All Forum Posts by: Rick Moccino

Hi, how do you estimate maintenance and cap ex for a new condo conversion vs. an older building in a high cost of living area (mo rent/purchase ratio of 0.4%-0.5%)?

Given the difference, how much more are you willing to pay for a new renovation?

Wouldn't 4) where he put up his 1.5% commission plus another 48.5% for a total of X = 50% of purchase price, for P = 50% equity with the property management company managing be pretty fair? The main problem here I see is if he decides he wants to manage it himself (5), and then we have to decide his management fee B.

Yes I agree it would be very hard to fire your partner, so that's what I'm exploring if there's anything else that makes sense other than 1).

My friend is a property manager for a property management company, and also a licensed RE agent. We are looking at rental properties which either he can manage himself, or the management company he works for can manage. Assuming we go on to do other deals together and considering tax advantages/disadvantages, how would you rank these deal arrangements, and what do you think are fair or ideal numbers for A, B, P, Q, X, Y?

1) He earns buying agent commission on the sale, and the property management company manages the property at market rate.

2) He earns buying agent commission on the sale, and manages the property himself at a discounted rate A%.

3) He contributes his buying agent commission to the purchase, and manages the property himself at market rate.

4) He contributes his buying agent commission and/or capital totaling X% of the purchase in return for equity P%, and the property management company manages the property at market rate.

5) He contributes his buying agent commission and/or capital totaling Y% of the purchase in return for equity Q%, and he manages the property at discounted rate B%.

6) Other - if so, what?

How did you get away with so little money in? What kind of financing / financing terms did you get?

Has the ratio of median home price to median family income increased recently in DC? Where can we see that chart online, and compared to other metro areas?

"Of the nation's 10 largest metropolitan areas measured by population, four were overvalued in June according to CoreLogic Market Conditions Indicators (MCI) data. These four metros include Denver-Aurora-Lakewood, CO, Houston-The Woodlands-Sugar Land, TX, Miami-Miami Beach-Kendall, FL and Washington-Arlington-Alexandria, DC-VA-MD-WV. By comparing home prices to their long-run, sustainable levels, which are supported by local market fundamentals such as disposable income, the MCI categorizes home prices in individual markets as undervalued, at value or overvalued. Because most homeowners use their income to pay for home mortgages, there is an established relationship between income levels and home prices. The MCI defines an overvalued market as one in which home prices are at least 10 percent higher than the long-term, sustainable level, while an undervalued market is one in which home prices are at least 10 percent below the sustainable level."

https://www.cnbc.com/2017/08/01/four-major-us-citi...

Comments?

I looked at the CoreLogic report and couldn't really find the exact numbers they are using, i.e. home to income or MCI data, to substantiate this.

Their HPI shows DC at +4% in the past year and 4% projected over next year, below the national rates, which may support the idea of overvalued but not on the basis of the method used in the article.

Thanks. Ok, so this applies regardless of how many properties I own?

I was just confused misreading Form 530.

Qualified Home This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities. Main home. You can have only one main home at any one time. This is the home where you ordinarily live most of the time. Second home and other special situations. If you have a second home, use part of your home for other than residential living (such as a home office), rent out part of your home, or are having your home constructed, see Qualified Home in Pub. 936

If I am buying a property to live in, I am eligible to deduct mortgage interest and premiums, and real estate taxes. Can I deduct these if I later decide to rent out the property?

What if I buy to rent outright?

On those 3 auction sites, is there any way to see what the winning bids were?

What about the DC market? Would you use 1% or compare to nearby rents?

For example, luxury 1BR condos are going from high 400-600k, compared to rents for 2500-3000 per month.

Buying a primary home would allow for tax deduction and I'd be eligible for good loan terms.