All Forum Posts by: John Teachout

Run the numbers and if it works, it works. 7% interest sounds crazy high but I've seen it more than twice that in the past. The rates are likely going to go higher yet and may remain high for several years. Assume that's the case and do your analysis based on that to see if the deal makes sense.

This is a state specific post since some states require deposits to be held in a separate account (eg. Florida) In Georgia where we are, if you have 10 or more properties, there's also requirements that they be sequestered but not on a per property basis. So I have an account just for security deposits. I also have an account for Capex, set asides (taxes, insurance, etc). Books need to be kept on every property but you probably don't need to have separate bank accounts for each as that gets ridiculous if your portfolio grows. We have 1 business checking account that we pay bills out of no matter which of our 15 properties it's for. All in and out gets tracked in Quickbooks so a report can be printed at the end of the year for each property. Do whatever works for you, there's not necessarily a "right" or "wrong" way. Just remember at the end of the year, all income and expense needs to be ascribed to a specific property as that's what you'll put on your schedule E.

Whether to hire a CPA is somewhat like do I need to hire a plumber to replace a toilet? It depends on whether you are willing to learn how to do things yourself or do you want to hire a professional to do certain tasks so you can do others? We've always done our own book keeping, financials and income taxes but it is a lot of work. That said, much of the "work" needs to be done by you even if you do use an accounting firm or tax preparer. We have 15 properties and each one gets a schedule E, depreciation, etc. We also get K-1 forms and have a small business unrelated to real estate. Turbo tax readily handles all of this if you have your ducks lined up and can input the correct information. So we don't use a CPA or tax preparer but I'm a pretty avid DIY type person. CPA's are professionals that are good at doing certain tasks but that doesn't mean that you can't learn to do those tasks. There's tons of resources out there. If you do select a CPA, be sure to get one that's well versed in REI as accounting is a very general field and not all of them will be a best fit for your situation.

It used to be that realtors drove clients around in their vehicles. That's not really a thing anymore in our market so I don't think it makes a lot of difference what vehicle you drive. It would make no difference to me at all but some may be influenced. I wouldn't worry about it.

We don't provide washers/dryers in our SFR (or fridges). We provide a range, dishwasher if equipped, water heater, and sometimes an over the range microwave.

What are you trying to get a loan for? (ie, purchase what?) If your only income is self employment and you're showing low/no income on your tax returns, that's going to be tough to show you can pay a loan. Money moving in/out of a bank account shows activity but not profitability. Can you accumulate cash?

House hacking and live in flips are the best way to start out in my opinion. Mobile homes on land are "ok" but they often need extensive work. As stated elsewhere, stay away from old ones. Most things in them are "special", ie, doors are different, door knobs are different, windows are different, furnaces are different, faucets and sinks are often different and the list goes on. The roofs leak and then the walls and floors rot so they will usually need significant repairs. They're expensive to relocate and many times if you have property with a bad condition mobile it will have a negative value in that you will have to pay someone to make it go away. It's a workable niche, just make sure you know what you're getting in to.

It's very possible the gas service was restored but the company shut off everyone's meter until they could verify it was safe to turn on. ie, the gas company usually requires an inside inspection when service is restored in case there's an unlit pilot that hasn't shut off or whatever. It's different than the electric being off. If the tenant wasn't available, that may explain why their gas wasn't back on.

If you have "losses" that you can't utilize, they're not "lost", they get carried forward until you can utilize them.

You can just provide one or your social security numbers. I think doing it as a partnership would be a horrible idea. So the "sole proprietorship" is the way you want to go. Don't complicate your tax situation for no reason.