All Forum Posts by: Nick E.

Andrew Bosworth I use a very similar method. I just listed my first duplex last week and the phone calls, texts, and emails started rolling in. I realized that I couldn't spend 15 minutes on the phone with every lead. Here is what I set up: 1. I post my listing through Zillow, Zumper, and Craigslist. The first two syndicate the posting across numerous sites. All are free. Through my spreadsheet described below, I track my lead sources. Hotpads.com is currently my top lead source (syndicated through Zillow). I use a dedicated Google Voice number and Gmail account to track rental specific communication. This protects my personal number and email from getting out. 2. Every contact I receive gets a link to my Google Forms questionnaire. It is very easy: it asks Name, Phone, Email, Desired Move-in Date, Number of Pets, and lists my Qualification Standards and asks if there are any they won't meet. This form can be filled out on the phone or computer. Every email lead receives a "Canned Response" that I set up in Gmail (enable this feature in Google Labs). All I have to do is click reply and select the canned response and enter their name to personalize it. If they call me I tell them the first step in our process is for them to fill out our questionnaire so I can receive all of their information and they can see our qualification standards. I ask for permission to text or email them the link. If they text, I reply with a text containing a bit.ly link to the form. I track all of my leads in Google Sheets and include their status. I can track my statistics and I get about 30-40% of my leads to fill out the questionnaire. If they don't fill it out, I never respond back to them because they either aren't interested, don't qualify, or are too lazy (which aren't tenants I want). 3. Once the questionnaire is filled out I receive a notification and call the person. I go through a phone questionnaire from the Bigger Pockets Rental Management book. If they qualify, I proceed with scheduling a showing. 4. I received 30 leads in the first week and 10 people who filled out my questionnaire. I scheduled a showing on a Saturday (New Years Eve) with 7 people and had 5 show up. Every person was interested and took an application. I will be proactively following up with them tomorrow. Hoping to have both units with approved tenants and hold deposits before I close on Thursday. I think your method is great. Anything you can do to remain efficient is positive.

Hello,

I will be closing on my first rental property on January 5th.  The house needs numerous small "repairs" that we are planning on completing in the first few days of owning it.  Most of these items are small like replacing broken water shutoff valves, replacing some broken outlets, adding GFCI outlets where necessary, replace broken smoke detectors, etc.  

The seller is giving me permission to advertise the property for rent prior to closing next week.  I plan on listing if for rent and making the repairs ASAP.  My intent is a tenant could move in anytime after my closing.  

1.) Does it affect how I can write off these expenses on my taxes if I purchase them before my closing?

2.) Can these small repairs be listed as repairs (not depreciated) based upon my scenario?

3.) Any problems with me listing the property prior to owning it from a tax perspective (especially spanning over 2 calendar years)?  Please note that I have checked with the city rental license department and it is allowed to list the property for rent and fill the unit as long as I apply for the license on the date of closing.  

Thanks,
Nick

Hello BP Community,

I think I know the answers to the following questions, but I wanted to verify with the BP community:

Background: I have spent the last few months researching, visiting, and placing offers on properties.  I have an accepted offer on a duplex that will close around January 6, 2017.  I don't own any rental properties currently.  

1. I have been tracking my mileage from looking at properties to purchase.  Since I don't currently own a property, I believe the correct way to deduct these expenses (incurred in 2016) will be to depreciate them as a startup expense on my 2017 taxes.  I should be able to write off the entire amount in 2017 from the accelerated depreciation (up to $5,000 per IRS Publication 535(2015)).  Is this correct?

2. Can I deduct meal expenses incurred while traveling in-town (within 30 miles) to look at rental property? I believe the answer is No.

3. What is the best way to value the land of the property at purchase and sale?  I believe the best way is to use the county assessor ratio between land and structure and adjust it based upon the sale price of the property.  Another way would be to use the appraisal, but this appears to allow for a greater difference in appraiser-bias and also would require an appraisal at the sale, which would cost extra money.  Is this correct?

Thank you for your help in advance.

Originally posted by @Kurt Pauley:

Just curious, what type of financing are you using with 15% down and PMI, and it not being your primary residence?

I have passed on this particular deal, but I have financing set up from a small-town credit union in Minnesota. They are allowing me to purchase the property in my name (not an LLC) with as low as 15% down. If I purchase it with less than 20% down, I will pay PMI, but it really helps improve my cash-on-cash ROI by using this method. I will have about 5 years of PMI with this financing.

Thank you Sam and Blake for your advice. I really appreciate it. Blake, Have you ever had a seller respond with a counter offer at your disclosed maximum (200k in your example)?

Trying to pick up my first Duplex.  Put an offer in on a duplex on the first day of the listing, and the seller waited until there were multiple listings.  Now they are calling for best offer.  Here are the details. 

Several recent upgrades: brand new driveway, couple year old roof (architectural shingles), New gutters, gutter filters, downspouts, drain tile for downspouts.  All windows are newer vinyl.  New furnace and washer/dryer in both units.  One new water heater and one 6 year warranty water heater that is 10 years in service.  Essentially, most high cost items have been replaced very recently.  

One unit is newly rented with a 3 year lease (longer than I would do).  It is at market value.  The other is Section 8 and is below market value.  The Section 8 side has been in the unit for 6 years.  It was in pretty good shape, but not as updated as the newly rented one.  The current owner lowered the rent for that tenant this year on the renewal because of her budget constraints.    I don't know the exact rent they are receiving on that one yet.  

Asking Price: 209,900

Down Payment: 15%

PMI: ~$80/month = $960 / year

1st Year Rental Transfer (City Fee): $500

Insurance: $2,000 / year

Rental License: $138 / year

Trash: $900 / year

General Maintenance / CAPEX: $2400 / year

Water/Sewer: $2400 / year

Real Estate Taxes: $3,500 / year

Unit 1 rent: $1200 / month

Unit 2 rent: (estimate) $1000 / month

First offer: Full price, with 3% back for closing cost 

I plan to increase the rent for unit 2 at renewal in July. Even if I can't, I am still showing a cash flow of $216.43 with 0% vacancy. This equates to 16.5% ROI (cash flow, principle reduction, tax savings) on my estimated $38,900 cash invested ($5k of that is misc. repairs and closing costs). If I increase vacancy to 8%, I still cash flow positive. All of this excludes appreciation.

I believe the house is worth more than asking price.  My thought was to go to $226k with 3% back for closing, and that is about $10k over asking.  I still think it is worth more than that.  The cash flow and return numbers above are at that purchase price.  

Thoughts?