After writing off $39,000 a couple of years ago, I sold an investment property that I purchased for $70,000 with only $1,000 down. The seller let me write my own contract, so I tied up the home for three months with out giving him any payments. I then proceeded to rehab the home, and I had it rented out by the 90th day for $925 per month.
My payment was $512 per month, and I had put out $7,000 for the rehab. Six months later, I refinanced the home and took $8,000 out for myself, and the payment went to $524 per month. One year later, I sold the home for $138,000 with $6,000 down payment. I carry a second note for $30,000 at 9% monthly due in three more years.
Since my good write off, I had nothing but my own home to write off. When the tax person told me the figure last year, I was in shock and wanted more. So I found a seller with two homes and got right to the bottom line. We agreed on the first one, and I told him to tell the other buyers to go home.
I wrote out $1,000 dollar earnest money, and told him all cash at closing. I looked at his second duplex and told him I am a “no nonsense” person and to give me the bottom line of what he wanted. I agreed and met with him two hours later to present him the check for $2,500 down, and again all cash at closing. Of course, he was paying the closing costs.
With some bumps in the road, it took two months to close the deals. But once I regained the upper hand, at closing I was presented with a check for $6,500 from him. I have all three units rented out, and one of them pays the negative [cash flow] on the other.
My projected write off this year is going to be above what I wanted, and that check from Uncle Sam will only go to provide me with another home. My write off this year will be $52,000.