All Forum Posts by: Jack Forester

Old thread, but, this seemed to be the newest thread on "reserves"

Minimally, my lender requires enough cash reserves to cover 6 months of mortgage payments.  If you have a 401k without any loan against it, they will accept your max loan amount towards those reserves.

Ultimately, you are saving for vacancies, misc repairs, plus all those aging items (capital expenses) that will have to eventually be replaced. Roof, hvac, water heater, paint, etc...  As those things age, the chances of needing replacement increases.  How old are those components?  How soon will they likely need to be replaced (remaining life)?  How much does each thing cost?   Things to think about.

Personally, I use ezlandlordforms.com, which guarantees a legal lease based on state laws. 

In Dawsonville, GA, the Dollar General Store seems to do well next to the Tractor Supply. Dollar General also sells their stores an do a NNN lease.

We  do one month's rent

VA Loans can be used for small multi-family, but there are restrictions:

http://www.valoans.com/articles/va-loan-requiremen...

I have a 4 unit in Augusta, but I live in North Georgia (3.5 hrs away), so I could not use the VA Loan, since you must reside in one of the units (for the required minimum time). If you get orders to move, they release you from having to live there with no penalty (as I recall).

My son lives in one of the units and is the point of contact for contractors and small repairs. He graduates next year, so I'll need a new "house captain" or a property manager to help placing a new tenant. 

I know this is a year old thread, but Mr TurboTax SuperUser is saying they are personal expenses.   He hasn't responded to me with an explanation at this time, other than to say it's a direct quote from Pub  535.   I did find his quote, but it was just a small section of an "either/or" section.  To me, you apply #2 and capitalize (add to the cost basis and depreciate) it to the property you eventually purchase, right?  In my case, I went looking in a new city 3 hrs away.  The first contract (property "A") fell through (after Appraisal and Inspection), but I bought property "B" 1.5 months later in the same city, so my thought was that I add it to the Cost Basis (acquisition costs) of the property "B".

From page 3 of Pub 535:

"If your attempt to go into business is unsuccessful.

If you are an individual and your attempt to go into business is not successful, the expenses you had in trying to establish yourself in business fall into two categories.

1) The costs you had before making a decision to acquire or begin a specific business. These costs are personal and nondeductible. They include any costs incurred during a general search for, or preliminary investigation of, a business or investment possibility.

2) The costs you had in your attempt to acquire or begin a specific business. These costs are capital expenses and you can deduct them as a capital loss.

If you are a corporation and your attempt to go into a new trade or business is not successful, you may be able to deduct all investigatory costs as a loss.
The costs of any assets acquired during your unsuccessful attempt to go into business are a part of your basis in the assets. You cannot take a deduction for these costs. You will recover the costs of these assets when you dispose of them"

@Brandon Turner

I've got my portfolio loaded, but I'm wondering, from the perspective of the bank, what do they want to see? Probably gross monthly income, debt service or PITI, and maybe monthly CapEx reserves? Debt to income ratio, maybe?

Then maybe a pretty graph at the bottom?

What do you think?

Following 

I see your point. We have a property with utilities included. For that property, I think I need to add a clause for billback for excessive use.   Does anyone have verbiage on someplace that? 

Yeah, I'd require utilities in their own name on next renewal. Any reason they could not have utilities in their name?