All Forum Posts by: Ying Tang

@Charles Perkins Thank you for sharing your experience Charles! 

• You might need to file a lis pendens (notice of pending lawsuit) to cloud the title and prevent them from selling it to someone else. I would tend to think that this will give seller enough incentive to act accordingly...

Hi Daniel! Allocating credits to closing cost is pretty standard. Have you calculated the break even time length for rate buy down? I think there will be several rate cuts in the coming years and I would refinance a couple times during the next couple years instead of doing a rate buy down. 

@Jay Hinrichs Thanks Jay! I saw others saying IRS would question the RE status if someone has other full time W-2 job. My case is a bit special, given the W-2 job doesn't really consume a lot of time. I will keep good time logs in case IRS asks. 

Hi BP Community,

I’m looking for some insight on qualifying for Real Estate Professional (REP) status and would love your input.

1. I’m the owner and president of a business that’s completely unrelated to real estate, and I’m the only employee. Thanks to systems I’ve built, the business only requires about 2 hours of my time per week, yet it generates enough profit to cover a high W-2 salary and K-1 income that I issue to myself.
2. I’ve been using that income to invest in real estate. I got my real estate salesperson license for the purpose of investing (not to serve clients). My time is spent analyzing deals daily, touring properties, negotiating purchases, working with contractors during renovations, etc. Once the property is stabilized, I hand it over to a friend’s property management company—I don’t manage any rentals myself.
3. The majority of my time is spent on real estate activities. Given that my non-RE business still generates substantial income (but only takes up ~2 hours/week), can I still qualify for REP status as long as I keep accurate time logs?
4. Lastly, does anyone have an Excel or Google Sheets template they use to track hours for REP purposes? I’d really appreciate it!

Thanks in advance for your advice!

I don't think the tenant is in the place to directly hire a contractor unless it is a imminent safety hazard and owner/pm are not reachable. But it has happened anyway. There are a couple of things to do:

1. Contractor:

Have a direct conversation with the plumber to understand: Scope of work; Why the cost was so high; Who authorized it; Was this considered an emergency job; Did they coordinate with the PM at all. Ask for dumentations, photos, ask for crew size, hourly rate, etc. If things don't add up, it's your chance to ask for a discount at least.

2. PM. He should have done better in terms of responding to the tenants, and handling the contractor. You should have a serious conversation with PM for future issues.

3. Tenants
Notify all tenants in writing that they are not authorized to hire contractors without PM/owner approval except in true emergencies when no one can be reached.

If the job was not an emergency, charge the tenant partially.

If it was an emergency, try negociate the price down with the contractor.

If it's not the Tesla, then one of them is mining bitcoins or using growth lights... my bet is on the Tesla...

@Dan H. Hi Dan! Could you share what tool or website you use to determine the potential rent amount/vacancy rate? Thanks a lot!!

Also, I usually would not think it's a good deal if the person brings you the deal is the seller agent. If there is really a $10k spread, he or she might just buy it himself/herself.

Hi John! Can you do more research on the sold houses nearby to see how much it really worth? If it sits on the market for a long time at $450k then probably it's not gonna worth $450k. 
The cash flow looks ok, but again if this tenant leaves, are you able to fill in the space quickly? If not, the actual cash flow may be much lower.