I closed on my fourth rental property

I closed on my fourth rental property

Investor · Prescott/Tempe, AZ · Member since 2013 · 73 posts · 57 votes
It’s been almost six years since I bought my first duplex. Next door to that there was another duplex I have been eyeing and lusting after for six years. Three years ago a young couple bought it and I befriended them. Whenever they had questions about taxes or anything else real estate, or even just needed a second set of hands to unload materials out of their truck I helped them in any way I could. I tried to pay it forward if I could help. Earlier this year when I did a 1031 exchange for a live in flip I did, I tried to persuade them to sell their duplex me. They politely declined. Since then they’ve bought a couple houses and become engaged. About nine months later they called and said they wanted to sell after all. I secured financing using an owner occupied fifteen percent down loan. The price was 330k, 20k below what my duplex appraised for earlier this summer and the seller agreed to pay most of my closing costs. I just closed this weekend. As a full time employee who does smaller scale investing on the side I sometimes get discouraged when I see others do a bunch of deals and I average one every year and a half. So I want to share this especially for people like me who are still hustling to scale up. Stay resilient and intentional about your goals and your property search criteria. As long as you keep being intentional, your no could become yeses in less than a year. Also even if you at first get a no, keep being yourself and trying to pay it forward. If you don’t take a no personally and stay likable and helpful, you put yourself in pole position to get the first call when the become a yes. So you may be getting closer to your goals than you realize yet. :)
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Rental Property Investor · Salem, OR · Member since 2017 · 696 posts · 660 votes
7y

@Matthew Perry Awesome work and way to stay persistent!     Relationships are the secret sauce if there is one!

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  • Investor · Prescott/Tempe, AZ · Member since 2013 · 73 posts · 57 votes
    7y

    @Cam Jimmy it was an eightplex. So I was able to live in one of the units with a roommate. So on my taxes I claimed seven eights of it as an investment property. So I took one eight of the cash to buy an owner occupied fha. I put the seven eights I rented out into a 1031 exchange.

  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    7y

    Congrats! Keep that leverage low.

  • Investor · Anchorage, AK · Member since 2016 · 222 posts · 294 votes
    7y
    Originally posted by @Matthew Perry:

    @Cam Jimmy it was an eightplex. So I was able to live in one of the units with a roommate. So on my taxes I claimed seven eights of it as an investment property. So I took one eight of the cash to buy an owner occupied fha. I put the seven eights I rented out into a 1031 exchange.

    Oh wow, that's awesome! I didn't even know you could do that. Was it hard to organize that 1031 exchange? Did your realtor handle it or your CPA?

  • Investor · Prescott/Tempe, AZ · Member since 2013 · 73 posts · 57 votes
    7y

    @Cam Jimmy honestly neither did I until I asked my CPA. Me handled it. Honestly the realtor did not know much about the rules around it. I did some additional research and my CPA was a huge help. I also read a few books on it myself because I was a little paranoid and wanted to make sure I could save the money on taxes. If you want to learn more about 1031s the best book I read on it is: How To Do A Section 1031 Like... https://www.amazon.com/dp/194562700X?ref=yo_pop_ma_swf

  • Lauren SpeidelPro Member
    Qualified Intermediary for 1031 Exchanges · Chicago, IL · Member since 2017 · 164 posts · 119 votes
    7y

     @Matthew Perry Congrats and good job for doing your research!

    @Cam Jimmy With a 1031 Exchange, there are many roles that are vital to the transaction. A Qualified Intermediary really should be an independent third party that has an arm's length transaction with the client. For example, if you are working with an attorney and they're providing legal advice it's best to not use that individual as your QI.

  • Real Estate Broker · East TN Loudon/Lenoir City/Tellico Village · Member since 2014 · 363 posts · 222 votes
    7y
    Great job, always good to hear success stories!
  • Investor · Anchorage, AK · Member since 2016 · 222 posts · 294 votes
    7y

    @Matthew Perry thanks brother!

  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    7y

    @Cam Jimmy. @Matthew Perry, It's no surprise Matthew that your realtor didn't know a lot about the 1031.  Most accountants are actually in the same boat.  I know that in a my entire accounting degree 30 minutes of one class were dedicated to 1031.   

    When doing a 1031 exchange a qualified intermediary is required to be involved prior to the closing of the sale.  The intermediary must be an unrelated 3rd party who's only role is the documentation and processing of the 1031 itself.  So technically your accountant would not be able to actually perform the 1031 for you.  Their role is document the exchange on your tax return.  They are responsible for filing the form 8824 that reports the exchange and transfers the basis from your old property into the new property and sets the new depreciation schedule.

    The 1031 Investor5137 Reviews
  • Investor · Saint Charles, MO · Member since 2016 · 16 posts · 8 votes
    7y

    @Matthew Perry

    Great story. Similar situation here. Own a four family and a duplex. I’ve been in this game for about 4 years. I had the next door 4-plex in my sights sine I bought my quad. I networked to buy it this fall, but the deal fell through. None the less, I’m going back at the market this spring and plan on going bigger. I’m happy to hear your story, because all I see is the people going to like 100 doors in six months??? Can it be done, yes, but it sounds like a house of cards to me. My Midwest, engineers brain can’t handle that level of leverage. Slow and steady wins the race. Keep it up.

  • Investor · Prescott/Tempe, AZ · Member since 2013 · 73 posts · 57 votes
    7y

    @Dave Foster my accountant wasn’t the QI. I used the one he recommended though, and she performed well. :)

  • Investor · Prescott/Tempe, AZ · Member since 2013 · 73 posts · 57 votes
    7y

    @Jeff B. Yeah some of those stories are hard for me to relate to because the start out with a lot of equity in a home or with a high paying job, and I’m starting from a different place and about 25k in student loans. I didn’t want to post on Facebook because I didn’t want to be ostentatious. So it’s cool to have a forum like BP so we can stay motivated and driven. :)

  • Rental Property Investor · SF Bay Area · Member since 2016 · 234 posts · 103 votes
    7y

    @Matthew Perry congrats man and love the attitude bro! Paying it forward, being a good person with integrity and keeping your eyes on the prize! More success in 2019!

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