All Forum Posts by: James Mc Ree

@Eduardo Cambil

You posted variations of this question multiple times. I think you got good advice (don't do it) and you are doing it anyway. Has anything changed in the past few weeks besides you have a property under contract possibly without a clear way to pay for it?

You might be able to get more help here if you share your annual revenue and expense model for this property. Assume you get the financing you are looking for, but don't be in a fantasy.

After you do all of that, does your model show a DSCR greater than 1 (revenue / expenses)? If not, you probably never get a DSCR loan and will be in trouble with your HML in 6-12 months.

It is not uncommon for an employer to ask about outside business interests. They are looking for conflicts of interest. 

Go through the property on your own today or tomorrow and tally damages. Provide the tenant with a written bill for the damages at the final walkthrough and refund the remainder of the deposit. Take pictures of the damage in case your tenant contests it later.

I am not aware of Section 8 paying a security deposit, but check with the tenant's case worker on what to do with it. My experience is Section 8 pays on behalf of the tenant, so my guess would be the refund goes to the tenant, but that's just a guess.

I don't care if my tenant returns the keys since I change the locks anyway. If I were you, I would have changed them by now (May 5) if their lease ended Apr 30.

I own a real estate business. 

Inspect the property tomorrow when your tenant is out. You could use the security deposit to cover May rent if there is no damage; otherwise, deduct the damage, then apply the remainder to May rent and inform your tenant they owe the remainder.

Hello. Please advise on this situation if you have some expertise to share.

I had a long term Section 8 tenant who was looking to move and asked for an end of lease as of March 31. I approved it. No issue. She found Section 8 was slower than her plans (no surprise there!) and she requested a 1 month extension of her lease to the end of April. She requested this around March 25-26. I agreed with the same terms as the original lease. We informed Section 8 of the extension and they approved it.

April 1st comes and there is no payment. I inquire and they say our lease extension was too late in the month and payments were locked down. The case worker said I would be paid mid-April. No issue with that as I am familiar with their bureaucracy.

Mid-April comes and goes to today, April 21. No payment. I inquire of the case worker again. She informs her understanding is the tenant moved out which was news to me. I check with the tenant and confirm she actually moved out to her new home April 1, but didn't tell me anything about it.

I circled back to the case worker and request payment for April since we have a lease extension in place and neither the tenant nor the housing authority informed me of the end of the extension or move-out. The case worker informed me they already paid the new landlord and can't pay twice for the same tenant/month, so I would not be getting paid. I objected stating this is a housing authority mistake. I have an in-force lease of which they were aware. I wrote that I should be paid and the new landlord should be waiting until May for payment.  I requested supervisor escalation if the case worker disagrees. I haven't heard back yet on their response.

Do you have any advice on how to handle this situation? I can't sue Section 8 as they have sovereign immunity as part of the federal government. I plan to ask my former tenant to pay the rent of Section 8 does not, but she is unlikely to have the money and I probably still won't get paid if I sue her. I saw a reference to a HUD complaint process in lieu of lawsuits that I haven't explored yet. Is that worthwhile?

Assuming your tenant leaves and the property remains as is with regards to the exterior, you are probably deducting from the tenant's security deposit and filing a lawsuit for the remainder. You can charge for removing the structures and maybe repairing the grounds. A lawsuit win will get you a judgment, but you still have to collect. You have to decide if it is worth it.

@Stephen Lopez I think a holdover notice would apply if the tenant stayed beyond the lease. In this case, it looks like the tenant is leaving, but leaving personal/business property behind. That would fall under "abandoned property". Landlord will need to check how abandoned property is handled in that state.

I am looking to add a home office deduction for 2024 taxes using TurboTax Premier. I am landing on Schedule C if I follow the TurboTax support docs, but I think I want to be on Schedule E with my rental properties. Schedule C seems to be for a separate business.

How do I account for a simple home office ($5/sqft) in TurboTax on Schedule E? I don't see a feature for it and can only guess it might be a miscellaneous expense in the TurboTax UI, but that is a free text data table and won't disallow the expenses for an overall real estate loss. I haven't seen a "Do you have a home office?" type question in TurboTax in the rentals section.

Here are two suggestions:

Focus more on appreciation by buying in the best markets and improving your property. Appreciation is where most of your profit will come from and it is tax deferred until you sell. You have the added benefit of being able to refi with no unfavorable tax impact the appreciated value to do more. Cash flow is good, but you pay tax annually on it.

Shop for properties in opportunity zones. Capital gains taxes are eliminated if you hold the property 10+ years. Also, look in areas with tax abatements which reduce your taxes for the next several years. You may think this suggestion runs counter to the first one since opportunity and abatement zones are usually not good areas (and you might be right!). The idea is they will become good areas in time, but that timeframe is undefined, so you have to do your homework.

I try to get my leases to end at the worst possible time: Dec 31 to make it least appealing for tenants to want to move.

You should always be thinking of a rent increase at the end of a lease or generally annually. Your costs are going up and revenue is flat if you don't. I offer tenants 2 choices along the lines of rent +$25 for a 6-12 month lease or +$50 for a monthly lease with those amounts varying with each situation. I might do an 8 month lease now, for example, to get from April to December as a term end.

Keeping the increase relatively small amount doesn't offend the tenants and they may continue to recommend you as a landlord. The choice helps them to feel in control and decide on the trade-off themselves. You can tell your tenants that turnover is your biggest cost and you are providing a discount if they commit to staying longer if you feel you need to justify the offer to them.