New to investing and would love guidance on forming a team

Member since 2020 · 4 posts · 1 vote

Hello, I am new to investing and from No California. We have a property in Olive Branch MS that we purchased 12 yrs ago and after many years of poor renters and property management, we are selling... (our 3rd close on this property in 4 weeks! mainly due to COVID..keeping fingers crossed)... My question is, I would like to take the little proceeds from this property and reinvest in another property elsewhere. I just signed up for pro memberships and excited to get started. I would love tips on how to assemble the right team and learn how to find good areas of growth for investors. Thank you in advance and please stay safe.. looks like we are doing our part of flattening the curve in the San Francisco Bay Area.

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Lawrence LeungBusiness Member

Property Manager · San Francisco, CA · Member since 2018 · 97 posts · 80 votes

@Susan Kim-Laubach,

Before you close, are you working with a qualified 1031 intermediary? If not, I would NOT close because you would disqualify yourself from a tax deferred exchange when taking funds in your own name.

This of course is a moot point if you don’t have any gains or the gains you have are being used to offset capital losses that you are carrying over from prior years or you expect capital losses from stocks or equivalent investments from Covid-19 (although I would also say not to sell when things are low).

Please consult a tax accountant for more details. 😊

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Lawrence LeungBusiness Member
Property Manager · San Francisco, CA · Member since 2018 · 97 posts · 80 votes
6y
@Susan Kim-Laubach,
Before you close, are you working with a qualified 1031 intermediary? If not, I would NOT close because you would disqualify yourself from a tax deferred exchange when taking funds in your own name.
This of course is a moot point if you don’t have any gains or the gains you have are being used to offset capital losses that you are carrying over from prior years or you expect capital losses from stocks or equivalent investments from Covid-19 (although I would also say not to sell when things are low).
Please consult a tax accountant for more details. 😊
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Frank Contreras
Member since 2020 · 4 posts · 0 votes
6y
Hi Susan
I'm new to all of this too but super excited. I just wanted to reach out and let you now that someone is here . I would be happy to share any info i come across during my research. it sounds like you are a little ahead of the curve since you will have some funds from the sale of your current property . I live near Santa Cruz. I'm trying to reach out to established investors in other states . it will probably be easier once i finish enrolling i the pro membership and try to start networking. I'm thinking of starting out of state to build up to the point that i can do some deals in our area. I wish you the best and hope to chat again.
Sincerely
Frank Contreras
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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
6y
@Susan Kim-Laubach, I'd echo what @Lawrence Leung said verifying that you have a qualified intermediary involved right now (since forming a team was the topic here :). They must be in place prior to the closing of your sale. But even if you don''t have any capital gain on that property you've owned it for 12 years. so it has been depreciated almost half way. That by itself will be a large tax bill unless you do the 1031.
Hang in there on your sale. We've got one guy on his 5th contract in a month selling the same property. He's got his fingers crossed !!
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Susan Kim-Laubach
OP
Member since 2020 · 4 posts · 1 vote
6y
Wow, thank you all for your replies! I have not closed yet...how soon do I need to purchase for the 1031 exchange? Where can I learn more about intermediaries?
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Scott Mac
Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes
6y
Hi Susan,
It might help to start with your first team member as your property manger.
An experienced PM should know others in the area, and be able to point you in the right direction for some other team members.
Good Luck!
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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
6y
@Susan Kim-Laubach, from the date of your sale you have 45 days to identify your potential replacement properties (there's some rules to that as well). And you have a total of 180 days to complete the exchange and close on your replacement properties.
But you want to keep a close eye on the IRS. You might just be in the enviable position of completing your sale right when the IRS issues extensions to those 1031 exchange time lines and prices take a dip. No guarantees on this but closing a sale right now could be very advantageous to you.
There are a number of Qualified Intermediaries like us here on BP. You can see real reviews of us all by going to the recommendation section of each profile. I've sent you a personal message as well.
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Dmitriy Fomichenko
Solo 401k Expert · Anaheim Hills, CA · Member since 2012 · 18k+ posts · 6k+ votes
6y
@Susan Kim-Laubach

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

If you wish to tag someone in the conversation on the forum, type @ followed by their name and then select the name of that person which should appear below the comments box. He or she will be notified of being tagged so that the conversation will continue.

Wishing you the best!
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Alyssa Dyer
Rental Property Investor · Oklahoma City, OK · Member since 2017 · 1k+ posts · 694 votes
6y
@Susan Kim-Laubach what strategy are you pursuing with the next property? Appreciation, steady cash flow?
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Alyssa Dyer
Rental Property Investor · Oklahoma City, OK · Member since 2017 · 1k+ posts · 694 votes
6y
@Dave Foster is Susan able to hire an intermediary before close and pursue as if she had it lined up from the start? I've worked with investors that have been in similar situations and I want to best advise them!!
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Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
6y
@Alyssa Dyer, absolutely. The regulations require that the intermediary only be in place prior to the closing of the sale. So even at the last minute @Susan Kim-Laubach would be able to bring the QI into the picture. My personal record was 22 minutes from notification to closing. The title company can be inconvenienced sometimes with last minute things like this but they're used to it. And I don't have that much hair left that isn't gray so it's really no problem.
And you don't want to forget that even if you're not making a bunch of gain that 12 years of depreciation would have to be recaptured. This too would be deferred in a 1031.
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Alyssa Dyer
Rental Property Investor · Oklahoma City, OK · Member since 2017 · 1k+ posts · 694 votes
6y
@Dave Foster thanks for the follow-up!
1 Reply
Chris Levarek
Real Estate Syndicator · Phoenix, AZ · Member since 2018 · 903 posts · 1k+ votes
6y
@Susan Kim-Laubach Hope that close goes well. Some great tips by @Dmitriy Fomichenko for getting some traction in BP towards your goals.
Regarding your goals. What kind of team are you looking to build? Do you mean a realtor, lender, property manager, contractor? Or you are looking to raise capital? Or both?
Depending on what you defined goal is will define the team needed to execute the vision. Here some steps I recommend in a capial raise type acquisition:
1. Define your end goal/criteria
2. Educate with resources aligned to your end goal
3. Select a market meeting your criteria
4. Build the team aligned with your goal - Realtor, Lender, Contractor, Property Manager, Title Agency/Attorney
5. Source Capital - Build network/verbal commitments. Financing with lender.
6. Find Deal
7. Offer/Close
8. Manage and Execute business plan
9. Sale or Hold as time goes on.
10. Repeat
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Susan Kim-Laubach
OP
Member since 2020 · 4 posts · 1 vote
6y
@ Chris Levarek Thanks for the detailed recommendations. As I am learning about RE and different goals, I think my goal with the 1031exchange is a buy and hold for cash flow. My next question is once I identify an area that I want to purchase in, what is the best way to find the members of a new team in the area? I guess BP is a good starting point, then need to interview and research reviews?
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