All Forum Posts by: Isaiah Cuellar
Isaiah Cuellar has started 12 posts and replied 40 times.
Post: Strategies for deterring cash flow
- Investor
- Columbus, OH
- Posts 41
- Votes 32
Quote from @Taylor Dasch:
There is always more potential for cash flow in lower class neighborhoods in my opinion. Your process seems like a good way to determine cash flow / potential of an investment property, if you have a realtor you can have them pull rental comps for a decent picture of the rental markert as well.
Post: Buy and hold tax benefits?
- Investor
- Columbus, OH
- Posts 41
- Votes 32
Quote from @Ko Kashiwagi:
Hi Isaiah,
Property deducted expenses from your rental property can reduce the taxable income generated by the property. Buy and hold rental income is generally considered a passive investment income unless you are a real estate professional. Losses from passive activities typically cannot offset active income (W-2). This is a major reason some W-2 employees get into STR, as managing STR could classify you as a real estate professional with enough activity. With that being said, it's probably advisable to use a tax professional on this topic!
Got it, thank you!
Post: Strategies for deterring cash flow
- Investor
- Columbus, OH
- Posts 41
- Votes 32
How do you guys determine cash flow for a property, assuming it's fresh of the MLS. Here's mine but I feel like it can be better
• Use Zillow and Redfin apps to look up similar rentals in the same area, note the obvious differences compared to my property such as unfinished backyard, proximity to main roads, pools, whether or not it requires a cosmetic rehab, SQFT, etc.
• Use Redfin's property value estimator to determine the value of these properties, and calculate the ROI of these properties (hypothetically, assuming the house was paid cash) only including home value and rental price they are listed for (not taxes and insurance) to determine general ROI of properties in the area.
• Select the properties most similar to mine, and use the minimum rent of these as my minimum expected rent potential. Say that would be $1,600 and my property is $220k, I would divide 1,600 by 220 to figure out exactly how much each $1,000 will get me (which is 7.27) and if the property is worth it, then include taxes, insurance, vacancy, and other expenses.
Also, in doing this I noticed the market near me is garbage, there’s more potential in C class neighborhoods but that’s too much risk at that point.
Post: Highest cash flow in Alabama?
- Investor
- Columbus, OH
- Posts 41
- Votes 32
Looking to buy my first investment property, and I’m considering looking into Alabama, what cities and/or neighborhoods should I look for in terms of cash flow? And what cities should I look for I terms of appreciation?
Post: Buy and hold tax benefits?
- Investor
- Columbus, OH
- Posts 41
- Votes 32
What are all of the possible tax deductions when claiming a rental property? And assuming I have a rental property paid off, and I have a W-2 job, do I save money on both taxes? Or one or the other? Also is there any other important information a new buy and hold investor should know about?
Post: Negative cash flow for the most of rental properties
- Investor
- Columbus, OH
- Posts 41
- Votes 32
Quote from @Greg Parker:
Alabama has the second lowest property taxes in the nation behind Hawaii. That might help your numbers work out a little better.
Post: Paying off a property in 3 years?
- Investor
- Columbus, OH
- Posts 41
- Votes 32
Quote from @Carlos A.:
Quote from @Joe Villeneuve:
Quote from @Isaiah Cuellar:
This is because it's the fastest way to achieve $1500-$2000/ month passive (when I'll be 25 years old) which will also give me a HELOC, allow me the option to leave my job and get a less strenuous one, and be able to provide to my family and repeat the process but a lot faster.
This is some wisedom to take note of. To Joe’s point as well, if you have the ability to put $4000 extra towards principle per month, in 3 years we are talking $144k. You could easily have enough to purchase 2-3 more properties, achieve your goal of $1500/mo cash flow and grow your net worth exponentially.
Post: Paying off a property in 3 years?
- Investor
- Columbus, OH
- Posts 41
- Votes 32
Quote from @Bill B.:
If the CD rate is lower than the mortgage rate, you pay the extra towards the mortgage. If you haven’t closed on the property yet, a 15 year mortgage usually has a lower rate. If you are solely interested in the cash flow you can continue to pay extra towards the mortgage and if your situation changes refinance it as a 15 year mortgage at a lower rate on a lower rate which will lower your payment and increase your cash flow. If your plan is to have more properties, don’t pay extra here. If it’s simply to have one super safe, no payment property to help you pay your bills and work less, you’ve got a decent plan.
It will be almost impossible to lose the property and the cash flow will still be at least slightly tax advantaged because of depreciation. You don’t want to lose the property if t government decides tenants don’t have to pay again. I’m sure almost every landlord who lost their properties in the last 4 years was expecting their tenant to pay for it.
Good luck.
Post: Paying off a property in 3 years?
- Investor
- Columbus, OH
- Posts 41
- Votes 32
Quote from @Basit Siddiqi:
It depends on what your interest rate is and what return that you can get in the market.
If the mortgage interest rate is 5% and you can get 7% by investing, then you should not pay off the mortgage.
If the mortgage interest rate is 7% and you can get 5% by investing, then you should pay off the mortgag
Okay makes more sense, thank you!
Post: Paying off a property in 3 years?
- Investor
- Columbus, OH
- Posts 41
- Votes 32
Quote from @Tanner Lewis:
It depends if your loan has a prepayment penalty. Most DSCR loans will carry a 5-year penalty, so I suggest waiting until that is over before paying more than your minimum payment , or you will incur additional fees.