Can you make money monthly on 1 rental with the management fees, taxes, etc. Or are you banking on increased property value and/or scaling the investment with other rentals to make money?

I'm looking for alternatives to investing in the stock market.

it depends on the property and the financing

you will get help on the rental's interest and property taxes, as well as, depreciation.

I have a few questions in regards to your unit at the barracks if you don't mind helping me out. Interested in purchasing one as a rental myself.

Corps dot ag12 at gmail dot com

In your opinions, which would be a better investment in BCS, a 3/3 or a 4/4?

ColinAggie said:

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I love real estate, but the CS market scares the crap out of me right now with all of these new luxury complexes popping up. Plus, from my understanding, a lot are nowhere near capacity. What does that say for the rental market in CS. Especially for townhomes, duplexes, fourplexes, etc..

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i was up that way last weekend and will be heading back tomorrow. a lot of For Lease signs out.

CS is the last place I would invest. Specifically tertiary property locations.

I heated from a leasing company that one of the upper end complexes is 33% leased, so they lowered the rent to $450/mo with all bills paid. I believe there are 700 rooms total in the place that is walking distance to Kyle and Olsen.

Random Walk said:

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CH

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CH?

Calloway House

Harkrider 93 said:

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I heated from a leasing company that one of the upper end complexes is 33% leased, so they lowered the rent to $450/mo with all bills paid. I believe there are 700 rooms total in the place that is walking distance to Kyle and Olsen.

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Which place?

Assume it's one of the Calloway properties

I didn't ask the name. Just listened to the data being told and decided to wait on buying a rental in CS.

Wife and I had a house on Meadow View we rented to college students the last eleven years. We recently sold it because I got tired of keeping up with it and wanted to use the money to buy some adjoining land to our place.

Overall, we were pretty lucky. Two of our tenants we had all four years of their time at A&M. We bought the property using money my wife inherited and we more than made our money back but like I said we were lucky with it always being rented out and rented out to decent kids who took care of the place as well.

Abitaholic said:

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Here's some personal info to your question. I was in the same boat - wanted somewhere to park a bit of cash outside of the market.

I bought a 3BR/3BA townhouse in CS this past spring at The Barracks. I put 20% down and my monthly mortgage is right at $1,100; including taxes, insurance. Each tenant pays $550 so I make roughly $550 per month. At some point I'll have maintenance to do so that will hit me but this is better cash flow than I initially expected. I manage it myself.

I'm hopeful I'll also get a tax benefit from the rental property taxes and interest, but I'm not sure exactly how that will play out.

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So that means you're paying $1100 / month + being taxed on $1650 income per month. At ~20% that's ~$330 of your $550 profit gone to taxes. Granted you have a few deductions but not enough for me to give it a go.

Cyp0111 said:

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It's over built

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Land is a finite resource and land in Texas will not be here forever. Especially BCS... you can only grow so far out before you have to start building up.

CS78 said:

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The Wonderer said:

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wcb said:

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So that means you're paying $1100 / month + being taxed on $1650 income per month. At ~20% that's ~$330 of your $550 profit gone to taxes. Granted you have a few deductions but not enough for me to give it a go.

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Where do you get taxed on revenue and not profit for businesses??

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Might also want to google up on rental property depreciation. Most financed rentals should be turning a tax loss at the end of the year even if you're pocketing decent money each month.

If you're a peon like me making under $100k, the IRS lets you apply $25k of passive real estate losses against that years normal income. Subtract that plus pretax health care and 401k and my AGI usually runs about $10-15k a year. AKA I don't pay jack in income tax and probably never will.

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This was my thought. There are a lot of ways to kill that rental home profit with other advantageous tax techniques.

wcb said:

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Abitaholic said:

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Here's some personal info to your question. I was in the same boat - wanted somewhere to park a bit of cash outside of the market.

I bought a 3BR/3BA townhouse in CS this past spring at The Barracks. I put 20% down and my monthly mortgage is right at $1,100; including taxes, insurance. Each tenant pays $550 so I make roughly $550 per month. At some point I'll have maintenance to do so that will hit me but this is better cash flow than I initially expected. I manage it myself.

I'm hopeful I'll also get a tax benefit from the rental property taxes and interest, but I'm not sure exactly how that will play out.

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So that means you're paying $1100 / month + being taxed on $1650 income per month. At ~20% that's ~$330 of your $550 profit gone to taxes. Granted you have a few deductions but not enough for me to give it a go.

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Not at all how the tax breakdown works

CS78 said:

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The Wonderer said:

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wcb said:

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So that means you're paying $1100 / month + being taxed on $1650 income per month. At ~20% that's ~$330 of your $550 profit gone to taxes. Granted you have a few deductions but not enough for me to give it a go.

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Where do you get taxed on revenue and not profit for businesses??

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Might also want to google up on rental property depreciation. Most financed rentals should be turning a tax loss at the end of the year even if you're pocketing decent money each month.

If you're a peon like me making under $100k, the IRS lets you apply $25k of passive real estate losses against that years normal income. Subtract that plus pretax health care and 401k and my AGI usually runs about $10-15k a year. AKA I don't pay jack in income tax and probably never will.

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If you ever go to sell the rental property, you'll have to recapture all of that depreciation unless you do a like-kind exchange.

People forget/don't understand that the depreciation expense is a tax benefit now that becomes a liability when it comes time for sale. Not a big deal if you plan accordingly but it certainly can create some ugly situations if not planned for.

I rented out a house I got in exchange for unpaid legal fees for about 2.5 years. I leveraged the house to buy a commercial lot in a very good area of town that appreciated almost $75k in the first two years.

I used the rent exclusively to repair the dilapidated POS. I grew so very tired of a call every time something broke. I got it released from the mortgage on the commercial lot and I sold it, owner finance, to the tenant for $100 less per month. I stand to make a very nice little profit on it. I also learned a valuable lesson that I will likely never go into the residential rental game again.

I've heard residential is like an alcoholic 1 is too many and 10 ain't enough.

Sooner Born said:

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If you ever go to sell the rental property, you'll have to recapture all of that depreciation unless you do a like-kind exchange.

People forget/don't understand that the depreciation expense is a tax benefit now that becomes a liability when it comes time for sale. Not a big deal if you plan accordingly but it certainly can create some ugly situations if not planned for.

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The 10-15 year plan is to reduce the number of properties via 1031 in to less profitable but nicer newer houses in the best areas. Less headache and avoid the tax man. It also resets the depreciation clock to 27.5.

Of course, who knows where politics will take the tax code with time.

Quote:

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If the value of the home you invest in drops, significant home repairs arise, or you run into legal trouble with tenants, you can still easily lose on your investment and then some.

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Just be a former contractor who went to law school and you'll be fine!

I've long wondered exactly how the taxation works for rentals. Is there an easily read breakdown of how it works that still provides good detail?

Just google it. Tons of resources out there.