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rated:
nwill002 said:   here is what I'm seeing for the other tax letters:
Galena park I.S.D tax statement ( Ben b. Pape tax assessor)
http://www.galenaparkisd.com/departments/taxOffice/ 

Bob Leared tax assessor
http://bli-tax.com/ 

I'm able to pull up my property in their online lookup database but I'm still not sure if they are legit taxes I need to pay.

  
Ask your neighbors.

Looks to me like you're getting separate tax bills from the schools.    I'd assume that you do have to pay those taxes and they look legit.

You could probably confirm with your neighbors that these are the right bills.

 

rated:
this is an out of state rental property. We live in California and never stepped foot in Texas.

rated:
Ask the realtor you used when you bought it.
Call the county government in TX.

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Hi All,

Long time reader.. first time asker......

I came upon this condo.... and need your input making a decision to buy it or pass it.....

Here are the numbers:

Cost: $55,000
Monthly expenses (total)= $550
Rent: $1,100~1,300
Vacancy Rate: low
Management company (will use them due to distance) = 10%
Net Monthly= $440

Issue: Due to Association's financial situation..... the banks will not make the loan.... so it will be a cash investment.....

Question where I need your input= Should I buy this or pass on it..... Why or why not?

Thanks.

rated:
well... what is the financial situation the association is in. Typically you need to take into account the health of the association or else you may be prepared to pay some massive special assessments.

rated:
bhaiyagi said:   Hi All,

Long time reader.. first time asker......

I came upon this condo.... and need your input making a decision to buy it or pass it.....

Here are the numbers:

Cost: $55,000
Monthly expenses (total)= $550
Rent: $1,100~1,300
Vacancy Rate: low
Management company (will use them due to distance) = 10%
Net Monthly= $440

Issue: Due to Association's financial situation..... the banks will not make the loan.... so it will be a cash investment.....

Question where I need your input= Should I buy this or pass on it..... Why or why not?

Thanks.


I personally shy away from condos. Too much that is out of your control regarding rental restrictions and general HOA b.s.

rated:
Pass. Like sharpie mentioned their precarious finances should be a red flag. With financing unavailable it will be very difficult for you to sell later on and finally condos can change rules and make life difficult especially for landlords. Keep looking...

rated:
bhaiyagi said:   
Cost: $55,000
Rent: $1,100~1,300
Vacancy Rate: low

 

where in the country are those numbers valid??  unless the association is absolutely tanking, that's a solid return.

rated:
solarUS said:   
bhaiyagi said:   
Cost: $55,000
Rent: $1,100~1,300
Vacancy Rate: low

 

where in the country are those numbers valid??  unless the association is absolutely tanking, that's a solid return.

   Entire thread makes no since.  Long time reader, but account is brand new.  You can't see changes/new items to read without an account.  I hope he's a better landlord than lurker.

rated:
bhaiyagi said:   Hi All,

Long time reader.. first time asker......

I came upon this condo.... and need your input making a decision to buy it or pass it.....

Here are the numbers:

Cost: $55,000
Monthly expenses (total)= $550
Rent: $1,100~1,300
Vacancy Rate: low
Management company (will use them due to distance) = 10%
Net Monthly= $440

Issue: Due to Association's financial situation..... the banks will not make the loan.... so it will be a cash investment.....

Question where I need your input= Should I buy this or pass on it..... Why or why not?

Thanks


Cashflow is good, but just understand that with the Association not being on the GSE's approved list, you will likely have little to no appreciation as this will keep pricing down, due to cash basically being the only option. You also may have special assessments,  HOA bad debt increasing,  higher number of rentals in the complex/increasing your competition for tenants, deferred maintenance in complex/exterior of unit. Is that worth $5k a year? IDK

rated:
a tax related question .. i bought a property in january but there process started in december and had several expenses in december (appraisal etc.). Since technically I didn't own that property last year, how do I take deductions on those expenses against that property ? anyone had similar experience ?

rated:
MeraNamJoker said:   a tax related question .. i bought a property in january but there process started in december and had several expenses in december (appraisal etc.). Since technically I didn't own that property last year, how do I take deductions on those expenses against that property ? anyone had similar experience ?
  Amortized and deducted annually over the life of your loan once it's closed and payments commence. (Line items from HUD-1).

  • 801. Loan origination fee
  • 802. Loan discount
  •  
  • These items must be amortized over the life of the loan.


  •  
  • TIP: Many people think that these amounts (usually referred to as points) are a current tax deduction. However, the only time that points are allowed as a current deduction is if the points are paid in connection with the purchase of a primary residence. Points paid in connection with the purchase of an investment property or paid on a refinancing of a personal residence or an investment property must be amortized over the life of the loan. 
  • 803. Appraisal fee
  • 804. Credit report
  • 805. Lender’s inspection fee
  • 806. Mortgage insurance application fee
  • 807. Assumption feeThese items must be amortized over the life of the loan.

rated:
Forgive me if this question is not right for this thread. I am thinking of buying a single family home in Florida near Disney attractions which can be used as a short term rental for park visitors. The management company says i will be able to cover all my expenses with average 28-29 weeks rentals (Rents varies from $85-$125 a day based on season) in a year. Looks like there is no cash flow and i am not aware of the appreciation rate in this area of Florida. The agent i visited when i was in Florida charges $150 per month + 15%-20% of rentals. I am thinking he/she is making more money on my investment than i make. Is there anybody in this thread who has this kind of property or any experience/advice on this kind of investment?

rated:
One more question i have but wanted to keep it a separate discussion is if you are buying an investment property is it must that you should take mortgage as an investment property or its alright to take the loan as a second home. The difference in interest is almost .5%-.75% so trying to understand the implication if i take the loan as a second home.

rated:
wannabelandlord said:   Forgive me if this question is not right for this thread. I am thinking of buying a single family home in Florida near Disney attractions which can be used as a short term rental for park visitors. The management company says i will be able to cover all my expenses with average 28-29 weeks rentals (Rents varies from $85-$125 a day based on season) in a year. Looks like there is no cash flow and i am not aware of the appreciation rate in this area of Florida. The agent i visited when i was in Florida charges $150 per month + 15%-20% of rentals. I am thinking he/she is making more money on my investment than i make. Is there anybody in this thread who has this kind of property or any experience/advice on this kind of investment?
  There is a glut of vacation rental homes in and around Orlando.  My guess is that you'd have a hard time getting 28 rentals in a year. 

rated:
wannabelandlord said:   One more question i have but wanted to keep it a separate discussion is if you are buying an investment property is it must that you should take mortgage as an investment property or its alright to take the loan as a second home. The difference in interest is almost .5%-.75% so trying to understand the implication if i take the loan as a second home.
  

When you apply for the mortgage you have to indicate the purpose for buying the property.    If you're planning to use it as a rental and you say its going to be a owner occupied home then you're actually committing mortgage fraud.
I don't know how often people lie on mortgage applications nor how often they're caught or punished.   But it doesn't seem worth the risk of a felony conviction.

rated:
Do not buy rental near disney.... n agent would be making more then youm based on hours invested ! 

rated:
vadeltachi said:   
MeraNamJoker said:   a tax related question .. i bought a property in january but there process started in december and had several expenses in december (appraisal etc.). Since technically I didn't own that property last year, how do I take deductions on those expenses against that property ? anyone had similar experience ?
  Amortized and deducted annually over the life of your loan once it's closed and payments commence. (Line items from HUD-1)


thanks for response.. my question was more on which year i start the deduction.. will it be last year (when expense actually happened) , or will it be this year (when I actually got the property in my name). from your response i get the indication that it would be this year... is that right ?

rated:
I was under the impression that lenders add 25 basis points (+0.25) for an investment property over a primary residence/owner-occupied quote, with all other factors remaining the same....

but checking provident rates online for owner-occupied v/s investment is costing way more than that....
Any recommendations from folks here for mortgage brokers for investment property purchase...

rated:
Can I 1031 exchange a primary residence I sold after 6 months into another property that I may turn into my primary residence for longer than 2 years and have no step up basis or any other detrimental tax situation?

rated:
.

rated:
JaxFL said:   Do not buy rental near disney.... n agent would be making more then youm based on hours invested ! 
  ThanksJaxFL, When you say based on hours invested my thought was to have it managed by management company so not much my time invested but yes if no cash flow then no sense. Orlando rental landlords who can share their personal good/bad experiences . will be good to hear ....

rated:
jerosen said:   
wannabelandlord said:   One more question i have but wanted to keep it a separate discussion is if you are buying an investment property is it must that you should take mortgage as an investment property or its alright to take the loan as a second home. The difference in interest is almost .5%-.75% so trying to understand the implication if i take the loan as a second home.
  

When you apply for the mortgage you have to indicate the purpose for buying the property.    If you're planning to use it as a rental and you say its going to be a owner occupied home then you're actually committing mortgage fraud.
I don't know how often people lie on mortgage applications nor how often they're caught or punished.   But it doesn't seem worth the risk of a felony conviction.

  Thanks for the response, i agree . I was just curious as my mortgage broker didn't explain enough details. What is the other way to keep the interest low, just do lot of shopping ? Use online brokers than a local one? For my primary residence my broker gave a good closing credit is it something like that i can negotiate for investment property ?

rated:
I have friends with short term rentals near Disney and on other locations along the Gulf Coast. They all pay hefty management/rental fees. Some pay as high as 40% of gross for services.

rated:
mastroadam said:   Can I 1030 exchange a primary residence I sold after 6 months into another property that I may turn into my primary residence for longer than 2 years and have no step up basis or any other detrimental tax situation?
  
I think you meant a 1031 exchange. That is for investment properties. A primary residence would not qualify. It normally has to be owned for at least a year as an investment property in order to qualify for a 1031 exchange. If you lived in a primary residence for 2 of the last 5 years, you can sell it and pay no taxes on the gain of up to 250k or 500k if married. There's no need to do a 1031 exchange when it's a primary residence. And if your gain is more than the 250k or 500k, it doesn't qualify for a 1031 anyway and you'd have to pay taxes on the difference, but if you've kept your receipts or kept track of improvements, you could increase the basis from the purchase price. 

rated:
henry33 said:   
mastroadam said:   Can I 1030 exchange a primary residence I sold after 6 months into another property that I may turn into my primary residence for longer than 2 years and have no step up basis or any other detrimental tax situation?
  
I think you meant a 1031 exchange. That is for investment properties. A primary residence would not qualify. It normally has to be owned for at least a year as an investment property in order to qualify for a 1031 exchange. If you lived in a primary residence for 2 of the last 5 years, you can sell it and pay no taxes on the gain of up to 250k or 500k if married. There's no need to do a 1031 exchange when it's a primary residence. And if your gain is more than the 250k or 500k, it doesn't qualify for a 1031 anyway and you'd have to pay taxes on the difference, but if you've kept your receipts or kept track of improvements, you could increase the basis from the purchase price. 

  Yes 1031, thanks.  The only issue is a lot of my improvement costs were cash for labor (I kept records but I never 1099 'd anyone) .  I realized the penalty for not 1099ing a contractor is a relatively small fine but not sure if my records are good enough in an audit.  I have no problem paying my share of taxes but I don't want to have to eat the labor costs.  For many reasons I don't want to live in this current renovation but I need to buy a place for myself soon.

Thanks for that tidbit about it having to be an 'investment property" for a year though.

rated:
mastroadam said:   
henry33 said:   
mastroadam said:   Can I 1030 exchange a primary residence I sold after 6 months into another property that I may turn into my primary residence for longer than 2 years and have no step up basis or any other detrimental tax situation?
  
I think you meant a 1031 exchange. That is for investment properties. A primary residence would not qualify. It normally has to be owned for at least a year as an investment property in order to qualify for a 1031 exchange. If you lived in a primary residence for 2 of the last 5 years, you can sell it and pay no taxes on the gain of up to 250k or 500k if married. There's no need to do a 1031 exchange when it's a primary residence. And if your gain is more than the 250k or 500k, it doesn't qualify for a 1031 anyway and you'd have to pay taxes on the difference, but if you've kept your receipts or kept track of improvements, you could increase the basis from the purchase price. 

  Yes 1031, thanks.  The only issue is a lot of my improvement costs were cash for labor (I kept records but I never 1099 'd anyone) .  I realized the penalty for not 1099ing a contractor is a relatively small fine but not sure if my records are good enough in an audit.  I have no problem paying my share of taxes but I don't want to have to eat the labor costs.  For many reasons I don't want to live in this current renovation but I need to buy a place for myself soon.

Thanks for that tidbit about it having to be an 'investment property" for a year though.

  
Is your gain more than 250k or 500k if married? I don't know how you would fare in an audit, maybe if you had before and after pictures. I think when you sell the home, the gain is what you have left after all fees like broker commissions, taxes and attorney fees. But if you had to pay taxes, then it would be long term capital gains which I guess can vary between 0-20% depending on your tax bracket. 

rated:
henry33 said:   
mastroadam said:   
henry33 said:   
mastroadam said:   Can I 1030 exchange a primary residence I sold after 6 months into another property that I may turn into my primary residence for longer than 2 years and have no step up basis or any other detrimental tax situation?
  
I think you meant a 1031 exchange. That is for investment properties. A primary residence would not qualify. It normally has to be owned for at least a year as an investment property in order to qualify for a 1031 exchange. If you lived in a primary residence for 2 of the last 5 years, you can sell it and pay no taxes on the gain of up to 250k or 500k if married. There's no need to do a 1031 exchange when it's a primary residence. And if your gain is more than the 250k or 500k, it doesn't qualify for a 1031 anyway and you'd have to pay taxes on the difference, but if you've kept your receipts or kept track of improvements, you could increase the basis from the purchase price. 

  Yes 1031, thanks.  The only issue is a lot of my improvement costs were cash for labor (I kept records but I never 1099 'd anyone) .  I realized the penalty for not 1099ing a contractor is a relatively small fine but not sure if my records are good enough in an audit.  I have no problem paying my share of taxes but I don't want to have to eat the labor costs.  For many reasons I don't want to live in this current renovation but I need to buy a place for myself soon.

Thanks for that tidbit about it having to be an 'investment property" for a year though.

  
Is your gain more than 250k or 500k if married? I don't know how you would fare in an audit, maybe if you had before and after pictures. I think when you sell the home, the gain is what you have left after all fees like broker commissions, taxes and attorney fees. But if you had to pay taxes, then it would be long term capital gains which I guess can vary between 0-20% depending on your tax bracket. 

  No my gain is only about 30k after all expenses but I don't want to live there for 2 years to avoid the tax.

rated:
mastroadam said:   No my gain is only about 30k after all expenses but I don't want to live there for 2 years to avoid the tax.

Well if it's more than a year, you're probably just in the 15% tax range anyway. You never qualified to do a 1031 anyway, but all it does is defer taxes and you have to do this complicated 3 party exchange which also costs money. Your only option if you sell it right away is to pay the tax unless you keep it for at least a year and convert it to a rental property, then you can do the 1031. But sometimes it can cost you more money than you would save in taxes, and you're not really saving money on taxes, just deferring it. The accounting just gets more complicated once you do it. You could just go ahead and take the deductions, if you get audited, you could go back and get written receipts for the work done. 
  

rated:
henry33 said:   
mastroadam said:   No my gain is only about 30k after all expenses but I don't want to live there for 2 years to avoid the tax.

Well if it's more than a year, you're probably just in the 15% tax range anyway. You never qualified to do a 1031 anyway, but all it does is defer taxes and you have to do this complicated 3 party exchange which also costs money. Your only option if you sell it right away is to pay the tax unless you keep it for at least a year and convert it to a rental property, then you can do the 1031. But sometimes it can cost you more money than you would save in taxes, and you're not really saving money on taxes, just deferring it. The accounting just gets more complicated once you do it. You could just go ahead and take the deductions, if you get audited, you could go back and get written receipts for the work done. 
  

  Thanks, that was the answer I was looking all over for.  Sounds like a 1031 would be overly complicated and might not save me anything.  Is there any audit red flags to avoid for a less than 2 year sale of a primary residence?  Should I stay within a certain profit percentage to avoid triggers? (I'd rather pay a little too much in tax than get audited and potentially put a bulls-eye on my back for years to come) 

rated:
I bought my primary resident in January 2010 and rent it out starting May 2014. If I sold it before May 2017 I should not have to pay any taxes right? I have been filing taxes since 2014 tax year that the home was a rental.

rated:
Thanks every one who provided feedback.... 

I guess i will stay away for one fact that the association can ask of more money anytime and I won't be able to do anything about it....


>Here are the numbers:

Cost: $55,000
Monthly expenses (total)= $550
Rent: $1,100~1,300
Vacancy Rate: low
Management company (will use them due to distance) = 10%
Net Monthly= $440

Issue: Due to Association's financial situation..... the banks will not make the loan.... so it will be a cash investment.....

Question where I need your input= Should I buy this or pass on it..... Why or why not?

Thanks

rated:
TonyVH said:   I bought my primary resident in January 2010 and rent it out starting May 2014. If I sold it before May 2017 I should not have to pay any taxes right? I have been filing taxes since 2014 tax year that the home was a rental.
i'm not a CPA but i believe that's accurate...assuming the gain was <250k single / <500k MFJ.

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