All Forum Posts by: Rich Zellmer

Depreciated over time.. However there are some changes in 2015 allowing you deduct expenses up to $2500 in the year it incurred.  If you can break this up in to sub $2500 you might be able to expense this year 1..

http://www.miller-financial.com/irs-increases-de-m...

I also wonder if there are any other options or considerations in taking a personal residence and making it a rental and then moving it back. I would believe you would lose some percentage of the capital gains exclusion when you go to sell.  ie if you held it 10 yeras you would lose ~1/10 of the capital gains exclusion for owner occupied buildings.   I have converted personal residences to rentals but never back again.  What happens to the depreciation you took in that year it rented?  Does it get recaptured right away.  

How many families is your building? http://www.nj.gov/dca/divisions/codes/publications...

"The landlord may file for eviction, if the owner of a building with three residential units or less seeks to personally occupy a unit, or has contracted to sell the residential unit to a buyer who wishes to personally occupy it and the contract for sale calls for the unit to be vacant at the time of closing. A Notice to Quit must be served on the Tenant at least two months prior to filing suit for eviction. No legal action may be taken until the lease expires."

So if it is three or less you can certainly get it vacant at closing.  personally I would tell them that rather then supries him with notice to move out whenever it goes in to contract it might make more sense have him look for a new place now and then he can move out on his schedule rather then need to hussle to find a place when you go under contract

If it is a single family you can do all the work yourself,   ie GC, plumbing and electric.   The premise is that you are doing it as a home-owner.  If you start doing multiple properties in the same town that might not fly but you will be fine for the first one.  the idea here is the license exception is for homeowners working on their own house. 

If the building is a multifamily you need a licensed GC and then you cant do the plumbing and electric. 

You dont need to pass a test, you just a certain amount of insurance.   I think it is 1 million.  If are one man shop in a low risk trade (ie finish carpenter) the insurance is less then $1000.  But dont expect them to pay out if you are doing other stuff.

It can a few months to get the license, just cause they are slow.  So dont exspect to buy a house and then just fire up the licnese in 30 day 

there is normally a ratio for each town of accessed values to real value.  That is how you can tell if you can do an appeal.

ie..  lets say you have a million dollar house with a $200K value for taxes.  You may be under or over taxed..  normally your county does a annual chart.   Here is mine in NJ http://www.state.nj.us/treasury/taxation/pdf/lptva...

In Weehawken the ratio is 42%.   So if your house is really worth a million then the fair accessed value would be $420K. In my fake example my tax form has 200K so I am paying about half the proper taxes and I keep my mouth shut.  If on the other hand my accessed value was $600K then I can appeal based on the fact that a 600K accessed property should be worth $1,428 million(600K asses divided by .42)

In NJ at least you can appear if your accessed value is at least 10% off, there is only 1 time a year you can do it...   

That being said, on $600K purchase, some in my head math would make me think you need to have rents in the  $4,500-$5,500 range to even both doing the full math.  Of course the exact math depends on interest rates and taxes/expenses and this rent likely needs to be closer to 6K but I can tell you right off the bat that your rent number would be way negative. 

Thanks to both of you.  

I was under the impression that since the policy was government underwritten  the rates should be nearly the same for the same policy.      $595 is a steal  

Good point in the liability insurance. 

I am now looking at shore houses.  ie point pleasant or LBI.  Anyone have any feedback on what happened to rates down there and what to worry about.

I own some rentals in Hoboken and we have flood insurance. I saw my rates go from 2K to 3K on two my houses but I heard a lot more concern about way worse rate hikes from folks down the shore.  

Most of the houses I am looking at are in AE zones just like my Hoboken houses but I have heard stories of much more expensive rates at the shore so I assume not all houses in same zone have same price? I know they are doing a lot of re-mapping at the shore as well.

Any guidance of what to look out for are far as future rate changes on the horizon?

You should be careful on this one if you dont have a 'No Further Action Letter' from DEP.  

I can tell you my experience.  I bought a house two years ago, had an oil tank that was removed. They provide me a DEP case number and a letter that the DEP case was closed.  However this year I went to refinace.  It turned out there was a second case open at the DEP.   What happened was the company provided the oil did an annual leak test(required for underground tanks) and it failed for a small hole on top, they opened a case with DEP.  Company comes out to remove tank and  open a case with DEP and do everything by the letter as far as testing the soil. That case gets closed but the 1st one never did.   Bank lets me close but wants the other case closed.

So now I have what I know is clean soil on a properly removed tank with a closed DEP case that I just need to get a duplicate case number closed.  I had to have them do new soil samples and write a report.  Cost me 6K to just test the soil and write the fancy report the DEP requires.  I think I could have price shopped this a bit but oil work is very expensive.

If you dont have an open case with DEP then you may have no one really care in the future but a 'No Further Action Letter' from DEP is really what they should have got when they removed it.  I have DEP webiste at the office where I was able to find me open case.  If you are okay posting the address or sending it me to me I can see if it shows up anywhere.  And/Or I will post the link when I find it.

Here is the nightmare...  You buy this house rent it for a few years and decide to sell.  Next buyer wants to do the samples, you let them and they find something.  They are obligated to report to DEP and your are f'd..   What happens in these cases is they basically need to dig out soil until they hit clean soil.  If they hit the water table first all sorts of crazy stuff happens. 

I went to rutgers and use to rent rutgers housing for about 10 years.   Back when we did it, it was more smaller landlords but in the past few years more and more larger off-campus buildings have been built.  So in a way you are competing with them, there are more options.  But there are also more students.

You are not that far away from people starting to sign leases for next school year.  I would check out http://ruoffcampus.rutgers.edu/search-create-listi... and try to get a feel for the per person rents.  Compare that to on-campus per-person rates.  there is a differntial between on and off campus but over time the raises of oncampus rates will drive your rates in a similar percentage.     On campus rates going up faster then inflation over time was very kind to us :)

I really liked the student renal market when we did it.  We set up our leases up so that if you were not returning you had to get out a week before the new tennants came.  Turnover can be a bit more then non-college kid rentals.  So we always planned to take a few days off the day job during rutgers turn-over.  But otherwise we found it to be good. 

What are you basing that budget on, the amount you think you can come up with for a down payment?  

I do mostly hoboken and weehawken buys  so $175K is more about what a parking space costs :) but that being said I have a guy that works for me from time to time looking to buy his first home and he thinks he can do a first time buyer 3% down kinda deal.  Depending on how you came up with the 175K, lowering your down payment might increase your buget a lot. 

Anyone had advise on how to do some historic rental rate and occupancy analysis for AirBNB or VRBO. 

Background .....
I have some 3 family buildings in the Weehawken/Hoboken NJ market and under threat of divorce my wife has spoken, 'if we buy another house it needs to be a shore house.'   But she didnt say I can't rent it out too :)

I am trying to get a feel for some shore towns and was playing around on AirBNB by looking up listings in both the shore towns and in my local Weehawken market.  Weehawken is the closest NJ town to NYC and should be ripe for NYC tourists.   What I found was that many of the listings seemed to have huge percentage of the calendars going forward unbooked.    It may be a little bit (but not much early) for summer rentals but on both Weehakwen and NJ shore but I was very surprised at the high percentage of unbooked days.  It could very well be that these units were overpriced and another set of units are getting much better occupancy.  

In the case of the shore rentals I really want to see how they did last year.   Does anyone do this kind of analysis?  https://www.airdna.co/ seems like it might but I as unsure how these guys(and sites like them) can tell if a place was rented.  I guess they can check availability and prices daily and if the place is marked as unavailable before the day expires they can assume it was rented at the last price?   Is that how this works?  Can anyone recommend a site that does a good job on providing information like this?  It seems like there are a lot of results when searching AIRBnb pricing analysis.