All Forum Posts by: Michinori Kaneko

Thanks Justin. why would rental not fall into UBIT?

Hi Brad,

For that amount of equity you get, i think you can get better cashflow elsewhere EVEN IF you hired a PM to manage the property for you.  usually the PM charges 8%-13% or so of rent, so your cashflow would probably drop to like $600 or so a month on your current property.  $7200/200,000 capital = less than 4% return annually. you can find a property (or multiple properties) that meets 1% rule, then you can def beat that return easily! Opportunity cost is too great for you to keep the property!

@Dmitriy Fomichenko Thank you! i'll keep my stocks in there and do my rentals out side of IRAs then. thank you.

Thanks @Justin Windham

I suppose from my perspective it would make more sense to include investments that has more capital appreciations (either flip or stocks/mutual funds) rather than rentals since those are mostly tax free anyways.

is IRA considered an entity? meaning, can i "sell" my property that's fully depreciated to my IRA so that future rental incomes from the property will be tax free?

Hi! I've thought about doing real estate invested via ROTH IRA (sort of relevant), but have few questions:

1. Is it really beneficial to do the real estate investing via IRA? Maybe if you are doing flips, it makes sense, but for rental property, most of your income is offset by depreciation and interest expenses (if you finance your purchase), so there is no big benefit it holding the property through ROTH IRA.

2. If you do rental properties in ROTH IRA, then what do you do with the cash collected from rental? Does it just sit there until you have enough cash to but another property, or do you invest in mutual funds short term?

3. I wonder if you create multiple accounts, the accounts will actually work similar to LLC and if something happens to the tenant in the property, you are only liable for the property that's held in that specific account?

Thanks for your help in advance!

welcome peter!

you can research some basic data about the city here.

@Hashim Jakvani

are you looking to invest locally or open to investing in other states too? Looks like the later since you've mentioned Las Vegas.  Here is a link that might help you get started by narrowing down areas you want to focus on

Price to Rent Ratio by City

You can also find more details about the city that are you looking at:

City data.com

In terms of timing, no one knows.  you can only play a guessing game, although I think most people are thinking that we are coming to end of cycle (but that doesn't mean you cant find a good property, just means its harder).  Hope that helps!

@Colin Courtney a relevant post for you.

Hi, i would definitely include any cashflow in your analysis. at the end of the day you want to estimate how much money will you have in your pocket, and if after including everything, your return is like 5% a year, then its not a great opportunity and you'd rather invest in the stock market, right?

Here are things I also consider in my model (but I'm also an excel guru and work in investment management firm so i'm good with number crunching):

estimated annual appreciation of (but you can bypass this if you assume that increase in your rent offsets all the expense increases):

1. assets

2. rents

3. Insurance

4. HOA fee (if applicable)

5. Tax

One time costs:

closing fees/rehab fees

Other fees:

Tenant placement fee (by your PM, assuming annual replacement of tenants).

I would not include utility fees and stuff that tenants are responsible for. But if you want to be REALLY conservative,  you can build in Utility and maintenance expense while the property is vacant.

Hope that helps!