All Forum Posts by: Joe Splitrock

I am not a fan of the open house, because you get a bunch of unqualified people and "lookers" wandering through. You also loose the opportunity to meet people and interact with them. I do heavy prescreening, which means only a small number of people end up at showings. My last vacancy, I had 20 inquiries and only one showing. That person took the property. You don't need more showings, you need showings with qualified people. The great thing about 1 on 1 is you get to ask questions in conversation and people volunteer information. You would lose all that with an open house. I also feel an open house is impersonal. When I tried them in the past, people said to me "there are so many people interested that I don't want to waste my money applying". Yet at the end of the open house, nobody qualified had applied. 

@Jason Cook since you just purchased your second property, you will not have the rental income showing on one or two years of taxes. This means they may not count any of the second property income. Although it is an income property, they may not count the income yet.

What is length of ownership on the first home? FHA requires one year of occupancy. Your roommates rent may count as income, since it would show up on 2021 taxes and possibly more years. I am not sure how much that income will help with qualifying for a larger mortgage.

Either way, be aware that you can only have one FHA at a time. That means your new property will need to be conventional owner occupied. Another option is refinancing your current primary residence into an investment conventional mortgage, but that will require 20% equity.

As others suggested, you should sit down with a mortgage broker showing your specific situation. Many factors play into this and we don't have all the details. Income, debt and credit score are all major factors that we have no information on. 

Quote from @Patrick Gilbert:

So I understand the concept of depreciation - appreciating asset that degrades ("depreciates") over 27.5 years so you get to take a loss on taxes. My question is: how is that depreciation number determined, specifically when using the BRRRR method? Is it determined via initial purchase price or can you use ARV appraised value? It could obviously vary greatly depending on the amount of rehab needed. Thank you!

Depreciation is based on purchase price - land value + capital improvements (actual cost). ARV or appraisal has nothing to do with it. All business costs are based on actual expense. This is important because your own labor (aka sweat equity) cannot be claimed.

Depreciation is actually the IRS telling you that "you can't take the full cost year one because the item is too expensive". It is basically the IRS slowing your expense realization. 

I would work with a tax professional to setup your depreciation schedules. There are specific things that need to be depreciated versus claimed in a given year. Even within depreciation there are different terms, so the 27.5 years applies to some items, shorter for others, bonus depreciation for others. There is also diminimis that may come into play.

Final point, you may not have a loss on your taxes. Depreciation reduces your taxable income, but it often doesn't result in a loss. Usually it will offset a good chuck of income and early years are often a loss. Later years, depreciation stays the same and rents increase, so plan on taxes. It is hard to not have taxable income if you are successful in real estate.

I wouldn't sell the property in Ohio. You have decent cash flow and the property hasn't really appreciated much in value. If you assume 8% selling fees and original closing costs, you will basically net what you paid for the property. You will get your original down payment back. That being said, if the rental property is a dog and causing you headaches, selling may be the best choice.

@Lenin Garcia electric baseboard will be very expensive for the tenants. You may think, "who cares they are paying". That is a common mistake landlords make. Tenants cost to live in your property includes utilities. If your competitors have heat included and rent is $1000 and you make tenants pay for heat at average month expense of $200, then you can only charge $800 rent to be competitive. Tenants will move out of properties with electric heat after one cold winter. 

I would fix the radiator baseboard heat and get better zone controls. This will be your most efficient heating method.

You always need to verify with third party. Licensed contractors will be listed on a city or county website. Get the phone number of their insurance company and have the agent send you proof of insurance or bonding. Some cities required all licensed contractors to be insured or bonded. 

We have a Ring security system with outside Ring camera. We have a wifi Schlage lock. We can remotely activate the alarm when the property is vacant. We have sensors on windows and doors, plus motion in the living room. We are able to monitor the sensors to see if a guest has left the property. Occasionally a guest will leave without locking the door and we have remote lock capability. Door codes can be set based on time, so each guest has a unique code that starts at check in and expires at check out. I have had guests show up a day early or come back after check out trying to access the property. I can't imagine not having unique codes in a situation like that. We pay $99 per year for the Ring security system and they cloud store camera footage along with alarm history. 

Quote from @Jerryll Noorden:

OK I don't want to be a negative Nancy and I support improvement.  I am all in for improving technology... BUT never "improve" for the sake of improvement.

This new layout is horrible to navigate posts, it is counterintuitive and believe me when I say I tried. I RFEALLY tried.. all I can say is that I have WAY less motivation to hit the forums, post in forums or be helpful in the forums.

If it aint broken, don't fix it.

(sorry)... I know some of you worked hard on it, but for me at least... its not happening!

Just my opinion... that is what you all are after yes?

 I think they are looking for more specific feedback on what you don't like or what you would change. The navigation all happens at the top when you enter the forums page. You can click on "categories" and select any sub category. You can type a keyword to find your sub category. It seems pretty straight forward. The big issue people seem to have is that the drop down menu when you click FORUMS is gone. Is that what you are referring to for navigation? 

Quote from @James Haney:

So, how and where are we allowed to post our events? I only ask, because I constantly get flagged and my posts removed. Haven't logged in here in couple weeks (I usually am in here once a day or every other day, but have been busy lately). Just logged in here today for the first time in a bit and now I am even more confused than I already was. 

Any help/feedback would be great

When the events are removed, it should reference that you need to post in "Real Estate Events and Happenings". The categories can be easily searched. To start a new post click on POST, then just type "events" and it will pop up quickly. This search is a fast way to find any category. 

I have heard of people charging their children rent, then refunding part of all of it back to them when they move out. They don't tell them they are doing this. It ends up being a nice bonus to help them get started in life. Maybe this isn't what you had in mind, but you could tell your wife that half or a third of the money will be given back. This incentivizes them to move out and is a compassionate way to help a young person get started. You wife may think it makes you seem more kind. Just for reference, your wife is ALWAYS right...