All Forum Posts by: Jay Thacker

Hello Bigger Pocket Gurus,

Silly question on rental math from a newbie: Can i deduct <property management fees, home structure depreciation, maintenance costs, interest expense, home insurance, property tax> from rental income before paying taxes or no? I thought i could but a friend just told me that i couldnt benefit from losses till i sold the house for a gain. Very confused now.

Mathwise, say 

(A) Rent = $100, <Total of expense buckets laid out above> = $80. Taxes = ~35% of $20 net income = $6?

(b) Rent = $100, <Total of expense buckets laid out above> = $80. Taxes = ~35% of $100 net income = $35?

Is it (a) or (b)? 

Thanks in advance!

Jay

Thank you all for your gracious feedback. Much appreciated!

@Ali Boone - your hunch is right. I am looking for best situated properties in very well diversified A+ cities (close to corporate offices, good school districts). IMHO, with interest rates at historic lows again for past 7-8 years, asset prices are likely to be a little inflated. When a market correction comes (triggered by interest rate increases or other catalysts - i cant predict), i anticipate the tide will recede from other areas first and better situated properties later/less commensurately. So why not just wait for the correction? I am not smart enough to time it - if it comes say 5-8 years from now, i will likely still be in-the-money after the correction if i invested now. 30 years out, if i am able to hold onto well situated properties in A+ cities, i should definitely be very much in the money. So i figured go for a better class of asset while i am still new and a little uncertain of macro factors (to avoid heartache/acidity/deep paper loss in the short term). I am hoping a better asset class also self selects the kind of tenants so i am hopefully a little less worried about tenant headaches. The downside is rental yields might be lower and cash-flow might be negative. Life's been kind to me and i have been able to save some money that might help me offset these negatives for a while. To offset these negative cashflows, i plan on building out the portfolio a little cautiously/slowly right now and sit on some dry powder for when the opportunities are lying around on the streets....   

Having said all of the above, i am a total newbie. Let me know if you think even the best downtown corporate apartments in atlanta, Dallas might also be cashflow positive? When i modelled some of these out, i didnt see a lot of cashflow. BTW, i am also really liking Charlotte as i am learning more. Any thoughts on that market?

Please let me know if i am smoking something. Dont spare my feelings :)

Hello All,

I am interested in investing in rental properties in economically diverse/robust cities (cities like Atlanta, Dallas come to mind).  Key criteria for me are (1) Corporate america presence (2) Not necessarily positive cashflow but rent should be able to pay for ~80%-90% of the mortgage (3) Price/Rental Income <15 (3) Strong population, economic growth projections (4) Access to reliable property management companies. 

I do anticipate accumulating a good number/concentration of properties in these cities once i start, hence the starting decision is important.

What markets/cities would the gurus on the site recommend?

Hey guys - this was super helpful. My take-aways: 

1) I will likely not be a able to get a significant discount buying from turnkey operators since flipping is definitely a significant portion of their money-making model

2) Property management option from turnkey operators and stand alone companies is similar. 

I will likely need to avail property management for at least first few years since i dont know the nuts and bolts and with me and my wife working and a two year old at home, time seems to evaporate anyways. 

One more question: from what i could gather from above, property management fees is also tax deductible, correct? 

Hello All,

After paying of all student dents, having bought a primary residence last year, i am finally thinking about passive rental income from real estate investing. I am a newbie and apologize in advance if this has already been discussed - please feel free to point me to the right thread.

What are the leading thoughts on buying turnkey properties versus buying separately and getting a property management company to help out renting and maintaining? I am guessing the later is more lucrative since you can get possible deals when you buy while the turnkey provider will likely not give you a deal/sell below market?