All Forum Posts by: Mark Jones

Thanks @Ashish Acharya one other thing I forgot to ask is whether any off the refi fees or the appraisal can be expensed?

I need some help understanding what interest I can/can’t deduct on schedule E.

I did a cash-out refi on the duplex I live in back in August. That refi also paid off a heloc I had on the property. 75% of that heloc had been used for a down payment on another rental 2 years ago.

So with the interest I’ve paid on the new loan, I believe I can’t deduct the amount that would for the cash-out (as a percentage of the principal). What I’m not sure about is the heloc portion of the new loan. Am I allowed to deduct the 75% of the heloc portion of the new principal? Then I’ll deduct 50% of the original loan portion since only 50% of the residence is a rental?

Hopefully I described this well enough. Engineers know numbers but that doesn’t mean they are any good at explaining them.

Are there any other tax implications that this would have had?

@Joseph Robele I wouldn’t look at it as buying more or less house than you can afford. Look at what makes the most financial sense. With limited capital you’ll definitely want something that is rent-ready (at least on one side). 

With the run up in prices on multi’s around here, I wouldn’t expect a lot of appreciation very soon. Do look for where you expect rents to continue to rise. Very tough to know for certain but this will always make the investment better in the future. 

Ideally you’d find something in a great area with a little potential for some value add that is within your limits, if not just go with what makes sense with the numbers. 

@Johnny Situ best read of the day. 

@Aviv Berkovitch are you asking for your own knowledge or is your property manager asking you? If the later, you need a new property manager. 

What is your property managers standard procedure for this? While the check bouncing doesn’t give you a good feeling about the tenancy, do they/you want to give them a couple days to cure it?

Remember only accept move-in monies in that are certified. 

@Zach Miller what banks have you tried? I’ve used Huntington and they’ve recognized rental income. Granted they lop off what seems like a ridiculous amount for vacancy and repairs. The other caveat is that you need to have a lease in place. They won’t use projected future rents. 

@Account Closed what you're likely doing wrong is going off the MLS. As previously mentioned you're looking for a property type that is in high demand right now from both investors and retail buyers. You'll probably find more opportunities going thru a local wholesaler and finding something with some value-add potential.

@Account Closed the “do not know” is probably just a CYA for the seller. Personally I wouldn’t have them do any of the repairs unless your lender requires it. The seller will just higher the lowest bidder off Craigslist. I’d try to get a seller credit or price reduction for any repairs so you control the work.

Most of these items are pretty easy handyman fixes. Inspectors make everything sound a lot scarier than it is. I’d have a foundation guy and a toffee come out to check those items. Those are your two biggies. 

If you proceed with buying the property I’d just plan on having a plumber out to fix any leaks and an electrician out to make some repairs. It wouldn’t hurt to get these guys out there pre-sale as well but you may not have time for it. 

Going thru on the deal depends on the repairs AND is there any room for a rent increase? $100 cash flow doesn’t leave a lot of breathing room. 

@Alain Perez-Majul nice work man!

@Angie Weddle do you have a mortgage on the investment property or is the only loan your HELOC? If it's just the HELOC, you're not actually refinancing.