New Member out of Chicago

Lien VuongBusiness Member

Real Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes

6y

Welcome to the BP community! I think apart from 1031 Exchange you should look into Opportunity Zone Funds that help you null the long term capital gains of the sale of the property.

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Kiera Underwood

Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes

6y

@Bryan Darge excited to see what you with all of these 1031 suggestions. As you dive in it would be cool to follow your thought process in the decision! I'm sure there are tons of people that are in similar situations that would benefit!

What markets are you looking into?

OP

Chicago, IL · Member since 2019 · 14 posts · 5 votes

6y

Thanks @Kiera Underwood!!

I certainly have not limited myself to any one state, I do know which ones I’m going to avoid!

OP

Chicago, IL · Member since 2019 · 14 posts · 5 votes

6y

Thanks @Andrew Syrios!!

OP

Chicago, IL · Member since 2019 · 14 posts · 5 votes

6y

Thanks @Lauren Juarez!

Per your suggestion I looked into the 1031 exchange.

Based on my cursory review and limited knowledge I think I’m missing the benefit for my situation, however, I welcome further insight!!

So at a mid year of my taxes with my accountant who strongly recommends off load the rental house (my former residence less than 5 years ago) by the of 2020 or get hit with 15% capital gains tax.

I looked at my overall yearly expenses NOI and I am in the red. The new tax law is no longer bridging that gap of loss if you will.

However with the available equity in the house at the sale I will have sufficient to invest in one or possibly 2 multi family properties.

So as a practice I have been looking at properties that would be very promising and they are getting sold within a week so I think so far I may be selecting good properties!

Oh and one more thing. The contract for my renters is done at the end of February and I’m listing it the house at what is apparently the hottest time to sell which is right after the Super Bowl!

Long winded here I know but just wanted to provide better context around my confusion on the benefits of the 1031. My rental is in a really hot hot market so I’m anticipating a fast sell. By the time it sells I want to hit the ground running with investing in real estate.

I am very excited about starting to invest in multi family properties.

Looking forward to your input and thank you in advance!!!

Kiera Underwood

Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes

6y

@Bryan Darge where's that?

Michael Facchini

Lender · Chicago, IL · Member since 2017 · 438 posts · 193 votes

6y

@Bryan Darge, do you have an idea of whether you're looking at 2-4unit residential, or 5+ unit commercial? Idea of down payment you might be working with, and are you looking to manage, partially manage/oversee, or have it be totally arm-chair?

OP

Chicago, IL · Member since 2019 · 14 posts · 5 votes

6y

@Michael Facchini would love to jump into the deep end with a commercial financed 5+ unit but will probably have to stay in the shallow end for a bit with 4 unit or less. I have great credit (have to for the line of work I am in). I see several 5+ units I would just love to get into but realize it is a totally different investment with the commercial lending and may be a bit more costly with a potential for much downside. The 5+ would be my goal.

I'm hoping to get about $70k from the sale some time in Feb/March 2020. With a full time job I hope to have these managed and be arm chair, which will cut into the cash flow but couldn't imagine trying to do it on my own. The single family I did manage on my own and it worked out well as we developed a good relationship right out of the gate. We had a couple of bumps and bruises along the way but we worked through them and I have learned much from this experience and it really helped to decrease the anxieties about getting into this.

Do you have units yourself or do you focus on the lending?

OP

Chicago, IL · Member since 2019 · 14 posts · 5 votes

6y

@Kiera Underwood I have looked in the Illinois market, however the re taxes here are very high here and they have a tendency to increase quite a bit yearly lately. I haven't ruled out my neighboring states or even south.

Do you stay focused in Oklahoma? How many units do you have?

Michael Facchini

Lender · Chicago, IL · Member since 2017 · 438 posts · 193 votes

6y

@Bryan Darge, very exciting and however I can help you along the way please let me know! To answer your question, I have been a lender for 19 years, but also been investing for 16 years, and in the past few years now doing some rehab and new construction development.

I hear ya on the bumps and bruises! Part of the deal! But this all creates valuable learning that catapults you forward. As for next steps, and I'd be happy to chime in more, but often getting into a 3-4 unit to start off is an easier entry. More straightforward lending options, better rates, and easier to qualify. With commercial, you'll need to show that you have some experience with ownership/management on an apartment building...and a 3-4unit helps you get that.

OP

Chicago, IL · Member since 2019 · 14 posts · 5 votes

6y

Thanks @Michael Facchini ! Be in touch soon!

George SkidisPro Member

Rental Property Investor · Belleville, IL · Member since 2017 · 875 posts · 529 votes

6y

Doing deals with friends and family can cost you more than the deal. One of my students partnered with a long time friend. They had no written agreement on who would do what or what could be spent on materials. They have not spoken in 10 years. The house is still unfinished and my student is still paying the insurance and taxes.

As a real estate investor who both flips and has long term rentals I NEVER rent or do business with friends or family. My other rule with tenants is address them as Mr. Mrs. or Miss and use their last name. When it comes to tenants my rule is always friendly, NEVER friends.

In Chicago check out the Creative Investors Association run by Jane Garvey. They meet in Lombard one Sunday night each month. Next meeting is Sunday.

George SkidisPro Member

Rental Property Investor · Belleville, IL · Member since 2017 · 875 posts · 529 votes

6y

To avoid paying income tax on the sale you must have occupied the property in two of the last five years. Both you and your spouse can take up to a $250,000 deduction for sale of a primary residence. That is a total Capital gain write off of $500,000 against the profit. Your basis in the property is not subject to income tax.

If you can sell the property in the 5 year window do so. Avoid tying it up in a 1031 exchange. Walk away clean and free.

Dmitriy Fomichenko

Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes

6y

@Bryan Darge

Welcome to the BP family! Good to have you here! Here are some recommendations for you:

Find and connect with other BP members that are in your area:
https://www.biggerpockets.com/search/users
Set up keyword alerts to be notified of the topics that interest you: http://www.biggerpockets.com/alerts
Read Beginner’s Guide: http://www.biggerpockets.com/real-estate-investing
Check out BP Podcasts: https://www.biggerpockets.com/podcast

Wishing you the best!

Bernard Laureus

Member since 2019 · 9 posts · 4 votes

6y

Hello and welcome Bryan. Congratulations on the new addition. I live in Chicago as well. What neighborhood do you live in?

OP

Chicago, IL · Member since 2019 · 14 posts · 5 votes

6y

Thanks @George Skidis I spoke with my account she said I would just make that window and have to sell by eod 12/31/2020 so I should be good! Thanks I was looking at that 1031 and it just didn't resonate with me for my current situation and glad you said something regarding that.

Also thank you for your sound advice about the investing with family members. I had seen others on the forum who pooled their money together and started their re investing adventure. Was not sure how it played out. But nonetheless thank you!

Can you PM where and what time Sunday night in Lombard? If I can get Mrs clearance I would like to check that out!

Thanks again!!

OP

Chicago, IL · Member since 2019 · 14 posts · 5 votes

6y

Thank you @Dmitriy Fomichenko !! Really appreciate the links -- they look like great resources -- will look at them soon!

OP

Chicago, IL · Member since 2019 · 14 posts · 5 votes

6y

Hi @Bernard Laureus and thank you!! I am near Pingree Grove (south of 47 & 90), how about you?

Jonathan KlemmBusiness Member

Moderator

Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes

6y

@Bryan Darge - Welcome to BP Chicago! Happy to have you join the community. You'll come to find out its a small tight-knit group that are all looking out for each other.

Where's your single-family and where are you looking into multi-family properties?

I am originally from Elgin so I know the Pingree grove area.

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OP

Chicago, IL · Member since 2019 · 14 posts · 5 votes

6y

Hi @Jonathan Klemm Thank you!! I am finding it is a strong community, I have never seen this type of support before, I really appreciate being apart of this! Oh yeah Elgin, pass through it often for work!

So the single family is in Bartlett, and honestly I have not really restricted myself to any one single area or state really. However, that may all change as I get better educated on off this.

Would be great to have coffee some time!

Jonathan KlemmBusiness Member

Moderator

Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes

6y

@Bryan Darge - Bartlett is a great rental market and I really like that it has the Metro train line there. Happy to get together anytime, PM me and we can set something up.

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Andrew Park

Property Manager · Memphis, TN · Member since 2019 · 28 posts · 15 votes

6y

Hi, @Bryan Darge welcome to BP! I came across this post as a newer member myself. Have you ever considered the Memphis, TN market?

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Bernard Laureus

Member since 2019 · 9 posts · 4 votes

6y

Hey @Bryan Darge, It looks like you are in the south side. I am actually in the north side in Rodgers Park.