All Forum Posts by: Taylor Jones

This roast is getting a little crispy.........

I agree with Dave I can't imagine 30k in OpEx where did that number come from?

How big is the house?

How is your opex at $2,500 / month? $1,600 / month also seems very high for cleaning fees, however, why not bake the cleaning fee, or at least part of it, as a fee passed on the renters? 

We finance a lot of smoky mountain STR's, nearly all of which cashflow very well when properly operated, even at 80% LTV. Obviously if you come in more cash heavy on the down payment, your debt service will be lower and your cash flow would improve, but even at 80% financing with todays current interest rates, $125,000 in gross revenue should certainly be cash flow positive. If not, you have a property with an unordinary amount of operating expenses.

 

$30k OpEx...? More like $3K if it's been updated or remodeled. 

Is a $20K annual cleaning fee seriously real? Asking for a friend. 

I haven't checked your numbers, but I suspect a $1 million property would produce closer to $40,000 - $50,000 net per year.

I've seen people buying property these last two years that look like real stinkers, but I know some people that are still doing really well.

@Taylor Jones

You literally typed out 35.9% of $640k, which was the total purchase price

@Taylor Jones

Can’t depreciate land so you can’t use the $640k value in your calculation. You need to use your building basis, the portion allocated to land needs to be excluded.

@Taylor Jones

Is there a form or application to get a RE professional status or is it simply that you meet the requirements and thus are considered one when doing your taxes?

You can absolutely bonus depreciate a large percentage of the building value of the home as described by the OP. Not sure why people are saying you can’t do this. So much misinformation on this thread.

We’ve done this for years and many many people do this as well. Being a RE professional (which I am) helps, but many of our clients aren’t and if you have a killer building making good money this is a great tax strategy regardless of RE pro status. You can’t count against your W2 income usually, but you can against the building income.

Now if you have a normal W2 income and a regular sfh that makes $150/month it's probably not worth the cost seg investment. But a very profitable and expensive apartment or STR it can make a lot of sense.

This is pretty much the lifeblood of the syndication business model. Very common and the OP got it mostly right.