55+

Renting and “aging in place,” but not alone, is a growing preference for aging baby boomers and seniors and offers a unique opportunity for investors who want to invest in and operate multifamily units.

Baby boomers are defined as those born between 1946 and 1964 while seniors are defined as those born before 1946.

According to research done by ARBOR, an increasing number of senior renters now live with unrelated adults across all multifamily property types. Small apartment buildings (5-49 units) have slightly higher shares of senior renters with roommates compared to large multifamily properties (50+ units). However, the co-living senior renter segment is growing the fastest in large-asset multifamily.

Co-living among seniors is highest in the single-family rental (6.1%), then the duplex/quadruplex (5%), next small-asset multifamily rentals (4.6%), and last, large-asset multifamily rentals (3.2%). To put this in perspective, among Millennial renters, the share of renters living with a roommate in a small-asset multifamily situation is 14.4%.

Sharing is motivated primarily as much by social connection as by income needs. According to Psychology Today, “20% of people over 60 frequently feel intensely lonely.” Loneliness can be a risk for heart disease, Type 2 diabetes, arthritis, and Alzheimer’s disease. Because of health risks associated with loneliness, seniors that share a home are actually dealing with their current and potential future loneliness.

In addition to social connection and apartment affordability, sharing is also motivated by personal security, and sharing of daily chores. The need to “age in place” is driving the increase in co-sharing seniors in the large asset multifamily rental because these buildings tend to be located near urban services and health care centers, have elevators and wheelchair lifts, and have higher levels of amenities.

Amenities Promoted in 55+ Adult Living

When looking over senior housing options available in Houston, I found most of the advertising in the higher end communities mentioned affordability, distinction, style, lifestyle, freedom from chores, and choice. Specific advantages and amenities listed by the higher end properties in the facility advertising included:

  • Independence
  • Affordability
  • Beautifully landscaped grounds
  • Luxurious and spacious interiors
  • Locations close to dining, entertainment, parks
  • Locations close to and medical centers
  • Diverse and colorful neighborhood
  • “Dynamic alternative to the ordinary”
  • “Live your lifestyle with passion”
  • Luxury
  • Style
  • Home
  • Distinctive living experience
  • Restaurant-style dining
  • Resort amenities
  • Complete freedom
  • Infinity pool
  • Court yards
  • Dog park
  • Wine tasting lounge
  • Media room
  • Chef quality demonstration living
  • It’s a lifestyle
  • Boutique, resort style

Amenities Advertised at Less Expensive 55+ Community Options

Retirement and 55+ community combinations in a lower price category advertised:

  • Activities and programs
  • Privacy
  • Aging in place
  • Gym
  • Garage
  • Outdoor grills
  • Designer living
  • “Trade your to do list for a bucket list”
  • Pet-friendliness
  • Outdoor pool
  • Yoga and art classes
  • Access to meals
  • Choices
  • Community
  • People of similar life stages
  • Leave home maintenance and yard work behind
  • Water gardens
  • Swimming pool
  • Computer room

The youngest of the baby boomers are approaching 55, and the huge number of 55+ adults who are still active but looking for reduced housing maintenance responsibilities and costs as they age and live within a fixed income makes this group a dynamic market for senior living situations. Not all are turning to apartment renting, but this tend is worth watching.

Competition for good rental properties is stiff, and in order to buy a property in a climate of competition you may need funds fast. As a broker and a direct lender, it is my job to help you get a hard money loan easily and quickly. Private Lenders, not banks, are willing to help you fund your project based on the value of the property and its after renovation value. We have money to lend. A perfect fit is out there.

Give me a call or send an e-mail. I am focused on funding your success.

Patrick StCin, 512-213-2271,

e-mail: patrick@REICapital.cash

Tech Considerations for Multifamily Housing

Just this week, I said that one of the mistakes a real estate investor can make is not seeing the property in person before buying it. I said that so I could eat my words today, at least with regard to buyers of finished properties. I still think it is unwise for an investor to buy a property to fix, flip, develop, or fund without inspecting it in person. However, Multifamily PRO is reporting that augmented and virtual reality technology is expected to increase the number of residents willing to sign leases without visiting the property in person because they will be satisfied with viewing the property using virtual self-guided tours.

New technologies are and will be changing the apartment-buying, apartment-selling, apartment-living and apartment-operating experience. Considering this, investors, builders, and remodelers need to focus on communications and electronic infrastructure to support these new technologies when planning, budgeting for, building, and marketing multifamily housing. A few areas to focus on include:

Excellent Internet Connections

The first things to think about are internet connections, their quality, number, location, and security. Smart-home technologies like smart locks, lights, thermostats, as well as visual monitors for pets, children, and deliveries will be expected in the new high-tech apartment unit. These will impact the way the resident interacts with facility operators. For the resident, chat bots may make routine maintenance requests on behalf of the resident, reserve facilities, and schedule hair and dining appointments.  For the facility operator, chat bots may provide routine information to residents and collect repair orders and  rent payments. All these electronic interfaces will require excellent internet infrastructure in the multifamily complex.

Numerous Charging Stations and Outlets

The demand for electric cars, electric scooters, and electric-motor-assisted bicycles will drive the demand for charging stations and charging outlets at multifamily properties. Planning, budgeting, and locating these facilities for convenient access, exit, and safety will be important.

Locating Autonomous Vehicle Dropoff Points and Parking

Autonomous vehicles, both driven and flown, will need places to park and drop off clients, meals, and other products. This will affect the size of the parking area you will need and the layout of delivery sites around the building. Robots and drones may deliver and pickup within the apartment.  A drone may deliver to a dropoff point with directions for a robot that will complete the delivery inside the apartment community.  Conventional vehicles will also be expected to make deliveries and pickups and need space to maneuver.

Photo by JESHOOTS.com on Pexels.com

Facial Recognition

Artificial intelligence technologies will enable facial recognition for customer identification and for criminal background checks, and these facial recognition systems can track a person as they move around a property. This will improve security but raise privacy concerns.

Planned Office Space in Apartment

People working from home will need an excellent internet connection and may want an office available as part of their apartment.

An electronic interface between operator and potential buyer may be a way to design flexible space for the customer with the hope that they will stay longer in a space that fits them well.

These ideas, with some speculations added, came from the NAA Apartmentalize conference in Denver through reporter Andrew Stephens on Multihousing PRO.

REI Capital Resources built its reputation on finding private funding for investors for quick turn purchases and difficult situations. 

Give me a call or send an e-mail and share with me your plans and needs, and I’ll see what lending solution I can generate for you.

Patrick St.Cin

W – 512-213-2271
Patrick@REICapital.cash
Info@REICapital.cash fffff

Fourteen House Flipping Mistakes to Avoid

I decided to visit fix-n-flip websites to come up with a list of the top rooky mistakes you can make when buying, fixing, and reselling a home for profit. One of the websites I consulted while compiling this list of mistakes to avoid while fix-n-flipping houses for profit is Dave Ramsey’s website. Dave Ramsey is well known for his advice that all of us get out of debt, and that is good advice. If you have cash that you can spend to finance your fix-n-flip project, you will not feel so much pressure if the house does not sell quickly. You won’t be tempted to sell the property for a loss because loan payments and interest costs are eating away at your bottom line.  You will be able to wait out the market and sell for a profit.

However, if you need to find funding, there are private lenders and hard money lenders out there that will finance your project and I can help you find them. Calculate how much you need and give me a call.  I’ll do my best to find you the right loan for the right price quickly.

Below are 14 mistakes fix-n-flippers make in the areas of planning and budgeting, buying, renovating, and reselling properties.

  1. Planning and Budgeting: Not calculating permit costs, property assessment fees, loan originating fees, loan processing fees, inspection fees, points, or interest in your budget. https://www.moneycrashers.com/five-tips-for-effectively-flipping-a-house/
  2. Planning and Budgeting: Not knowing how much you can afford for the entire project before making a deal, including purchasing a home, making repairs, completing renovation projects, and selling the house.
  3. Buying: Buying a property sight unseen. https://www.moneycrashers.com/five-tips-for-effectively-flipping-a-house/
  4. Buying: The location you choose to buy in has a housing inventory shortage and such a high demand for houses that you become entrenched in a bidding war and end up paying above-market prices for a fix-n-flip property. https://www.moneycrashers.com/five-tips-for-effectively-flipping-a-house/
  5. Buying: You bought a house to renovate that is far away from your residence causing you to spend too much money on gas getting to and from the job site, and the repairs take longer to complete than they would if the house was nearby. https://www.moneycrashers.com/five-tips-for-effectively-flipping-a-house/
  6. Buying: Not knowing the market and not knowing if you are getting a good deal on the house you are buying. https://www.daveramsey.com/blog/how-to-flip-a-house
  7. Buying: Not looking for black mold, a bad roof, or a cracked foundation when evaluating whether to buy the house to fix and flip. https://www.moneycrashers.com/five-tips-for-effectively-flipping-a-house/
  8. Renovation: Putting in high-end upgrades while renovating the house that cause the house to cost more than the neighborhood can afford. https://www.daveramsey.com/blog/how-to-flip-a-house, https://www.moneycrashers.com/five-tips-for-effectively-flipping-a-house/
  9. Renovation: You did not have a reliable contractor help you estimate the repairs for the house and a surprise repair broke your budget. https://www.daveramsey.com/blog/how-to-flip-a-house
  10. Renovation: You underestimated repair costs and did not add 20% to your estimated repairs. https://www.moneycrashers.com/five-tips-for-effectively-flipping-a-house/
  11. Renovation: You tried to do repairs yourself without experience and without budgeting for contractors when you need them. https://www.moneycrashers.com/five-tips-for-effectively-flipping-a-house/; https://www.daveramsey.com/blog/how-to-flip-a-house
  12. Reselling: Because you don’t know the market and have not done your research, you can’t accurately calculate the house’s potential value, and you don’t know how to price the house for sale. https://www.daveramsey.com/blog/how-to-flip-a-house
  13. Reselling: Failure to network with buyers and build relationships before picking a house to fix-n-flip. https://www.moneycrashers.com/five-tips-for-effectively-flipping-a-house/
  14. Reselling: You did not list with a real estate agent even though you hate hosting open houses. https://www.moneycrashers.com/five-tips-for-effectively-flipping-a-house/

REI Capital Resources is “focused on funding your success!”

Contact me at 
Patrick@REICapital.cash
512-213-2271 Grid Table 7

Declutter for a Big Return

When you first start a fix-n-flip project, you need to decide how much to invest on landscaping the front and back yards and include this in your funding request. If you decide to stick to the minimum, bring the yards up to the standards of the neighborhood but not much higher, you are looking at the declutter, clean, maintain, and disguise course of action.

Clutter weighs us down, stresses us out, destroys focus, and creates a terrible first impression. Clutter can also be hazardous and ugly. Most fix-n-flip investors, landscapers, and remodelers have a line item on their budget sheer for performing maintenance and cleaning up. This is the first level of landscaping, the cheapest and the most necessary. First impressions are so important that the labor and materials required to clean up the front porch and yard and the driveway and backyard should definitely be included in your renovation budget.

Make Safe

Inspect the yard for hazards like glass, pieces of metal, and chemicals and clean these up first so later workers and home buyers will not be injured. Clean out downspouts, gutters, and window wells, replacing any missing or damaged parts. Repair fences, level and repair walkways and patios, replace broken patio or porch railings or steps. Paint.

Declutter

Next, you can declutter the landscaping, digging or pulling out weeds and plants that are dead, refreshing mulch, planters, and container gardens.  Gardendesign.com recommends removing plants that are ugly, messy, or overgrowing a sidewalk or porch, simplifying the landscape. Since you have already made the property safe, you can pay high school students out of school for the summer to help you with these removal, maintenance, and cleaning activities.

Disguise

Gardendesign.com also lists some inexpensive remodeling tricks that can be done to or with backyard structures, like garden sheds, equipment boxes, and walls to disguise garbage bins or a neighbor’s driveway. These structures can be renovated into beautiful features instead of eyesores without too much expense using repurposed materials, like rough barn wood and antique hinges, antique doors and gates.

Adding Plants While Protecting Your Return

Now you may want to consider adding plants and amenities that will appeal to buyers. At one time you certainly would get back any investment you made plus some in landscaping both front and back. In an article written in 2013, “Landscape your Home to Sell: 5 Tips to Save Green,” Debbie Abrams Kaplan interviews real estate experts for bankrate.com on what landscaping techniques might sell a home faster. Margaret Woda of Maryland says that you could recoup as much as 215% of your landscaping investment, but only 68% of your kitchen renovation expenses.

On the other hand, Frank L. Lucco, a Houston appraiser and realtor, interviewed in the same article, says that installing a deck, patio, fire pit, outdoor kitchen, lighting, and fountains are a good ideas, but added that you should “install them if you want them, but you won’t recoup the costs.”

Reduce Maintenance

Add plants sparingly and add plants that grow well in the environment you are in, so they do not require too much water, fertilizer, or pruning. Add flowering plants to add a spot of color. Gardendesign.com suggests investing in an irrigation system, using perennial plants that come back every year and are adapted to the climate in a yard because these reduce the amount of labor and attention involved in maintaining a landscape.

Whether you add or subtract plants and amenities from the landscape, reducing your costs in the renovation should translate into reducing your buyer’s labor while they live in the home, an important selling point. Buyers at a minimum want to fit into the neighborhood they buy into without too much labor or additional outlay of money.  They also want to come home to a house that is safe and does not consume all their free time in lawn and garden care.

Our fix-n-flip loan program is one of our most popular real estate loan programs. Competition for houses to fix-n-flip is tight. The ability to get fast funds to buy and remodel a property is important. As a broker and a direct lender, it is my job to help you get a hard money loan easily and quickly. Private Lenders, not banks, are willing to help you fund your project based on the value of the property and its after renovation value. We have money to lend and you need money quickly. A perfect fit is out there.

Call me or e-mail me for a quick response.

Patrick StCin, 512-213-2271,

e-mail: patrick@REICapital.cash �

Draw People to the Door

It is no secret that the yards surrounding a house can appeal to or repel potential buyers. They can be turned off by an ugly yard that is cluttered with trash, bare and dusty, or overgrown by weeds. On the other hand, they can also be intimidated by extensive flower beds and manicured lawns that look like they require a lot of weekend maintenance and mowing, as well as high water bills and expensive chemicals for fertilizing, weeding, and pest control. If you can create a landscape that is attractive and not intimidatingly difficult to maintain, it can be an amenity that will draw people to the door of your property, extend the living space outdoors, and become a place where people want to gather.

Inexpensive and Sustainable

One inexpensive way to make a landscape more efficient and sustainable in a dry climate is to reduce the area covered by lawn. This will reduce reliance on water, which is becoming more costly as it becomes shorter in supply. One alternative to grass is gravel.

Gravel includes pea gravel, river rock, crushed granite, and slate chips to name the ones that are easiest to get.  Lava rock and ground up glass are also alternatives. Gravel is attractive and easy to use to reduce grass by replacing parts of it with walkways, patios, and gardens.

Gravel Paths and Walkways

A walking path from the street to the front door is an easy addition that reduces the amount of lawn that needs to be watered, mowed, or fertilized. Usually, a walking path is 24 to 36 inches wide and set at ground level.  To build the walkway yourself, outline the walkway with string or garden hose, giving it some interesting curves.  Then excavate 6 to 8 inches below the final ground surface. Pick a gravel that is local (less expensive) and pleasing in color and texture. Add an edging of brick, wood, stone, rubber, or metal and fill the excavated walkway with gravel so that it is level with the surrounding ground. Then compact it by walking on it.

Gravel Patios

Inexpensive to install, gravel patios drain quickly, require little maintenance, and supply attractive anchors for outdoor furniture, fire features, and pools. They can be of any size, surrounded by raised beds, walls, shrubs, and terraced with steps from one level to another. Like paths, excavate 6 to 8 inches below the final ground surface. Then, fill the space with gravel. The Better Homes and Garden online magazine suggests using gray or tan gravels when you are aiming for a neutral, natural character. They suggest using gold, brown, white, and rust gravels to create higher impact patio floors.

A fire pit or fireplace set on a gravel patio and surrounded by comfortable chairs would provide a gathering place for friends and family. Fire pits are beautiful additions to an outdoor space. They can be made of corden steel, concrete, stone, and stucco. Fire pits add to the price of a patio, but if you don’t have to build and stain a wooden deck for the remodeled house, and use gravel instead, it might be worth the expense.

Don’t feel obligated to get rid of every blade of grass when you add a patio.  If you keep grass in your landscape, you might want to consider using a heat tolerant variety. All American Stone and Turf recommends Raleigh St. Augustine, Palmetto St. Augustine, Centipede, Celebration Bermuda, Tifway 419, Tif Sport, Tifdwarf, Buffalo, Palisades Zoysia, Empire Zoysia, Cavalier Zoysia, and Jamur Zoysia for properties in the Brazos Valley.

Gravel Gardens

A gravel garden growing drought-tolerant plants like yarrow, lavender, thyme, and sedum in a soil mix of crushed stone and clayey loam may not need watering at all once established. In a gravel garden, the mulch is the gravel over the soil. It holds moisture and blocks weeds. One trick I found interesting was shared by Ken Druse at garden design.com.  Ken inserted seedlings into old tube socks filled with soil. He used seedlings of Sempervivum (hens and chicks) and sedum.  As he built a rock wall, he inserted the old socks and seedlings into dry nooks and crannies where they would flourish.

Drought tolerant plants can be recognized by the pungent smell of their leaves and stems when crushed. They also have small leaves that may be covered with hairs or a waxy coating to prevent water loss. Yarrow and lavender are two excellent choices for gardens that are water efficient and easy to maintain.

When you are selling the house you just remodeled, be sure to create an appealing landscape and use a good photographer to take pictures for online listings.

Please give me a call or send an e-mail when you find that perfect investment property for your fix-n-flip project.  Don’t forget. I am focused on your success.

Patrick St.Cin
512-213-2271
Patrick@REICapital.cash 

Dvortygirl [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)%5D

Hurricanes and REI: It’s all about Timing

Alert: Harvey, Irma, Rita, Katrina

Hurricane season is here, and there are things you need to know now, before the storms approach.

Natural disasters are a cause of financial loss for a real-estate investor in fix-n-flip projects or for vacation rental property deals on a coastline. After reading several articles and searching the real estate websites, I ran into tips for real estate investors facing an approaching natural disaster at yourflipcoach.com, Your Virtual Real Estate Coach. Be sure to visit Ryan’s site if you have a minute. Here are the key points in the article.

Insurance Binding
First, as a practical matter, it is very important to know that insurance companies will not bind a new policy or add additional coverage to an existing policy if a hurricane or large storm is headed for Texas. This is important for you to know if you are planning to invest in a property in Texas.

Make sure a hurricane is not on its way. Buy insurance that covers flood and wind damage and replacement costs, and don’t buy the property or the insurance if you can’t bind an insurance policy. Both you and your lender will want insurance on the property. Buy flood and wind insurance on your new property and make sure insurance binders are active well before the next storm.

Closings Disrupted
Second, when you have found a buyer and a storm is approaching, time the closing of the deal so that closing is complete well before the storm event. The storm can get in the way of your closing in so many ways. Following a storm, roads and properties may be damaged and inaccessible. Even if you are dry, routes in and out of your area might be blocked or flooded. You could lose your buyer because they cannot get to you or to the property, or because the property is damaged.

A study performed by the Federal Reserve Bank of Dallas concludes that the “typical hurricane raises real house prices and, to a lesser extent, reduces real incomes for a few years.”

New Business Opportunity 5 Years Out
Third, be ready for new business opportunities following a storm. Damaging natural disasters and the insurance money that comes into the market after they pass can create new opportunities for real estate investors. Some property owners may want to sell, particularly if they did not have insurance. Even if they are insured, many home owners will take their insurance check and sell the property for whatever they can get. Some lots are sold at land value after the home was removed; but once a house is rebuilt, it can be resold again at near the same price in future years (about 5 years).

aerial view atmosphere clouds cold front

Residential Prices Rise Because Housing is Needed
The value of property that is high and dry after a hurricane will increase because homes are lost or uninhabitable. Housing will be needed. And, buyers and investors will be seeking solutions.

An article in Forbes by Jordan Lulich points out that right after a storm, home sales go down because property owners are too busy cleaning up. According to his article, two months after Hurricane Harvey, 31% of residential neighborhoods saw an increase in median house prices here in Texas.

It is still smart to invest in real estate in hurricane prone areas because residential property values increase over time. Repair costs associated with storms are certainly worrisome. Just be sure to buy insurance that covers wind and water damage to protect your asset.

Please give me a call when you find that perfect investment, and I can help you fund the project.

Patrick St.Cin
512-213-2271
Patrick@REICapital.cash

 
References
Ryan Kuhlman, January 8, 2018, Natural Disasters and Real Estate Investing, https://yourflipcoach.com/natural-disasters-and-real-estate-investing/

Jordan Lulich, June 28, 2018, Does Hurricane Damage Negatively Impact Your Real Estate Value/
Forbes https://www.forbes.com/sites/jordanlulich/2018/06/25/does-hurricane-damage-negatively-impact-your-real-estate-value/#381ca6d5107b

Murphy, Anthony and Stroble, Eric, October 2010, The Impact of Hurricanes on Housing Prices: Evidence from US Coastal Cities. Federal Reserve Bank of Dallas, Research Department, Working Paper 1009, https://www.dallasfed.org/

Have You Hired an Uber Driver Today?

House flipping has made it to the Wall Street Journal. In a recent article (May 28, 2019), Uber Drivers Seek Extra Cash Working for House Flippers,” I read about a new way house flippers are finding houses to buy in today’s competitive market. They are maximizing their chances of locating houses to fix-n-flip by paying Uber drivers to identify homes on their routes that are ripe for flipping. This cuts down on the amount of driving and scouting the real estate investor has to do to find potential homes to buy, and the Uber driver makes some extra cash.

Uber drivers take a picture of a property using an app developed by DealMachine, LLC. The app uses GPS and county online property records to identify property owners. The DealMachine website in the Google app store says that the app “is the fastest growing solution for investors and agents who want to build their own marketing list and find local deals.” It advertises that you can “See a run-down house, find the owner, and flip it for a profit.” Their app gets in touch with the property owner via direct mail or e-mail. The app user instantly sees the owner’s name, phone number, and e-mail address to contact them on the spot.

Driving for Dollars

Homes that have owners that might be eager to sell include houses that appear vacant and those that have newspapers piled up and a “for sale” or “for rent by owner” sign in their un-mowed front yards. Uber drivers take pictures of the houses and submit the referrals when they are not driving a client.

Some real estate investment companies pay the Uber driver a hefty commission if a lead pans out and others pay some for each good lead and more if a referral leads to a deal closing. One Uber driver interviewed by the WSJ writer has sent in 400 photos and has not had any of her leads close yet, but she says, “I understand real estate is a numbers game. What do I have to lose? I’m driving around anyway.”

REI Capital Resources is a direct lender as well as a broker of funding solutions. We offer short and long-term financing options for real estate.

Please give me a call when you find that perfect real estate investment and know how much money you need.

Patrick St.Cin
512-213-2271
Patrick@REICapital.cash 

References

Parker, Will and McWhirter, Cameron, Uber Drivers Seek Extra Cash Working for House Flippers,

WSJ May 28, 2019

https://www.wsj.com/articles/uber-drivers-seek-extra-cash-working-for-house-flippers-11559035802?mod=trending_now_2

https://play.google.com/store/apps/details?id=com.dealmachine&hl=en_US 0feffffff0

Vacation Rental Investment Property: Expenses

Summer is here and vacations are in the air.  Perhaps, it is also time to think about how we can pay for our vacation with income from an investment property purchased to rent. As we discussed yesterday, if you receive income from renting property for use as a dwelling, such as a house or apartment, you may need to report the income, and you may be able to deduct certain expenses. 

To make your tax life easier and less confusing for you, your tax preparer, and the tax authorities, be clear about your goals for the rental property.  Are you using the property partly for your own use and renting it out when you aren’t using it or are you operating it solely for a profit?  If you are using the property yourself and renting it, divide the portions of expenses between your investment and your personal tax forms based on days used or percentage used, and you will not run into tax trouble.

Types of Rental Expenses

In most cases expenses related to renting your property are deductible. These deductions can be applied against the income you receive from rent to lower the amount of the rental income that is subject to tax. These would general be reported on a form 1040.  According to the IRS, if you use the investment property to rent for a profit and do not use the dwelling as a residence, or for personal use, then your deductible rental expense may add up to more than your gross rental income. When you use the property for both personal and rental use, you will not be able to deduct rental expenses in excess of the gross rental income minus the rental portion of the mortgage interest, real estate taxes, casualty losses from federally declared disasters for the rented part, realtor’s fees, and advertising costs.

Deductible expenses include:

  • Advertising
  • Auto and travel expenses (if the primary purpose of the trip is to collect rent or to manage, conserve, and maintain your rental property)
  • Cleaning and maintenance
  • Realtor and Online Commissions
  • Depreciation: This expense begins when the property is rented or placed in service. It is taken over the lifetime of the property to cover the cost of the original purchase.
  • Insurance
  • Interest on loans other than the mortgage
  • Legal and other professional fees
  • Local transportation expenses (those incurred collecting rents, managing, conserving, or maintaining your property)
  • Management fees
  • Mortgage interest paid to banks, etc.
  • Mortgage expenses, including mortgage commissions, abstract fees, recording fees, are not deducted as expenses, but are considered part of the basis of your property as capital expenses and are depreciated.
  • Points. Points are prepaid interest and are deducted over the life of the loan and not all in the year the loan was made.
  • Pre-rental expenses: Expenses incurred maintaining your property from the time you make it available to rent
  • Rental payments for equipment
  • Rental payments for the property you lease
  • Repairs
  • Taxes
  • Utilities

Vacant Property

You can deduct expenses incurred maintaining and preserving your property when it is vacant, or vacant while listed for sale.

Uncollected Rent – Not Deductible

Don’t deduct uncollected rents. It is not included in your income, so it cannot be deducted.

Renting to Your Employer

If you rent part of your home to your employer and provide services for your employer in that rented space, report the rental income.  Claim the income and deduct the expense for that portion of the house. You can deduct mortgage interest, real estate taxes, casualty losses from federally declared disasters for the rented part of your home.

I would like to help you with funding for an investment rental property or vacation rental.  I have a long-term rental loan program that can help you get into an income-producing vacation rental investment property.

Please give me a call when you find that perfect real estate investment and know how much money you need.

Patrick St.Cin
512-213-2271
Patrick@REICapital.cash 

References

IRS Publication 527 (2018) Residential Rental Property

IRS Tax topic 415 Renting Residential and Vacation Property

Image Credit, vacation rental, Seattle. Fred Ueckert, FJU Photography [CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0)%5D

Vacation Rental Investment Property: Income

Summer is here and our heads are full of vacation plans. Some of us rent summer vacation homes to stay in and some of us rent vacation homes out to others for income.

As a real estate investor, you may be considering buying a property to rent out for income or to remodel and resell. There are four points about income taxes that apply to rental properties that you should know about.

1.  If you rent the dwelling for fewer than 15 days a year, you do not have to report any of the rental income and cannot deduct any expenses as rental expenses.

2. If you receive income from renting property for use as a dwelling, such as a house or apartment, you will most likely need to report the income, and you may be able to deduct certain expenses.

3. The accounting method you choose to follow determines when you count income and deduct expenses.

4. Whether you use the property personally for vacations with your family and friends makes a big difference.

Accounting Method:

The accounting method you use determines when you claim income and deductible expenses.

Types of Rental Income:

Monthly rent is only one kind of income you may receive.  You may also receive rent in advance. You report monthly rent when you receive it. A tenant may pay you to cancel a lease. This income you report when you receive it. A tenant may pay some the expenses attributed to the rental dwelling (for example utilities). You declare the expenses paid as income. You can then deduct the expense if they are deductible rental expenses. A tenant may pay you with services (for example painting) or property (for example they construct a built-in grill). In this case you report the fair market value of the service or property as rental income.

Security deposits are not included in your income if you intend to return them to your tenant at the end of the lease. But, if you keep part or all of the deposit, include it as rental income in the year you receive it.  If a security deposit is used as the final month’s rent, include it as advanced rental income when you receive it.

Personal Use

According to the IRS, If you use the property for personal use 10% of the time or 14 days a year (whichever is greater) and rent it out at the fair market value for income, limitations apply on the rental expenses you can deduct. You will need to divide the expenses between the personal use and the rental income use based on the number of days of each. Of course for personal use, you will not receive income so there is nothing to report on the personal taxes. When you use the property for both personal and rental use, you will not be able to deduct rental expenses in excess of the gross rental income minus the rental portion of the mortgage interest, reals estate taxes, casualty losses from federally declared disasters for the rented part, realtor’s fees, and advertising costs.

One thing to note about personal use is that if you rent to a relative or friend for a token amount, less than the fair market value of a dwelling just like yours, you have to count this use as personal use, not as investment rental income use.

I have a long-term rental loan program that can provide funds for your real estate investment for the purpose of renting for income.

REI Capital Resources is a direct lender as well as a broker of funding solutions. We offer short and long-term financing options.

Please give me a call when you find that perfect real estate investment and know how much money you need.

Patrick St.Cin
512-213-2271
Patrick@REICapital.cash 

References

IRS Publication 527 (2018) Residential Rental Property

IRS Tax topic 415 Renting Residential and Vacation Property

Vacation rental Image in Florida. Jan Lieberman [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)%5D

Numbers: Prices, Percentages, Points

Despite the volatility of the stock markets and the Texas weather, no matter if it is raining, blowing, or baking, even if I have to walk uphill both coming and going, in a “snownado,” I am here to help you find ways to put your money and your time to good use making more money in big or small, short-term or long term, real estate investment adventures.

I have several loan programs to offer.

 

 

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Patrick@reicapital.cash

512-213-2271