All Forum Posts by: Greg Baker

I read the linked threads and am as curious as a cat. A cat who would like some secret sauce. Thank you!

Similar credit scores here, 49k rental home, conventional loan, 5.25% which we bought down to I think 4.75% for a few hundred dollars.

Lenny, I'm not sure what's available in your state. But you may qualify for income based repayment (IBR) on your school loans if they're federal loans which can also count towards loan forgiveness based on your professions. Maybe a banker can chime in, but regular payments on the student loans even if it's like $50 a month based on IBR may look better than deferred. Also not sure what your apr is, but may be worth using 1500 of that 10k and clearing the debt on the CC unless you never roll a balance over anyways I agree with the folks on the truck. When I read your post that was the main thing that made me say ugh. If you can't get financed can you find an investor trying to unload a duplex that will seller finance you? Good luck, keep plugging away and don't let too any pointless hard inquiries pull your score down.

@John Arsenault 

Welcome to BP and nice to meet you  I'm also in Rochester and just closed on my first property.  There are some great people in the area who I'm sure will be willing to share their experiences.  You can find a lot of them by searching the forums for Rochester and reading some of the lengthier threads.  Best of luck.

edit: ironically I see that @Mark Updegraff posted directly above me.  Mark was my "buyer's agent" and also runs a 1 stop shop with property management, maintenance, etc.  Definitely a good person to work with.

@Doug McLeod

Thanks, that sounds accurate from the IRS page.  Quick follow up, let's say the property is rented and a tenant is in place....

a.) Hypothetically, I've saved some cash flow up and decide to replace/upgrade the counter tops because I know they're beat.  I spend $800 in materials and $200 in professional install labor.  Can this $1,000 be used to offset cash flow? 

b.) Or on a micro scale, let's say a lightbulb goes, the tenant is not responsible for changing light bulbs so I go to home depot, buy a bulb, drive to the rental and replace the bulb.  Can the cost of the bulb and mileage be used to offset cash flow?

I do not plan on doing a or b above, but trying to learn and understand.

Side note: I do have a tax professional I plan to use next tax season, she's not a CPA, but she comes recommended from a local investor who said he used her until he ended up with numerous properties and a S-Corp and stepped it up to a CPA.  We met for an initial free consultation but I'm technically not paying her for her services until next tax season.  

@Brandon Hall

Thank you for the reply.  Quick follow up questions:

I just read Publication 527, "Depreciation of Rental Property" and while it makes some sense, I'm not going to kid myself and claim I understand basis and depreciation and how they interact.  Put simply, should I keep a 4 column spreadsheet for my tax professional that says Date, Company Paid, Total Cost, Specific items/services and then let her determine what is amortized and what is basis?  I'll obviously keep my receipts organized separately.  

Lastly, I think I had a horrible misunderstanding of this all.  I was under the impression that money I put into the property is eventually directly removed from my taxable gross earned income.  So, if I had a gross earned income of $100,000 but spent $2,000 on refinishing hardwood floors then my gross income at tax time would be adjusted to $98,000 and then I'd be refunded the tax I previously paid on the $2,000 (100k-98k).  Am I way off on this?  

Thanks again!

We recently closed on our first rental property and I'm trying to keep everything organized for our tax professional next January.  Which of the following can be written off?  

1. Pre-purchase - Home inspection and appraisal fee?

2. Closing costs - Lender origination charges, credit report, flood cert, interest, escrows, bank attorney fee, title insurance, record deed, record mortgage, mortgage tax, private attorney fee

3. I'm paying for some minor rehab, can the materials, mileage to home depot, and the cost of the laborers/tradesmen be written off?  

Thanks,

Greg

Ivan, I spoke with a tax professional (not CPA) who was recommended by a fellow investor and was pleasantly surprised by the quoted cost. I believe she quoted me about $200-250 to file my/my wife +1 rental property. Sorry I can't remember the exact amount as I won't be using her until tax year 2015, but it was lower than I expected and is worth the peace of mind. I've always been a turbo tax guy myself as well. Forgot to mention turbo tax has an amend a return option built in.

Ivan, I spoke with a tax professional (not CPA) who was recommended by a fellow investor and was pleasantly surprised by the quoted cost. I believe she quoted me about $200-250 to file my/my wife +1 rental property. Sorry I can't remember the exact amount as I won't be using her until tax year 2015, but it was lower than I expected and is worth the peace of mind. I've always been a turbo tax guy myself as well.

For a single family home I'm calculating 35% for vacancy, capex, maintenance, and property management. Roughly 10% vacancy, 10%, capex, 10% PM, 5% maint. You should know up front what heavy capex or maintenance is needed sooner than later and you may address some with rehab before placing a tenant. Your lease will impact these numbers as well, is your tenant responsible for basic things like toilets they clogged, light bulbs, etc. Lastly, I try to look at it macro rather than micro. I may have a tenant stay 3 years, then turn over twice by year 4.