The Basics of Real Estate Part 2

The Basics of Real Estate Part 2

What are tax deductions of owning a rental property?

We not CPAs nor tax attorneys so you should consult with your tax professionals, however below are deductions we used to lower our tax obligation. By the way, we use a CPA to do our taxes, he is worth every penny and the best part is we learn something new every year.

  1. Advertising: “For Rent” signs and/or hiring a real estate agent to advertise online for you.
  2. Auto and Travel: We live far away from our rental properties so this is great deduction for us. If you are driving it is more beneficial to deduct this expense with the mileage option.
  3. Cleaning and Maintenance: These expenses typically occur when you have pest issues and when tenants move out of your property.
  4. Commissions: Paying tenant finder fees to a property manager or real estate agent.
  5. Insurance: Hazard, liability, and if applicable earthquake and flood insurances.
  6. Legal and other professional fees. Eviction proceeding, closing costs, etc…
  7. Management fees: Property management fees. Property managers typical charge 8%-10% of the gross rent.
  8. Mortgage interest: self-explanatory.
  9. Repairs: Clog toilets, leaky pipes, crack windows, etc…
  10. Supplies: lumber, faucets, air filters, etc…
  11. Taxes: Typically property taxes.
  12. Utilities: Typically this expense occurs during renovation and vacancy.
  13. Depreciation: The property can be depreciated over 27.5 years. Why 27.5 years, no normal person would know, it’s just a number studies have shown. The stove, air conditioner, furnace, window blinds, insulation, refrigerator allow to be depreciated over 7 years. The sewer or septic tanks are allowed to be depreciated over 15 years. We plan to replace roof on one of the properties so I am curious how many years you can depreciate a roof, my guess is 15 or 20 years.

Continue reading “The Basics of Real Estate Part 2”

July in Review, Real Estate, Dividend Income, and Side Hustle

July in Review, Real Estate, Dividend Income, and Side Hustle

fireworksAtlanta Trip: Celebrating the 4th

Now that July is coming to an end, one major event that stood out in this month was celebrating the 4th with our family. In the past, the FEN’s family has been traveling to Atlanta to celebrate this holiday with my side of the family, and now has become our annual tradition. Another tradition is to eat as much as humanly as possible while being here. The supermarkets and restaurants are diverse and plentiful, with food deriving from different ethnic groups and nationalities, all one should worry about is the size of their stomach. There are even restaurants that offer fusion cuisines such as Korean tacos, strange, but somehow this combination works. Living in New Orleans, we get tired of deep fried food rather quickly. New Orleans much like other southern cities, would deep fried t-shirts if they are edible. The best part, all this traveling during a major holiday only cost us $22. Yes, round trip flights for two adults, $22. How this was accomplished? Two words, “Travel Hacking”. Parking near the airport cost us $65, so the entire trip cost was only $87, excluding food. God bless the good ol’ U.S. of A!foodie Continue reading “July in Review, Real Estate, Dividend Income, and Side Hustle”

June in Review, DIY, and Dividend Income

June in Review, First Birthday Celebration, DIY, and Dividend Income

DSC_1491Baby FEN turned ONE!

June was a very fun month for us as we celebrated our daughter’s first birthday. Being new parents we are blessed with a very healthy, active, smart baby. I am sure most parents would consider their kids smart too, in our case it’s true though. Being a little biased doesn’t hurt anyone. To help us celebrate our Baby FEN’s first birthday we invited her grandparents, uncles, aunties, and cousins to come New Orleans. A few couldn’t make it due to scheduling conflicts but they sent their best wishes, and gave Baby FEN “lucky” money. Typically, “lucky” money is given during the Lunar New Year and special occasions. Something that baby FEN did that surprised everyone was that she took the lucky money and handed over me the money as to say “here you go, invest it for me” [more like, “uuhh, ooh..baba”], we trained her well.

Rest assure baby FEN’s money is going straight to her 529 Plan.

Continue reading “June in Review, DIY, and Dividend Income”

Real Estate: The Basics – Part 1

By Mr. FrugalEnginerds

Real estate isn’t for everyone!

The information below is boring unless you are interested in Real Estate!

There are a few ways to invest in real estate, residential, commercial, land, etc…Since we have experience with “buy and hold” single-family residential real estate, we will be focusing on that. Buy, clean, repair, upgrade, rent it out, collect money. It’s that easy!

Actually, it’s more work than that. We are not professional just a little Mom-and-Pop dynamic duo. Sorry…just watched Superman vs. Batman.

3d House (XXL)

Buy and Hold: Rules of thumb that we follow Continue reading “Real Estate: The Basics – Part 1”