around time). Right inventory (location, price, return) that I want to buy.

Do you have an agent who can check with a few insurance companies to give you a quote?  If you don't have one yet, talk to a few agents to find one you're happy with.  He/she doesn't have to be local but need to be licensed for the state you have properties and should be available when you need to talk / find out info.  My agent is in DFW and I'm in LA but I find her customer service to be top notch compare to who we had locally before.

I'm not sure if you need personal property coverage if it's a rental.

From my understanding, the premium usually ties to rebuild cost (size and structure of your property) and local.  For example, my DFW rentals have higher insurance because of tornado threat.

Umbrella policy extends the limit of your landlord insurance.  For example, if you buy umbrella policy to extend premise liability to $1MM, it covers per occurrence up-to $1MM from your current $300K limit.

Is this your 1st purchase with this TK? Do you mind sharing the city? Unless you have something in your contract that you can get out of the purchase due to apprised value lower than your purchase price, not sure you have many options. You can suck it up and buy it, forfeit the earnest money and walk, or talk to them and see if they will do something about it. Personally, if this TK wants your business, I would suspect them reaching out to talk already. If not, then maybe you want to think twice if going with them. Good luck. Henry

@Juan Aguilera

I had a hard time when I started investing out of state.  My wife wanted to invest locally but I didn't want to invest a large sum and try to juggle family life, day job, and rentals all at the same time...  With her agreement, I took a field trip to visit DFW, met a few investors and PM's, and started analyzing all the deals the local agent sent me.  I did that every day that I got a mailing from the agent and tried to analyze the up / down side of the deals.  When I got a good deal that I like, I shared the spreadsheet with my wife and explained to her my assumption and the worst case scenario (contingency plan / carry cost / etc).  Knowing the risk, she agreed that it's OK to buy the 1st one...  

Talk to your wife - understand why she doesn't want to invest in RE - and do your homework to explain / ease her concern.  RE, like all investments, has risks...  If her concern is the risk / debt, then compare stock to RE risk because stock has risks, and RE you can control certain % of it.  If it's debt that she's concerned with, then explain good / bad debt differences.  She doesn't have to agree with you 100%, just make sure she's comfortable and agree with where you (both of you) are heading.

Hi Jon, Congrats on your condo rental success. Whether it's luck or not you had great appreciation and have good cash flow there. I'm more of a stock junkie than RE investor but I wouldn't sell the condo to invest into the stock market right now. Not knowing your other financial info (and I'm not a financial advisor), unless you have a good grasp of the stock market, why would you invest $300k at once into the market? There are value stocks out there but I don't know if there is enough value for you to drop majority of your net worth in there right now, at once. Besides, once you sell, unless you have other business or properties, you just lose out on your tax write off. If you want to diversify, start buying vanguard s&p funds on a monthly basis with your rental cash flow. Also invest through your 401k if your work has a decent plan, or IRA if not. If you want your asset to work harder for you, refi or find ways to get cash out of your condo. If you want more rental properties then sell to buy SFR or multi or 1031 to other properties. Good luck! Henry

I was reading your profile and noticed you are in the process of getting a duplex. If you are doing BRRR then you should qualify for low down (5%?) payment. I think you will need to live there for a year. This is the time you might want to evaluate if putting down more / borrowing against 401k would be beneficial vs paying PMI. For investment SFH properties I thought minimum down payment is 20% for 1st 4 properties. When you have more than 4 units I think it becomes 25%. Talk to your loan officer for details.

Before you take out a loan, understand that the loan will be due when you leave the job (or whatever amount of time you have - 60 days?) before the loan becomes part of your income and you are assessed 10% tax penalty. Find out the exact details before you take out the loan. If you have automatic 50% return from company match, I would stick to that for now. Once you have a unit under your belt, you have the tax write-off to start. Let your tenant pay your mortgage. If you have PMI - you can do the math to figure out if it's more beneficial to keep in 401k or pay down mortgage.