All Forum Posts by: Jeremy Segermeister

Thanks for the reply Patrick. Regarding taxes, how come you wouldn’t factor that into your analysis? Won’t you receive that money back at the end of the year through a tax refund, or couldn’t you change your tax withholding and get some of that money back throughout the year?

I’ll shoot you a PM on the lender and pro forma. 

Hi All,

I'm narrowing my focus and strongly considering buying a condo in Maui as in investment. This will be my first investment property. Two part question.

I have two options for the mortgage - classify it as a 2nd home, or classify as an investment. The mortgage brokers said that the new mortgage rules allow me to classify it as a 2nd home and take advantage of lower interest rates, as long as I stay in the property 14 days a year. I can still rent it out.

In my analysis, I am assuming I can write off:

• Building Depreciation (32% of purchase price over 27.5 years)
• HOA
• Utilities (cable/internet/water/electricity)
• Property Manager
• Mortgage Interest
• Property taxes

If I take the lower interest rate associated with the 2nd mortgage loan, will I then lose all of the deductions associated with an investment property?

Also, just want to make sure I am understanding the impact of the deductions, using some assumptions:

• Annual Gross Revenue: $50k
• Annual Deductions from above: $48k
• Annual Gross Profit, taxed at my marginal tax rate (~44.3%): $2k

So even if the property only cash flows $2k/year, I will still get additional cash flow from the $48k in deductions (I can change my withholdings or get a refund)

Annual savings from deductions - ($48k * marginal tax): $20,400

My total profit from this property for the year should be ~$22k, correct? I'm a bit confused because in a brief email exchange with my accountant, he said that I will not be eligible because it will be considered passive income and since I make over $150k, I can't deduct losses. I think he misunderstood my email so want to check here (maybe I need a new accountant?).

Hi All,

Looking to get some advice on what I should take as my next steps.

My wife and I purchased a new construction town home in the Bay Area 2 years ago for $1.15M, plus the builder allowed us to pay for upgrades in cash which ultimately kept our property taxes a bit lower. Mortgage is at 3.375% fixed for 30 years, $775k left.

We still love our home but long term as we grow our family, we want to be in a SFH with a yard. Over the past two years the area has really appreciated rapidly and now I estimate I can sell my home for $1.6-$1.7 (our neighbor sold for $1.8, but the market has softened over the past 3 months).

My question is- should I start looking to move now, while there is this momentary drop in interest rates and slight drop in market pricing? This would in theory get me out right around the $500k appreciation limit, correct?

My concern is that I really want to keep my monthly payment similar to what they are now, but any new home I purchase would be north of $1.8M. I could put another $150k in, but I think the increased property taxes on a $1.8M house makes it unaffordable, as well as the potentially higher interest rate.

If I worked with a smaller custom builder here, could I pay for the finishes out of pocket to reduce the overall purchase price of the house and thus keep my property taxes more manageable? I know there still needs to be an appraisal, but not sure where the limit is in terms of paying for things out of pocket vs. directly being reflected in the purchase price of the home.

Thanks for the advice!

Thanks everyone for the feedback! 

My goal is to do it for side income and use the license to help me in personal investments.

Hi everyone,

I posted a similar thread in the real estate professional group but think I would get a better response here.

I’m first getting started and looking to make my first investment in the near future. I’m doing everything I can to learn about the right way of doing it. I figure that getting my real estate license couldn’t hurt and will help me become more educated.

I was wondering has anyone here become or worked with a discount agent? My area is very expensive and if I could offer a rebate to potential buyers whom are willing to do most of the work on their own, it is a win-win. I also negotiate professionally so I could add value there. Furthermore, a few people in my network only purchase new construction where the sales price is the same regardless if they bring an agent or not.

Would love to hear everyone’s thoughts. Are there any reputable “discount brokers” that I can look into online?

Jeremy

Hi All,

I’m looking to get started in real estate investing. While I educate myself, I thought it couldn’t hurt to get a real estate license in the process.

I negotiate professionally in my full time job, so I believe I would do well helping others negotiate their homes in this competitive market.

My question is- if I studied and got my license, would I then be able to help friends/family purchase their homes and give them a rebate/portion of the commission?

I’m not interested in taking people to showings, marketing myself etc., but if people are willing to do some homework on their own and use me to close the deal, it could be a win-win. Home prices where I live are $2M+, so this would be a good opportunity for me to get additional cash flow.

Thanks in advance!

Hi All,

I'm learning a lot here and am feeling more confident to pull the trigger on my first investment property. As I get ready, I'm feeling less confident in the actual execution of the transaction and the day-to-day management. A couple questions/steps that come to mind. Am I missing anything?

1. I need to setup LLC, but I am not 100% decided on which state to create it in (should it be in the state of my investments, or residence? Live in CA, investing in FL). My dad, who will also be listed on the LLC, is a resident of Florida. He will be managing the property.

2. I need to create a new bank account and credit card dedicated to the new business

3. Is there a preferred expense management tool for beginner investors? Should I be using quickbooks to track everything? 

4. Should I look into online tools to manage leases, tenant info etc? Or should I wait to do that down the line and not worry about that on day 1? My tenants will all be senior citizens, so I don't think I can rely 100% on an online portal. But I would like to have it as an option.

5. I think I would use a realtor, especially for my first investment. But what exactly would the process be to purchase a property that I find on my own, off market (all cash, so escrow company would not be needed AFAIK)?

Thanks! 

Hello,

I'm looking to make my first purchase for an investment property. I live in the California Bay Area where home prices are exorbitantly high, making the risk higher than I am willing to take at this point. My goal is to start building a long-term passive income portfolio.

My father, whom has 30+ years of experience in property management, recently retired and is moving down to South Florida. He has agreed to do the day-to-day management of the property (long term, as I accumulate more assets, I would consider hiring a property management firm).

Looking to get some advice/call out any pitfalls in my assumptions:

• Focus on low cost, 55+ communities in Boca Raton/Delray Beach Area (Century Village, Kings Point etc.)
• Setup an LLC with my dad and myself listed (otherwise, my options to purchase in 55+ communities would be limited)
• Properties must have a net operating income of $1,000/month or more, expected rent $1,600-$2,000
  
  • HOA: $450-$550, Insurance: $50-100, Taxes: $50, Maintenance: TBD
• Initially pay for all assets in cash, no debt. ($40k-$100k purchase price)
  
  • For the first investment only look for minor cosmetic upgrades. Can be more aggressive on future properties.
• Reinvest income to acquire more assets
• Within 2 years, purchase 5+ properties

The rental market in these communities seem pretty strong. My biggest concern is a 6 month vacancy during the summer.

Does anyone here have any experience investing in this market? Would love to get your thoughts.