Bruceski44
Recycles dryer sheets
- Joined
- Apr 13, 2016
- Messages
- 191
Going to use up stored depreciation from the early years to avoid paying tax on depreciation recapture and the capital gains.
How does that work?
Thanks,
b
Going to use up stored depreciation from the early years to avoid paying tax on depreciation recapture and the capital gains.
.....Evaluating a good vs bad deal can be done on the back of an envelope, and lots of rules of thumbs can be applied.
1 months rent time 100 should be your purchase price or less. This way you have covered taxes and insurance.
10% net. If you paid all cash you should net a 10% return. rents-(taxes+insurance)=1/10 of the cash invested....
How does that work?
Thanks,
b
According to the CPA, these are carry over losses that can be used against gains and recaptured depreciation. If that's not the case, I need a new CPA.
Ok, I don't get it. Let's say rent is $1,000/month. You would pay $100,000 for the property and receive $12,000 a year in rent.
Unless your expenses are only $2,000 a year, how do you net 10%? Surely, taxes, insurance, etc will be more than $2,000 a year... in many areas of the country property taxes alone are 2% of value.
Ok, I don't get it. Let's say rent is $1,000/month. You would pay $100,000 for the property and receive $12,000 a year in rent.
Unless your expenses are only $2,000 a year, how do you net 10%? Surely, taxes, insurance, etc will be more than $2,000 a year... in many areas of the country property taxes alone are 2% of value.
Also live in Bay Area. Bought my rentals many years ago. Location, Location,
and Location. Now paid for. Good rents and appreciation. However,real estate is not a straight line. It does go up and down.
Have 2 friends who did the same as your friend. Sold/traded, local Bay
area rentals for out of state. Reasoning. Can buy multiple units, diversify
the rents, used property mangers.
Short version: Big mistake. Paying property managers very expensive.
Repairs, costly. (if local, you could do yourself).
Tenant turnover, high. (if you manage your own rentals
you are more careful). (property manager's have no
incentive, to try and find long term tenants).
One friend, said, never again. The other, I have not talked to recently.
Gain in value is a bonus. Having someone else pay the mortgage until free and clear is the real value. Then the cash really flows.
According to the CPA, these are carry over losses that can be used against gains and recaptured depreciation. If that's not the case, I need a new CPA.
I think he's saying if you can only rent a 100k property for 1k a month, don't do the deal.
Around here 100k is the very bottom of the market for a decent townhouse in a stable neighborhood. The rent would be at least 1300 with taxes and insurance about 3500 that's 12% return but will get trimmed by repairs/maintenance. This is consistent with the 10x rule of thumb. It's getting harder to find places that are not condos. If there's a condo fee it's very tough to justify at the lower end of the market. This is my casual observation after looking into the local market.
Three siblings have many rentals among them and they all swear by single family units (detached/duplex) but I think the business case is different for them.
1 months rent time 100 should be your purchase price or less. This way you have covered taxes and insurance.
10% net. If you paid all cash you should net a 10% return. rents-(taxes+insurance)=1/10 of the cash invested.
What he actually said was:
So for him if a property rented for $1,000/month he would be willing to pay up to $100,000 for it. If that was the case, it would be unlikely that rents-(taxes+insurance) would be $10,000 a year.
I'm curious as to how many properties he actually owns. I suspect the number is closer to zero than to one.
My dad owned several residential rentals and ultimately found they were more of hassle than they were worth and sold them. He had a commercial rental property that is easy peasy, generates incredible returns and he kept and I manage for my mother since his passing.
I prefer investments that do not result in losses, even if you get to carry them forward... if your losses net with gains, how is that a great investment?
Was just speaking to a co-worker (we're in the bay area) who recently sold his local rental property. To avoid capitol gains he bought 2 rental properties in another state.
I know this is besides the point, but does this actually avoid capital gains in the US? In Canada, capital gains would be payable regardless of what he did with the proceeds. I'm just curious!
I know this is besides the point, but does this actually avoid capital gains in the US? In Canada, capital gains would be payable regardless of what he did with the proceeds. I'm just curious!
What do you folks think about college town rentals? I've considered buying a rental in a town where my son attends school, about 2 hours from me. Son could take care of minor management issues. Seems that student rentals would have problems with less-responsible renters and yearly turnover. But, I suppose someone is making money at it?
What do you folks think about college town rentals? I've considered buying a rental in a town where my son attends school, about 2 hours from me. Son could take care of minor management issues. Seems that student rentals would have problems with less-responsible renters and yearly turnover. But, I suppose someone is making money at it?
What do you folks think about college town rentals? I've considered buying a rental in a town where my son attends school, about 2 hours from me. Son could take care of minor management issues. Seems that student rentals would have problems with less-responsible renters and yearly turnover. But, I suppose someone is making money at it?
I prefer investments that do not result in losses, even if you get to carry them forward... if your losses net with gains, how is that a great investment?