All Forum Posts by: Soh Tanaka

Would the house cash-flow if it's fixed up?

There's not enough information to make the decision, but total rent of $1,500 for a house for sale at $185,000 is a red flag. Generally speaking (which means there'll be some exceptions), you want the rent to be 1% of the purchase price. I would pass this deal. Also, the age of the home is a concern, unless it's fully updated.

@Jon Begley Unfortunately, it looks like you are right. One reason why you shouldn't take accounting advice from a non-accountant :-)

@Jon Begley It looks like the depreciation years has been reduced to 25 years. It's in page 204 of the bill. 

The Full Bill

I would consider $2,500 as a bonus, and do the math as if there's no tax benefits. This way, if something goes wrong, you still have some room to make money. I wouldn't do a break even deal. The point of an investment is to make money, not to break even...

I've been a landlord for quite some time, but I've been lucky and never had to evict anyone, until maybe now. The tenants are not paying this month, and I want to start the eviction process. If you know anyone good who does eviction in Chicago area, please let me know. Thanks in advance!

I think that is a very complex question. One thing for sure is to wait till it actually pass. A lot of things will depend of each individual situation.

@Rod Hanks First of all, I'm not an expert on this topic. I just think those who are thinking about doing this should study the cons also, as if you just talk to a custodian, he may just talk about the benefits. Buying a house can get complicated. Doing so within IRA can get even more complicated, especially if you leverage it. You can't manage yourself. You can't take out the cash. If you run out of cash, you better have a plan to put more money into the account. Tax benefits will change. Etc.

I know this is not what you are asking, but I'm not a big fun of using IRA/401k to buy real estate. It might be better to cash out, pay penalties and applicable tax, if any, and then use the money to invest "normal" way. Have you considered the pros and cons of using IRA/401k to invest in real estate?

I'm sorry about the layoff. I would get a job first, so that it'll be easier for you to do refinancing, renting, etc. Once you get a job, I would do a cash-out refinancing, and buy another house (maybe not in Reno, if the price is too high.) You can rent a house (if rent is reasonably affordable in Reno), and rent out the house in subject. Now you have 2 investment properties. By renting, you have an option to get a job anywhere in the country also.