All Forum Posts by: James Mc Ree

@Bryce Litwin re: I'm not a CPA, but I believe under the new tax law, Interest on HELOC funds used to improve your personal home is not tax deductible. Interest on HELOC funds used for acquisition debt (i.e. Buy a rental property) is tax deductible.

It is actually the reverse of that. HELOC funds used to improve your primary residence real property are tax deductible. They are not tax deductible if used for any other purpose.

https://www.irs.gov/newsroom/interest-on-home-equi...

I considered doing this and haven't yet gotten a professional opinion. Here are my non-expert thoughts:

A personal HELOC can be used to fund an LLC. That counts as a contribution to the LLC. The LLC can make the payments on the personal HELOC, just like you could pay my mortgage (just a suggestion!).

Those LLC payments will count as distributions though and may have tax implications. The HELOC is actually paying you interest by paying the interest on the HELOC. You may be able to structure the LLC payment to you as a return of principle if the LLC doesn't directly pay the bank, but you will eventually run out of principle for the LLC to pay back.

Your personal HELOC interest will not be tax deductible because you are not using it to buy or improve your personal residence.

Any pro thoughts on this?

Check the actual zoning for the property and what that zoning permits.  There is no such thing as "R2/R3" zoning.  It can be "R2" or "R3" and each has an explicit definition.  R3 might include multifamily while R2 does not, for example.  Your local zoning office can point you to the ordinances.

Just calling it an in-law suite is not going to cut it.  You must comply with the ordinance definition of "in-law suite" if it has one.  Many municipalities limit in-law suite to direct relatives of the owners of the principal dwelling.  They are not for whomever you can get to sign a lease.

Talk with your tenant again.  Advise them of the local noise ordinance and THEIR $500 fine when the police come out the next time.  (check your ordinance before quoting a fine)

I was able to get the APIs working from home, but not at the office.  They don't work if there is a proxy server involved if you are calling from Excel.

Ultimately, I gave up.  Two of the critical pieces of data I wanted were current price and listing status.  They seem to be unavailable due to legal restriction according to the message I was getting back.  I was able to get the basic property data.  I don't know if they have a fee on the API for current price and listing status - I didn't look.

I gave up for a 2nd reason: some of the data was coming back wrong.  I would look at a Zillow page and it would show the house was built in 1920.  The API data came back as 1950.  I noticed a few other differences and guessed the API is very buggy or has a different data source than the Zillow pages.  That shook my confidence - no point in using the service if I have to manually verify and edit the data.

I tinkered with the API after getting my ZWS ID and am getting an error in Excel.  Any ideas on this?

A URL I am using to call the API is below (need to put in your ZWS-ID).  This works fine when called from a browser.

http://www.zillow.com/webservice/GetUpdatedPropertyDetails.htm?zws-id=<ZWS-ID>&zpid=48749425

The URL above is the value of cell A1 in Excel.  I enter into cell B1:

=webservice(A1)

which should invoke the URL which returns XML and put the return value into B1.  Instead, I get a "#VALUE!" error and haven't found any clues as to what I am doing wrong in this very basic example.  Any ideas?

It is probably worth considering your reservations more.  To @Brent Coombs' point, one of you might be unhappy.  Should you keep looking?  Now is usually the low point for inventory.  Consider continuing the search for a few more months and you should see a lot more choices.

My wife and I started out with "her" house choice, which I reminded her of occasionally.  We then moved to "my" choice as it was "my turn" to get what I wanted in a house.  She didn't like it.  We now live in "our" house and are much happier with our home than we've ever been.  My recommendation is to think less about the little stuff (may need a new floor someday) and discuss more about what you want in a home.  Keep looking.

Are there any semi-reliable ways of doing due diligence on the interior condition of one of these properties when the site says the property is occupied - do not disturb?  The outside DD is relatively easy with a drive/walk-by, public records search, etc.  I haven't seen any *legitimate* ways of assessing the inside.  I haven't seen anything like a normal walkthrough that doesn't involve some type of impersonation or trick to get the occupant to open the door or being a peeping tom.

Is the mitigation for this risk to just assume the worst and keep bids low? I see properties listed with a minimum bit of $25k and an estimated ARV of $100k. It's hard to know if there is $25k of $100k of rehab and expenses apart from looking at the outside and public records.

It is always safest to have the municipal review complete and approval granted before you execute a lease.  You can sign a lease earlier, but be sure to include a contingency that the lease is dependent on municipal approval.

I take the deposit at lease signing, then rent at the start of occupancy.  Don't turn over keys before municipal approval or you could find yourself with an illegal tenancy.

Inspecting the home monthly is pretty aggressive, but allowable.

The tax law doesn't appear to consider who or what manages the property.  Only ownership matters.  This is probably a good question for your accountant to see if there are detailed loopholes for your situation.