Buying a condo for investment–questions

[Hatfield]

[quote=bearishgurl]”Sched. C” [/quote]

It’s actually Schedule E, but yes, most of the associated costs are deductible similar to how they would be for a Schedule C business. I don’t know how this works for a condo, but with a SFR you can depreciate the structure (not the land itself but the “improvements” to the property) over 27.5 years.

You want to aim for the sweet spot where the property generates positive net cash flow, but on paper looks like a loss, mostly because of the depreciation writeoff. When you’re in this zone you’re making more money but paying less tax.

I’d be surprised if you can get 5% fixed for an investment property.

[sreeb]

[quote=Hatfield][quote=bearishgurl]”Sched. C” [/quote]

I don’t know how this works for a condo, but with a SFR you can depreciate the structure (not the land itself but the “improvements” to the property) over 27.5 years.[/quote]

For condos it generally works better since you typically have a higher structure to land ratio.

[sreeb]

[quote=Hatfield][quote=bearishgurl]”Sched. C” [/quote]

I don’t know how this works for a condo, but with a SFR you can depreciate the structure (not the land itself but the “improvements” to the property) over 27.5 years.[/quote]

For condos it generally works better since you typically have a higher structure to land ratio.

[sreeb]

[quote=Hatfield][quote=bearishgurl]”Sched. C” [/quote]

I don’t know how this works for a condo, but with a SFR you can depreciate the structure (not the land itself but the “improvements” to the property) over 27.5 years.[/quote]

For condos it generally works better since you typically have a higher structure to land ratio.

[sreeb]

[quote=Hatfield][quote=bearishgurl]”Sched. C” [/quote]

I don’t know how this works for a condo, but with a SFR you can depreciate the structure (not the land itself but the “improvements” to the property) over 27.5 years.[/quote]

For condos it generally works better since you typically have a higher structure to land ratio.

[sreeb]

[quote=Hatfield][quote=bearishgurl]”Sched. C” [/quote]

I don’t know how this works for a condo, but with a SFR you can depreciate the structure (not the land itself but the “improvements” to the property) over 27.5 years.[/quote]

For condos it generally works better since you typically have a higher structure to land ratio.

[bearishgurl]

[quote=bearishgurl]I would also think you would have less vacancies with an SFR (all depending on where it was located, of course).[/quote]

Yes, temeculaguy, I totally agree that the rent multiplier is the bottom line when in comes to rentals. However, location is absolutely everything when it comes to the quality of tenant you will attract. It’s hard to get both (location and rent multiplier) in the same property. I believe tenants can and do sneak a large dog in a condo with a ground floor door which leads to a private, fenced patio area. Then you have the poor animal stuck in the unit or pacing the patio and scratching the fence all day while the tenant is at work as opposed to roaming a fenced backyard. Small older homes (that would compare with a condo “rent multiplier”) as a rule have more generous backyards than construction built in the 80’s and after.

Being the “control freak” that I am, though, I would have an issue with giving an Assn. nearly $3K a year, when I could put $$ that into my own property. The Assn. could also fine the owner for his/her tenant’s CC&R violations. And HOA hikes and special assessments can be unpredictable and eat into a landlord’s operating costs.

Sorry about telling jimmyle he should use a “Sched. C” to list expenses and depreciation of his (future) rental. I’m one of those folks who give my taxes to a “Hatfield” to do every year and just sign the return 😉

Since jimmyle does not yet own a principal residence for himself and desires one, I think he should figure out what kind of property he can get for himself after he uses part of his credit allotment to purchase a rental condo. This will tell him whether a rental condo purchase is feasible at this time.

[bearishgurl]

[quote=bearishgurl]I would also think you would have less vacancies with an SFR (all depending on where it was located, of course).[/quote]

Yes, temeculaguy, I totally agree that the rent multiplier is the bottom line when in comes to rentals. However, location is absolutely everything when it comes to the quality of tenant you will attract. It’s hard to get both (location and rent multiplier) in the same property. I believe tenants can and do sneak a large dog in a condo with a ground floor door which leads to a private, fenced patio area. Then you have the poor animal stuck in the unit or pacing the patio and scratching the fence all day while the tenant is at work as opposed to roaming a fenced backyard. Small older homes (that would compare with a condo “rent multiplier”) as a rule have more generous backyards than construction built in the 80’s and after.

Being the “control freak” that I am, though, I would have an issue with giving an Assn. nearly $3K a year, when I could put $$ that into my own property. The Assn. could also fine the owner for his/her tenant’s CC&R violations. And HOA hikes and special assessments can be unpredictable and eat into a landlord’s operating costs.

Sorry about telling jimmyle he should use a “Sched. C” to list expenses and depreciation of his (future) rental. I’m one of those folks who give my taxes to a “Hatfield” to do every year and just sign the return 😉

Since jimmyle does not yet own a principal residence for himself and desires one, I think he should figure out what kind of property he can get for himself after he uses part of his credit allotment to purchase a rental condo. This will tell him whether a rental condo purchase is feasible at this time.

[bearishgurl]

[quote=bearishgurl]I would also think you would have less vacancies with an SFR (all depending on where it was located, of course).[/quote]

Yes, temeculaguy, I totally agree that the rent multiplier is the bottom line when in comes to rentals. However, location is absolutely everything when it comes to the quality of tenant you will attract. It’s hard to get both (location and rent multiplier) in the same property. I believe tenants can and do sneak a large dog in a condo with a ground floor door which leads to a private, fenced patio area. Then you have the poor animal stuck in the unit or pacing the patio and scratching the fence all day while the tenant is at work as opposed to roaming a fenced backyard. Small older homes (that would compare with a condo “rent multiplier”) as a rule have more generous backyards than construction built in the 80’s and after.

Being the “control freak” that I am, though, I would have an issue with giving an Assn. nearly $3K a year, when I could put $$ that into my own property. The Assn. could also fine the owner for his/her tenant’s CC&R violations. And HOA hikes and special assessments can be unpredictable and eat into a landlord’s operating costs.

Sorry about telling jimmyle he should use a “Sched. C” to list expenses and depreciation of his (future) rental. I’m one of those folks who give my taxes to a “Hatfield” to do every year and just sign the return 😉

Since jimmyle does not yet own a principal residence for himself and desires one, I think he should figure out what kind of property he can get for himself after he uses part of his credit allotment to purchase a rental condo. This will tell him whether a rental condo purchase is feasible at this time.

[bearishgurl]

[quote=bearishgurl]I would also think you would have less vacancies with an SFR (all depending on where it was located, of course).[/quote]

Yes, temeculaguy, I totally agree that the rent multiplier is the bottom line when in comes to rentals. However, location is absolutely everything when it comes to the quality of tenant you will attract. It’s hard to get both (location and rent multiplier) in the same property. I believe tenants can and do sneak a large dog in a condo with a ground floor door which leads to a private, fenced patio area. Then you have the poor animal stuck in the unit or pacing the patio and scratching the fence all day while the tenant is at work as opposed to roaming a fenced backyard. Small older homes (that would compare with a condo “rent multiplier”) as a rule have more generous backyards than construction built in the 80’s and after.

Being the “control freak” that I am, though, I would have an issue with giving an Assn. nearly $3K a year, when I could put $$ that into my own property. The Assn. could also fine the owner for his/her tenant’s CC&R violations. And HOA hikes and special assessments can be unpredictable and eat into a landlord’s operating costs.

Sorry about telling jimmyle he should use a “Sched. C” to list expenses and depreciation of his (future) rental. I’m one of those folks who give my taxes to a “Hatfield” to do every year and just sign the return 😉

Since jimmyle does not yet own a principal residence for himself and desires one, I think he should figure out what kind of property he can get for himself after he uses part of his credit allotment to purchase a rental condo. This will tell him whether a rental condo purchase is feasible at this time.

[bearishgurl]

[quote=bearishgurl]I would also think you would have less vacancies with an SFR (all depending on where it was located, of course).[/quote]

Yes, temeculaguy, I totally agree that the rent multiplier is the bottom line when in comes to rentals. However, location is absolutely everything when it comes to the quality of tenant you will attract. It’s hard to get both (location and rent multiplier) in the same property. I believe tenants can and do sneak a large dog in a condo with a ground floor door which leads to a private, fenced patio area. Then you have the poor animal stuck in the unit or pacing the patio and scratching the fence all day while the tenant is at work as opposed to roaming a fenced backyard. Small older homes (that would compare with a condo “rent multiplier”) as a rule have more generous backyards than construction built in the 80’s and after.

Being the “control freak” that I am, though, I would have an issue with giving an Assn. nearly $3K a year, when I could put $$ that into my own property. The Assn. could also fine the owner for his/her tenant’s CC&R violations. And HOA hikes and special assessments can be unpredictable and eat into a landlord’s operating costs.

Sorry about telling jimmyle he should use a “Sched. C” to list expenses and depreciation of his (future) rental. I’m one of those folks who give my taxes to a “Hatfield” to do every year and just sign the return 😉

Since jimmyle does not yet own a principal residence for himself and desires one, I think he should figure out what kind of property he can get for himself after he uses part of his credit allotment to purchase a rental condo. This will tell him whether a rental condo purchase is feasible at this time.

[jimmyle]

This is a newer condo built in the 90’s so I think it is not a problem.

[quote=bearishgurl]
jimmyle, have you checked to make sure the condo doesn’t still have polybutylene plumbing between the walls? It’s a disaster waiting to happen (or has already exploded) and was prevalent between 1979 and 1989 build-dates. If there is some of this still left in the building, I wouldn’t touch it. That’s just me. FYI, many owners who got their class-action settlements in 1994 for faulty PTB DID NOT spend this $$ on plumbing upgrades. I wholeheartedly recommend you check into this before making an offer.[/quote]

[jimmyle]

This is a newer condo built in the 90’s so I think it is not a problem.

[quote=bearishgurl]
jimmyle, have you checked to make sure the condo doesn’t still have polybutylene plumbing between the walls? It’s a disaster waiting to happen (or has already exploded) and was prevalent between 1979 and 1989 build-dates. If there is some of this still left in the building, I wouldn’t touch it. That’s just me. FYI, many owners who got their class-action settlements in 1994 for faulty PTB DID NOT spend this $$ on plumbing upgrades. I wholeheartedly recommend you check into this before making an offer.[/quote]

[jimmyle]

This is a newer condo built in the 90’s so I think it is not a problem.

[quote=bearishgurl]
jimmyle, have you checked to make sure the condo doesn’t still have polybutylene plumbing between the walls? It’s a disaster waiting to happen (or has already exploded) and was prevalent between 1979 and 1989 build-dates. If there is some of this still left in the building, I wouldn’t touch it. That’s just me. FYI, many owners who got their class-action settlements in 1994 for faulty PTB DID NOT spend this $$ on plumbing upgrades. I wholeheartedly recommend you check into this before making an offer.[/quote]

[jimmyle]

This is a newer condo built in the 90’s so I think it is not a problem.

[quote=bearishgurl]
jimmyle, have you checked to make sure the condo doesn’t still have polybutylene plumbing between the walls? It’s a disaster waiting to happen (or has already exploded) and was prevalent between 1979 and 1989 build-dates. If there is some of this still left in the building, I wouldn’t touch it. That’s just me. FYI, many owners who got their class-action settlements in 1994 for faulty PTB DID NOT spend this $$ on plumbing upgrades. I wholeheartedly recommend you check into this before making an offer.[/quote]

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