All Forum Posts by: Josef Hardi

Hi Yuri, 

A couple of things to note:

1. I notice that you put in interest rate of 6%, last I checked for investment it's hovering around 7.2% -  7.5%.

2. Is this for a short term rental / long term rental? I don't see any utilities expenses listed.

3. For taxes, make sure that you calculating the future tax amount based on the updated purchase price, instead of last year's tax bill.

4. A few more things to consider this is for short term rental, you can get massive tax benefits in the first year. And there might be additional expenses for repair etc right after you purchase the property, so make sure you'll have enough to account for that.

All the best!

Hi Chris, 

I am sorry this is happening to you. I would think you might need to get some sort of a law assistance to make your case to the city. I don't have any experience unfortunately. 

Something else to consider just in case you are not aware, if your building is registered as a historic building, you can apply for Historic Tax Credit to help offset your maintenance cost.

All the best,

Josef

Hi Max, 

I am also a newbie in RE investing, and I have to say the BP podcast with Tom Wheelwright was a game changer for me. I had to listen to it a few times, and am still going through his books right now: The Win-Win Wealth Strategy and Tax-free Wealth.

I am also trying to find a compatible tax strategist that can assist me with planning for 2023 strategic investments. My head has been reeling with so many ideas.

In any case, to my (limited) knowledge, tax treatment differs whether your activity is considered a passive or active one. For example, passive would be a long term rental. Active would be a short term (under 7 days) rental.

If you go with the route of short term rental. Let's assume you purchased the property on Jan 1, 2022 and you owned it for the whole year. Come tax time, you can run a Cost Segregation Analysis. It will break down based on: value of land, building, land improvement and contents of building.

Typically then you can claim about 30% of the purchase price. For example, let's say you purchase a house for $1M, then you can claim bonus depreciation of $300k. And since this is an active expense (generated from your active participation in the business). It can go against your other active income (aka W2).

On the flip side, if this is a passive investment, such as a long term rental. Then you are allow to have this deduction only against your other passive income.

Hope that helps, please take it with a grain of salt and check out those books i mentioned above!

Hi Stephen, 

Welcome! I'm not familiar with Houston area, but when I was researching out of state investment, here's what I did:

1. Look up a BP affiliated agent. Contact a few of them and find one that you have a good feeling about. They can be a good source for your local lender.

2. Get in touch with a couple of local property management companies. Vet them, and once you have once you feel good about, they can be your source in terms of finding contractors, tenant profile, projected rental income etc.

Best!

Hi Oscar, 

I'm a fairly new investor and I was also confused at first when doing my earlier analysis. This is my conclusion, the numbers will not make sense as-is. It gets way more interesting once you have these factors:

1. Rent increase. I am not sure where you are located, but add rent increase in your calculation. In my area, I can increase rent 3-8% per year. 

2. Property appreciation. Around my area, conservatively I can calculate a 5% increase annually. If it's true in your area, that's about $26k equity each year (plus your mortgage payment towards capital). That can open up other options in the near future such as cash-out, refi, HELOC, etc. Considering that we are still within record low inventory level, home prices is still projected at a growth.

3. STR numbers can generate more than LTR.

4. Other factors they might encounter would be tax related benefits. For example, if they are in the middle of a 1031 exchange, instead of paying taxes on their current property, they will still come out ahead purchasing a negative cashflow property.

Those are some the points, your mileage may vary. Only pursue a deal if the numbers make sense to you, only if you can afford the monthly payments and ideally if you are willing to hold it for a longer term.

Best! 

Hi Tahmid,

You can check out Brandon's episode on YouTube where he covers this topic "Should You Get an LLC For Your Real Estate Business?"

TLDR: LLC may not be worth it for a smaller portfolio. LLC is not lawsuit proof, and umbrella insurance may offer the protections you seek.

Hi Anthony, 

Just be mindful of the differences between Los Angeles County and Los Angeles City. They all treat rent-caps differently. Los Angeles City has in place far more restrictions, especially with its treatment of the moratorium. As a landlord, you will have more risk with a property in the Los Angeles City.

All the best!

Congrats on your journey Gregory, that's exciting! 

I am also researching about STR and have been using airdna to get data on my local market. Also- checkout robuilt's videos on YouTube, he goes through STR strategies that you might find helpful.

All the best!

That's awesome, thanks for sharing. I visit that area for my backpacking trips. All the best!

Hi Duncan, 

A couple of tips my realtors shared with me:

1. List it right now on zillow or rent.com and see how many inquires you get. Make sure you take professional photos over the space. Overshoot the price, and then start to lower it every week. This will be purely for collecting data, you don't have to actually open your condos for open house.

2. Contact local property management companies, have a chat with them to get a feel of the market.

Best!