All Forum Posts by: Victor N.

@Ricardo A Perez. No, you don't pay taxes on cash flow. You pay income taxes on net taxable income. The principal portion of mortgage payments are not deductible and are made with taxable income. Cash flow is reduced by deductible expenses including noncash expenses like depreciation. Many rentals have positive cash flow and a tax loss due to depreciation.

@Andrew Hamlett. I haven't tried this but establishing sub accounts for operating cash and cap ex set aside that roll into the main bank cash account should accomplish your desired results

Talk to your mortgage lender. Not paying property taxes will just cause you to incur penalties, interest and eventually lose the property. Learn the laws on foreclosure and property tax sales in your state to see how much time you have before things happen. Cash for keys maybe

You should be able to handle the online filing yourself.  It is pretty straightforward.

@Jean Joseph You have received lots of good advice. Another tool I use with tenants is to always say yes to requested improvements like the refrigerator followed with the rent will need to increase by $x to cover the costs of those improvements. I price it with a 12 to 18 month payback with a component for the time value of money. The tenant then controls how important it is to them. If they want it, I have a happy tenant who stays longer with a higher return on my investment and an improved property. If they don't want it, they made an economic decision and it wasn't a power struggle with me. Most often they choose not to get the improvements. After all, they rented the place as it was then. Now, if the lightbulb was out or burned out at the very beginning of the tenancy, I would replace it on my dime. Otherwise, I would say "sure, that will be $50 or $75 for that level of service or you can change the lightbulb yourself if you prefer. Pay that to (whomever) and we will send out our handyman. Would you like us to put you on a monthly inspection and change lightbulbs and such for $50 per month more rent?" The calls should quickly become more focused on real issues.

@Shawn O'Brien You should check with the zoning enforcement office for your jurisdiction. It may be a grandfathered nonconforming use caused by a zoning change enacted after it was built.

@John S. I agree with the approach taken by @Todd Rasmussen but I think your monthly cash flow is actually lower than the $750. I don't think your expenses account for maintenance and repairs, capex, property management or vacancy. Therefore, the return on capital threshold you have to meet is significantly lower than 17.1%.

Didn't you grant a mortgage to the HML to secure repayment of that loan? If yes, your property is not "free and clear." The title work will show the mortgage lien which will have to be paid as part of the refinancing in order to give the new lender a first position mortgage lien securing the new loan. Time to come clean to your loan officer.

@Devin James. Law schools do not give out very much in scholarships. You will have very little time to work other than study. It is very different than undergrad. I have a law degree and I was married before I went to law school. The law school experience is very hard on relationships and marriages. I strongly recommend hanging onto your savings to help with your living expenses in law school. If she is the one, she will be there through law school and you will both be in a better place to marry and start investing. Now is the time to invest in your knowledge and education for both of your benefit. Three years is a small portion of a lifetime. My law degree and experience practicing is immensely valuable in my real estate investing.

My answer is always yes we can do that and rent will increase by $x. I usually figure a 12 month to sometimes an 18 month payback. This takes away the power struggle and finds out how badly the tenant wants the improvements. If they agree, they just improved my property and invested in living there longer. If they say no, they made a financial decision and you didn't deny something they wanted.