Archive | February, 2014

Transitioning to a Property Management Company + Letter to Tenants

11 Feb

This post is a continuation of my Property Management Company series which details our property management selection process and experience.

Once we decided on a company, there was a healthy list of logistics to sort out before handing over the reins, including:

  • Home Questionnaire – this clarifies property-specific details, including listing specifications, bank account numbers for payments, HOA information, our desired pet policies, trash pickup day, utility providers, included appliances, and neighborhood amenities.
  • W9s – enables the property management company to issue a MISC 1099 to document annual gross income (gross = before expenses).
  • Unit Documentation – copies of the existing lease plus any extensions or amendments, and also the inventory and condition form completed at move-in.
  • Tenant Documentation – copes of the paperwork compiled when vetting the existing tenants: rental applications, background checks, proof of income, and signed rental criteria.
  • Keys – we both have a complete set of keys now. When the locks are changed I request a copy so that I can still access the units for repairs and future make ready work.



Good Morning [Name],

I wanted to let you guys know that we are hiring the services of a property management company to help us with some of the day-to-day demands of the duplex.

[Company Name] will be sending an introduction letter in the next couple of days. They will manage a lot of the behind-the-scenes work – repair requests, rent collection, lease renewals, etc.  We might still handle some of the repairs we can do ourselves, but they will be the point person.

Of course, [Name] and I are only an email away if you feel like there is a concern that needs to be escalated.  🙂


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Home Mortgage Interest Deductions – Duped by the Standard Deduction?

4 Feb

To expand on my cautionary tale about homeowners overestimating the value of the interest tax deduction, there is another wrinkle to consider: 2 out of 3 tax returns claim the standard deduction (per CBS MoneyWatch) – making the mortgage interest deduction irrelevant.

Total deductions need to exceed $6,100-$12,200 annually, depending on filing status, to realize any benefit.

Filing Status 2013 Standard Deduction
Single $6,100
Married Filing Jointly $12,200
Married Filing Separately $6,100
Head of Household $8,950

Assuming no other deductions (important caveat) – and referencing our 30-year $150,000 at 4.5% example loan again – best case one would only benefit from itemizing the first 5 years of the 30-year loan.

Payments Yearly Total Principal Paid Interest Paid
Year 1 $9,120 $2,420 $6,700
Year 2 $9,120 $2,531 $6,589
Year 3 $9,120 $2,647 $6,473
Year 4 $9,120 $2,769 $6,351
Year 5 $9,120 $2,896 $6,224
Year 6 $9,120 $3,029 $6,091
Year 7 $9,120 $3,168 $5,952

Run the same numbers with a $120,000 loan and you’d never pay enough interest to itemize your deductions.

Payments Yearly Total Principal Paid Interest Paid
Year 1 $7,295 $1,935 $5,360
Year 2 $7,295 $2,024 $5,271
Year 3 $7,295 $2,117 $5,178
Year 4 $7,295 $2,215 $5,081
Year 5 $7,295 $2,316 $4,979
Year 6 $7,295 $2,423 $4,872
Year 7 $7,295 $2,534 $4,761

Of course, by that same logic a larger mortgage or higher interest rate would allow the deduction even longer. Simply be aware that this standard deduction scenario exists – and is fairly common.

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