All Forum Posts by: Mark Stone

I would say if you truly think selling it to him would net you an extra $30k, then worst case attempting to pay off $30k of his credit cards would be a wash if he never paid you back a penny, and also the hassle of listing it amd rehabbing (aka time/energy) is saved as well.

Just my 2 cents.

Yes @Gail K. I agree it could definitely be worse, since I at least end up getting the rent eventually. But I have also had to deal with cops being here to arrest the bf, his drug dealer swinging by on occasion, and  also the bf and gf waking up my front tenants by fighting right outside their door, drunk at 2am.

Lol I just keep telling myself it could always be worse!!!

Yeah I had done some research on appropriate late fees and penalties for posting a notice and they didn't seem to far out of the ordinary. They have lived here 16 months and not once had rent to me on time. I have never enforced an actual late fee. Obv I blame myself for letting the problem get to the point it is at. Learning things the hard way I guess lol.

Also, I mean if I get rid of them I will have a lot of rehabbing to do on that unit. So, if his new job means they can pay rent consistently on time then I might let them stick around until I move out, which is up in the air. But no chance I am leaving them here when I move out.

Thanks again for the advice.

@Samantha Klein

So, you would say it is atypical to be able to shield all rental income? Is this the case even in the beginning and becoming worse as time goes on (decreased write offs and increased rents)?

Also, if I go through this scenario a little more slowly and think about the numbers perhaps it is all a wash in the end in regards mortgage interest. Please let me know if this logic makes any sense at all.

For example, if I pay $7k in interest this year, I am losing $7k out of pocket, however I can use that interest write off to not pay income tax on $7k of rental income (@28%), so saving $1960. Overall though I am down $7k - $1960 = $5040. 

However, if a few years down the road my percentage of my mortgage payment is more principal and less interest then it may be like this. Mortgage interest for the year $4k out of pocket. Tax savings $1,120. Overall, I would then be down $2880.

So, as time goes on I can't shield as much rental income but overall I am paying less.

Also, in regards to depreciation, if I 1031 exchanged into a larger property which required an additional mortgage. I could only depreciate the new mortgage amount and therefore this wouldn't be any different in regards to shielding rental income.

Man there is so much to know in RE. I hope that made some sense. You have to be quite the Jack of all trades in RE huh, and I have quite a ways to go lol. Thanks for the help!

Thanks, I didn't write the current lease as I inherited from prev owner, but will check to see if that is in there.

Thanks for the advice guys.

Here is the link, which I believe is a reputable enough source for supporting the 15 day notice I mentioned.

http://www.nolo.com/legal-encyclopedia/florida-not...

I have thought about cash for keys and may go that route if needed. 

I may end up posting another pay or quit. The current lease was actually was drawn up by the old landlord, bc when I bought the property I inherited the back tenants. In the lease it specifies an additional $200 fee if I have to post a notice. Is this a typical amount to tack on?

The bf just recently got a M-F 9-5 job as opposed to working side jobs. Therefore, if they have 2 steady paychecks coming in starting in a few days I feel more confident I can consistently get the next few rents from them. And then still allow him to lay pavers if he wants with the ability to walk away at the end of January/Feb with an additional $1-$2k.

You guys def gave me some things to consider though so thank you!

My current back tenants (bf and gf with 1 and sometimes 2 kids) have been a headache since day 1. They are on a month to month lease since their year lease finished. 

Per the lease agreement I can end the lease if I give them 15 days notice. They are also always behind on rent, but usually gets me it all by the end of the month. I have also considered going the route of evicting him for failure to pay rent. It is just a constant headache and I am tired of dealing with it after 16 months.

Is there any reason that I should pursue one method over the other (end lease vs eviction). If I tried to get rid of them via either method I am also afraid they will try to not pay rent yet still stay as long as possible. I have heard the eviction process can be quite costly and I would prefer to not go that route. 

I have also attempted to get him to lay pavers behind my #2 and #3 units to help cover rent since he did this for a living for a while (he laid them behind unit #1 and they came out great and he did it for very cheap), and he has agreed to do so and even seemed quite interested, however something always comes up and their hasn't been any work done in the last month in that regard.

Thanks in advance for any advice!

Just wondering if there could be any consequences on appliances or what not from power being shut off due to failure to pay the bill in the back unit of my triplex.

Thanks

Hey Everyone,

I was brainstorming about shielding rental income from taxes and had a few questions. Thanks in advance for any help you can provide.

Last year I bought a triplex with little money down, and took out an owner-occupied loan. I plan to move out within the year. When filing last year's taxes all of the rental income was shielded by writing off losses via a combination of depreciation, loan interest, fees for loan origination, other closing costs etc.

It got me thinking though as time goes on the amount of interest that I will be able to write off will decrease as more of my mortgage payment is on principal and not interest. Also, thinking really long term in like 27.5ish years when I won't be able to depreciate anymore that will be even less I can write off.

So my question is, do people who own a property for a long time eventually find it harder to shield their rental income (which would also have hopefully been going up as well). Is it a strategy to sell your property, and then do a 1031 exchange into a larger income producing property, take out another loan to cover the additional cost and therefore provide you with a new depreciation write-off as well as more mortgage interest to write off right off the bat?

Not sure if I am logically missing something here as taxes aren't my thing. Thanks!

@Jonathan Cope

Thanks so much for the advice I definitely appreciate all of it!!!