All Forum Posts by: Zach Liu

I am not very sure, but I think there is a simple way to think about calculating income tax from property.

1, Figure out your NOI first:

NOI = Income - property tax - insurance - maintaince/repair - utiities - other

2, Taxable Income = NOI - Depreciation - Interest

3, Income Tax = Taxable Income * your tax rate

@Sebastian Villa

Welcome to BP and Go Jackets!

That's very clear and comprehensive, thanks a lot! 

Congratulations and hope it brings profits down the road!

The good thing is you are young and have many years ahead. Time is one of those valuable things in investment world.

To start out, it's all about building knowledge, building network, and building experience. And of course you should start building your credit.

If you really like Real Estate, why not take some time and get a license, that may be the quickest way to get into the game. 

Good luck.

@Joe Kim

Yes and you can also think it positively: you also have a new roof good for many years and you get some tax benefits too.

@Joe Kim

 If the seller rehabbed the property, you should ask him to provide a new roof before closing, or at least negotiate more discount. It is lucky a roof even lasts for 40 years no matter what the material is...You may also keep an eye on other expensive things like water heater and AC. 

Lesson one: whatever the seller tells you, you trust and verify. Most of the times they may lie to you or at least exaggerated a bit.

I think if you send a polite letter of notice and suggest if they have somewhere to go please stay away. Do it before hand with a small gift, your tenants should be fine. They won't like that "surprise" for sure if your crew just show up and "bang bang bang" a couple of days over their head. 

I have a temperory apartment where sometimes I go there to work. And one week I worked there they came to replace the roof. I didn't have good experience with that and I hated it. But I sucked up and stayed there for the whole week because I have to work there. So it is not that unbearable and I understand replacing the roof is costly and if the owner wants to do it, it is actually not a bad thing. 

So I hope your tenants will understand too. Try to say something like "I want to maintain this property in very good condition so you will have a good living experience along the way." So it feels like you are not only taking care of your roof, you are actually taking care of them.

To figure this out, I think if you can bring in enough income every month to cover all your expenses and debt, and have some savings for investment, you will be in good shape.

Or if you have a job that can do that for you, stay with the job until you get there.

But if you have no good alternatives, being a full time investor means you can spend all your time making money in real estate.

With that said I think you need to have an good estimate how much you can make at the beginning and go from there.

@Jon Quigley

Hi Jon, congratulations on the first deal, and looks like it works based on the numbers. 

From my experience you have a 33% expense ratio which does look a little underestimate for a C neighborhood, I would use 40% - 45% even if it seems to be in good condition. 

But I hope you can have minimum along the way:)