All Forum Posts by: Aaron Junck

Cool thanks

here goes.. I am a builder... I am in the process of building a 4 plex.. and then after that I will do another .. Plan on having 4 within the next 5 years. All being 75% LTV. If all goes well I am considering in 5 years selling these off and using the proceeds along with some other $ to build an apartment probably around 30 units or so. My question lies in the process of the 1031 exchange.
I know I have to have 1031 qualified intermediary handle it and I have a 180 day to have the process complete, but I am wondering if there is anything I have to do to make this work since in reality I would be the owner from the ground up. It isnt like finding an existing 30 unit complex that someone else owns.

One I just finished and recommend is by Rich Weese and is "From Janitor to Multi-Millionaire" was a great read on how he made it big and gets your to open your mind to being creative in your deals.

Ok thanks

Ok that makes sense. So here is the scenario:
Current Market Value as of the Lease Option was written in as $247,000(this is a number we both agreed on .. based of an appraisal that was a year old and off of tax assessment.)
Option Consideration was $10,000 (roughly 4%)
Purchase price at the end of the lease is $247,000 minus the option consideration of 10,000 equals 237,000 due at closing.
There is no rent credits tenant just will get equity credit in the form of appreciation IF they exercise the right to purchase the property.
So right now since this was my personal residence for over 5 years. I pay federal income tax on the 10K that I collected in Option Consideration. Then if they purchase this property under 2 years all $ at closing is tax free correct? due to the fact that I lived in the house personally 3 out of the past 5 years. I would just have to recapture depreciation for those 2 years.
If they decide they want to extend the lease out further than 2 years then would the profit be prorated or would all the profits be viewed sale of a rental?
Steven Hamilton II my understanding on your post is I pay tax on the 10k at the end and on Bill Gulley my understanding is that I pay tax on the 10K in the year the lease was signed... any clarification?

You may ask why not just sell this property for the 247,000 and get my money tax free now? here are the reasons I went this route:
1)The area where the house is, is a really nice area however not the booming area of town
2) there isn't alot of comps in the area that have been sold in the last year
3)by the time I figure listing it with a realtor for 247,000 and accepting 237,000 (96% of listing) and then pay all the fees roughly 10% =$23,700
4) that brings me down to $213,300 to me thats a lot of money given to others aka $33,700

Thanks Steven Hamilton II

Steven Hamilton II any ideas? :)

Have any of you with a realtor's license been able to use your commission and borrow it back to the buyer to make a deal work? The reason why I ask is that with all the strict mortgage regulations now I was wondering if this is something still done these days or if most lenders don't allow this anymore? Thanks

I am referring to owning this property personally for over the past 5 years.

Lets see if this makes a difference now.. Say you live in this particular property for over the past 5 years and decided to do a lease option on it. If the lease option is exercised within the next few years the profit is not taxable other than any recapture of deprecation right? How would the option money be taxed.. if it is under the 2 years it isnt correct and since it is collected now. Now what if they exercise the right to extend it another year if need be . how does this change everything or doesnt it??