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I'm not worrying now. If CA doesn't go crazy and Prop 13 holds I may stay here forever. Yes I want a LTR but no way am I getting married, not even for the tax exclusion.
I think that still works. The timing is wrong but I'm kicking out my PHX tenant next month and I could move in there and sell my current residence, live there 2 years and then upgrade.
The only thing is, I just *LOVE* my beautiful current home! My PHX property is very nice too, but it's in a tract, the only view is neighbors' houses. And it has a pool. (I think a pool is required in PHX...)
Residential Property that has been depreciated as a rental introduces a calculation to the mix.
In the old days you could have owned a rental for years and written off a lot of depreciation and then move in for two years and husband/wife exclude 500k of profit...
I have not sold anything in a long time... so don't want to give advice as gospel...
Not anymore . Depreciation still gets recaptured and the tax free exclusion is prorated over the number of years it was used for unqualified use
Thank you... the word I could not remember is recapture...
It was a very sweet deal for those looking to transition out over time and willing to occupy their rentals two years at a time.
My friends Mom was not too keen on the idea... but her husband laid it out and said this is a 2 million dollar proposition and she signed on.
Looking back it was not that bad... they had local houses to be close the kids and they had their forever retirement home with tax benefits at Incline Village Lake Tahoe and they are still there...
Residential Property that has been depreciated as a rental introduces a calculation to the mix.
In the old days you could have owned a rental for years and written off a lot of depreciation and then move in for two years and husband/wife exclude 500k of profit...
Quote:
Originally Posted by mathjak107
Not anymore . Depreciation still gets recaptured and the tax free exclusion is prorated over the number of years it was used for unqualified use
It's academic for me, can't say for others.
This last rental has been like an albatross around my neck, and I'll be glad to see the payout check. Besides I have a significant amount of money in my stocks and in my trading account, and I'd like to see a bit more liquid funds at my credit union. I have a level above which I feel inflation is eating my meager interest, and below which I like to have a pretty nice chunk so I won't be risking having to cash in something (stock) that I don't want to cash in, like in case of an unanticipated emergency. Everybody should have a year's worth of living expenses in the bank IMO.
So I'm not buying any real estate, maybe never again. I have my dream home that I worked much of my career for.
I've been a LL for over 15 yrs with multiple properties in different locations. ALL my properties are paid of and I've never had to evict a tenant. I know people who've had nothing but hell with their tenants and there's reasons for that. Here's what I've learnt over the years;
- Real estate is not for everyone especially if one is going to take a 30 yr mortgage to finance their property. One might as well buy stocks on margin.
- Location, location, location comes second once you have the $$$$ to invest in a property.
- A good property in a good location will attract good tenants. On average my tenants last more than 5 yrs. Bad properties (in bad locations) will attract all sorts of deadbeats. The only solution to this is below market rate rent to attract good tenants to a bad location.
- Screen every prospective tenant. Don't entertain stories to cover up for gaps or blemishes in their background check.
No stock can beat getting rental income month after month, year after year. Real estate is REAL wealth.
Over the years neighborhoods change... right now they are changing in a positive way in Oakland CA.
Starting out the only game in town was Section 8 for many of the locations... that was it.
Many of the same properties today and have not had a new Section 8 tenant in over 12 years... still have some legacy S8 tenants.
Good tenants can go bad... one couple were super stars... they had great jobs and were planning on buying... starting a family.
He came home and found his wife cheating... she moved out that day... it was a downward spiral from that moment... simply didn't care anymore... lost his job... stopped paying for his car... wouldn't answer the door... I told him either he is out or the Sherif would put him out... he said he was broke and had no place to put his things...
I went with him to a public storage... paid for one months rental and 4 hour U-haul... helped him move and never heard from him again...
People are not static... by the same token... had some that got laid off when things were tight back in 2009... "We" got through it and we made it work...
One thing I will not do is chase people... but I have had tenants come to me with a job loss... etc... especially back in 2009... we sat down... figured their unemployment and did the math... the difference is they took the initiative... another I moved to a 1 bedroom from a 3...
I often drive around my city and look at anything with a 'for rent' sign in the yard. I go home and look up the owners and many of the addresses are in high cost areas like Bel Air, Ca and Palo Alto. These rentals are owned by wealthy individuals.
It's a very stealthy way to operate wealth. It makes me wonder about every stranger I cross in everyday life. The goofy clown in line ahead of me at Jack In The Box could own 20mil in RE.
I know of one old guy who owned a small music store in my hometown for decades. Just a humble local merchant. I bought guitar strings and picks from him when I was a kid. Years later, when I learned how to search property info I came across at least 25 properties he owned in the area. I'd be searching a block or area and his name kept coming up. I'd never have guessed that he owned so much RE.
It may not be easy, but it seems to me that if you can get the learning curve down with RE the sky is the limit.
I've been a LL for over 15 yrs with multiple properties in different locations. ALL my properties are paid of and I've never had to evict a tenant. I know people who've had nothing but hell with their tenants and there's reasons for that. Here's what I've learnt over the years;
- Real estate is not for everyone especially if one is going to take a 30 yr mortgage to finance their property. One might as well buy stocks on margin.
- Location, location, location comes second once you have the $$$$ to invest in a property.
- A good property in a good location will attract good tenants. On average my tenants last more than 5 yrs. Bad properties (in bad locations) will attract all sorts of deadbeats. The only solution to this is below market rate rent to attract good tenants to a bad location.
- Screen every prospective tenant. Don't entertain stories to cover up for gaps or blemishes in their background check.
No stock can beat getting rental income month after month, year after year. Real estate is REAL wealth.
i went the first 20 years wih no issues with tenants .but if you do it long enough , you can't screen for the big three that eventually get just about every landlord .
JOB LOSS -ILLNESS -AND DIVORCE .
then the tenants problems become yours .
my equity portfolio blew away my non manhattan real estate . manhattan did better then my equity portfolio .
so real estate is highly local and deal dependent . i would never say one is inherently better than the other
I often drive around my city and look at anything with a 'for rent' sign in the yard. I go home and look up the owners and many of the addresses are in high cost areas like Bel Air, Ca and Palo Alto. These rentals are owned by wealthy individuals.
It's a very stealthy way to operate wealth. It makes me wonder about every stranger I cross in everyday life. The goofy clown in line ahead of me at Jack In The Box could own 20mil in RE.
I know of one old guy who owned a small music store in my hometown for decades. Just a humble local merchant. I bought guitar strings and picks from him when I was a kid. Years later, when I learned how to search property info I came across at least 25 properties he owned in the area. I'd be searching a block or area and his name kept coming up. I'd never have guessed that he owned so much RE.
It may not be easy, but it seems to me that if you can get the learning curve down with RE the sky is the limit.
I tend to know a lot of small owners...
Some as small as a duplex or triplex where the owner lives in one unit and rents out the remaining...
My High School teacher did quite well and I had no idea when I was his student...
He would buy a home that needed work, move in and spend summers remodeling... every 3 to 5 years he would get an equity line and buy another... this worked well as the limit is 4 or 5 loans at one time under Owner Occupant.
His little portfolio resulted in 5 area homes with 4 being rentals... worth a couple of million today... never would have known...
Another guy is a mechanic... has a small shop with 5 bays... he and his Dad came here from Poland and bought the shop where they both work... when rates dropped they did a refi and had lots of cash flow and started buying single family homes... about 10 years ago they shifted to AZ and have picked up quite a few... maybe 40 now in 30 years... with 17 in the last 10 years... and the bulk in 2008-12.
I see it as a hedge for the working man/woman if they are willing to jump in and stick with it.
The area is crazy though... have friends that started at Apple as a summer job in High School back in 1980... she never went beyond High School but her Apple Stock is worth millions and her home is paid for... same for another at Genentech...
I've had tenants go through job loss and divorce. The key is to allow them to break the lease or work it out with them. Another thing that works is to make sure all adults in the property are on the lease. So if one of them is affected, the others are obligated to chip in or they have to collectively resolve the issue.
Quote:
Originally Posted by mathjak107
i went the first 20 years wih no issues with tenants .but if you do it long enough , you can't screen for the big three that eventually get just about every landlord .
JOB LOSS -ILLNESS -AND DIVORCE .
then the tenants problems become yours .
my equity portfolio blew away my non manhattan real estate . manhattan did better then my equity portfolio .
so real estate is highly local and deal dependent . i would never say one is inherently better than the other
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