Did you ever ask yourself what went wrong and what went right, what you could’ve done differently?
Real Estate Investing
- Thread starter bartletsamerica
- Start date
Did you ever ask yourself what went wrong and what went right, what you could’ve done differently?
Make sure you don’t over leverage and always always always maintain strong cash reserves. Too many crisis events out there like 2008 and 2020 that can put tremendous strain on your finances, as Rob has pointed out.
Maybe I’m misunderstanding what you’re saying here, but you shouldn’t be deducting losses on rentals unless you’re a real estate professional or are using them to offset other passive income.
So it's not deducting "losses".. its deducting mortgage interest, property taxes and home improvements off my own taxes using a schedule C form.
Now, to get those awesome deductions, I DID have to spend money on home improvements.. and quite a bit of them. However, the 10k i put into the foundation that was deducted off my income? That was actually credited to me from the sellers.
But yes you get to write off home improvements in an owner occupied situation. Not sure what it is for property you rent but don't live in. Tax stuff gets wild with rentals and an uncle once told me "that's where you make your money".. I can't go much further than that. But I would LOVE to hear about UKRobs taxes as it pertains to 100 units. Haha.
You can deduct the pro-rata share of the improvements that are allocable to the rental part of the property, but not the part you live in. You can’t just fix up your own bathroom, for example, and deduct that. Chances are you won’t get audited these days, so you do you, just be aware that you’re not supposed to deduct 100% of what goes into your home just because you rent a piece of it out.
Also, if you ever sell the property, the rental portion will be subject to a taxable gain if you make money on it. Just something to be aware of.
Yep, I'm aware of all of that. I immediately got an accountant to help. A lot of the work was either a. for the entire house or b. for her unit only. Rarely was anything speficially for the unit we live in. But we go through EVERYTHING.
I'm still not sure how this all changes when I move out, buy a 2nd home, our REAL home, and then keep these two units.. Do I still write-off interest and taxes? How do I deduct home improvements, now that it's not Owner-occupy? That's stuff I'm hoping to work with my account on.
Anyone have a good rule of thumb for a super conservative cash reserve, assuming you leverage at a conservative 50% equity value? Considering taking on some leverage and buying more property, but definitely want to play it safe.
I own a parcel of land that has been sitting there for years and looked into putting apartments or commercial rental on it. My wife is totally against it. We travel a lot and would have to hire a property manager that would eat into profits.
I just don't like the idea of it sitting there while paying taxes and mowing upkeep because I would never sell it.
I just don't like the idea of it sitting there while paying taxes and mowing upkeep because I would never sell it.
My brother and I flipped homes for YEARS. Imho, that's the best way to make money off real estate. Renting and renters for the most part suck. We started buying property and renting, got out of that pretty quickly.
Like someone else said, it helps if you're handy. I could usually do about anything. Water heaters, drywall, painting etc. And to this day, that's probably why I hate doing that stuff now. Got burned out on it
Like someone else said, it helps if you're handy. I could usually do about anything. Water heaters, drywall, painting etc. And to this day, that's probably why I hate doing that stuff now. Got burned out on it
Speculation, it’s always been that way.
I sold a 150 acre parcel six years ago that had been in the family since 1895.
I just assumed (I know, never assume) that people back then bought for purpose. The region just started to be settled 50 years prior. I figured the title search would reveal 1-2 more owners.
Nope. The property had 8 owners after being sold from the original owner, United States of America, in 1850.
It sold originally for $5/acre. Then trade for $10, 20, 25 before someone got bit and it lost half its value. The price would swing back and forth.
That was a pretty volatile 45 years.
The improvements you’re making now are added to your cost basis in the property. That amount is depreciated over 27.5 years starting when you place the formerly owner occupied unit in service as a rental. You’ll also deduct 100% of the interest and taxes as a rental expense once the full house is a rental (technically you can deduct it all now split between Schedules E and A but you’re probably taking the standard deduction).
Yeah, my advice too and right now real estate is sky high so good luck making a profit unless you can do all the work because the workers that do that and those materials are all sky high as well.
Our plan is to move out of the duplex in a year or two into our actual home.. So I sometimes use Realtor's saved searches to see what's available.
It's insane where house prices are at. You're seeing like 10-25% markups. A split level came across my search, nothing special, pretty outdated interior but in good shape. Asking $275,000 and the assessed value of the house only THREE years ago? $210,000.
I think people are just seeing what they can get, with no intention of selling. But if you can make THAT kind of turnaround, why not?
The crazy part is, I've read a few articles that say there really isn't a housing bubble, and that in many times in the past, the housing prices don't really fall all the way back to earth.
We bought our house for $390,000 in 2019 with a Zestimate of $370,000 on Zillow. The Zestimate now is $510,000. It's right on a golf course too. I told my wife during this lockdown there is no way I would list for less than $525,000 and I guarantee we could get it. I don't know what is real or not? I just feel like from here seeing big increases would be tough. That said I would suggest owning real things right now. Money being cheap means real assets valuate quickly. I don't see an end to that for several years.
The other problem is.. we sell our homes for a great profit just to overpay on the next house. A great decision followed by a poor decision.
Yep, and them dang realtor fees. The % fee is garbage. My realtor didn't do 4 times the work on this house than she did on my first house. She did maybe 1.3 times the work.