All Forum Posts by: Mark Gauger

@Robert Kirkley Which do you want to have, a real estate business or the other business you referred to that you're creating? Based on your post, I'd say you want to have your other business, so focus your attention and capital on that. When your business is up and running and turning out surplus cash flow, stash that away into an account to fund real estate investment. Continue to focus on your business, but take an "always shopping" approach to real estate so you can pounce when you spot a deal.

Real estate can speed you on to FI, but it doesn't need to be (and isn't) a full time business for most investors. Instead it's a vehicle where you can park your excess cash from your W-2 or business, but the first step is to create that excess cash. The secret to FI is to mind the gap (see Afford Anything: https://affordanything.com/the-most-crucial-money-lesson-in-three-words-mind-the-gap/). Keep your expenses low, grow your income, and invest the difference.

For those saying pit bulls aren't a problem, read through the list of 2018 dog bit fatalities here:

https://www.dogsbite.org/dog-bite-statistics-fatal...

First thing you'll notice is that pit bulls are by far the most common breed involved in dog bit fatalities. You'll also see how many of them were described as sweet family dogs who never hurt anyone before. Yet something snapped and they killed, including many adult victims. These aren't "biased facts". Sources are cited and you can find the original source materials. 

I certainly wouldn't want to take on that additional risk. It isn't a hatred, it's a logical and rational analysis of the risk/reward equation. If you're a pit owner and don't like being denied a rental due to your choice of pet, then buy your own home.

@Charlie Moore Are you reporting the income from your rental properties on your tax return? If you aren't, you're committing tax fraud and eventually the IRS will catch up to you.

If you are reporting the rental income but not reporting the depreciation expense, then you are paying too much in income taxes today. Very simple example, but suppose your properties generated $10,000 in gross rent in 2018, and that you had $5,000 in expenses not including depreciation (mortgage interest, property taxes, insurance, etc). The remaining $5,000 would be taxable income. If you were in the 22% tax bracket, you'd pay $1,100 in income taxes on that $5,000.

Let's assume the depreciation expense for your properties is $4,000. If you properly reported that as you should, now your taxable income is reduced to $1,000 ($5,000-$4,000) and at your 22% tax you would owe $220 on that income.

In short, your paying too much in income taxes today and a visit to a CPA is likely going to save you money. 

(I am not an accountant and this was a simplified example)

It's a fuse panel. If you want to upgrade to a modern 100A to 200A breaker box, rough estimate would be in the $1500 to $2500 range. The wiring is most likely fine.

@Lee Castro

You could have $0 in a flip if you had a partner who brought all the money. Given that you have no experience, I'd imagine the only partner you would possibly find is someone who knows you personally (friends & family), has money, and is willing to invest in you.

Costs you are likely to see:

Buying costs: purchase price, financing fees, inspection fees, closing costs, etc

Rehab costs: materials, labor, permits, etc

Holding costs: utilities, property taxes, insurance, loan interest, HOA or condo fees (if applicable), lawn mowing/snow removal, etc

Selling costs: real estate commissions, staging, closing costs, etc.

You may want to talk to a mortgage broker about the 203k loan. My knowledge on it is very limited, but I believe you need to have a 203k qualified contractor complete repairs. If you were thinking you could act as a GC yourself, you may be mistaken. 

However, there are other options for financing that would let you accomplish your goal. Check out the latest podcast for some ideas on private financing. 

Welcome to BP @Jeremy Mattson. I stumbled on this site earlier this year and am still looking for first deal or house hack. Have you been lurking here for awhile? Or did you jump into your house hack prior to finding this site?

I'm curious about your custard store as that's something I've considered for starting a business. Do you operate seasonally? Or stay open year round?

@Satish Subramanian You can't depreciate the part you live in. If all 3 units are the exact same, then while you were living in one unit you would be able to depreciate 2/3 of the building. If they aren't the same, then you'd determine what % of the building you're living in and depreciate based on that. For example if unit A and B are 1000 sqft each, but unit C where you're living is only 500 sqft, then you would depreciate 80% (2000/2500). It would probably be worth your $$ to meet with an accountant to maximize deductions (and make sure you're not claiming something you shouldn't).

Why not live for 2 years and then move onto the next house hack? You can decide before the 5 years are up if it makes sense to sell or if you'd rather keep as long term rental. Or leave after 1 year but move back in later for the 2nd year if you do want to sell. Two out of 5 doesn't have to be consecutive. Or move out after 1 and plan to 1031 exchange in the future. Lots of options, but what's your long term strategy?

If you have the time, go look at it. If you're new, the best way to learn is by doing. You're not committing to anything by looking, and it will give you a chance to ask the agent about the contract issues you're questioning here. Just keep an open mind and realize the agent is out to make money for themselves and the sellers, not you. 

Scenario 1: a nest under a gutter that's home to 10-20 paper wasps, a variety that is not very aggressive and can easily be taken care of with a can of spray. 

Scenario 2: a bald faced hornet nest located 20 feet off the ground in a tree that's home to 600 to 1000 extremely aggressive wasps who will sting anyone getting close

Which did you have? 200 bucks for the removal of #2 is not out of line.