All Forum Posts by: Aaron Morris

I'm not a CPA so my recommendation is to consult with a CPA strong with real estate before you do anything. The reason is this: if you sell your AZ house before you buy in KC the proceeds from your AZ home should be exempt from cap gains since it's your primary residence. If you buy a principal residence in KC and eventually sell the rental in AZ you'll get hit with long term cap gains taxes. You could use a 1031 exchange but your basis would still be lowered and you'll have to pay recapture taxes. I agree that you should sell and if your goal is cash flow I'd buy closer to home, save the management money, get a 30 year note, and grow from there. Timing is crucial. Sell the AZ home, buy the KC residence, then buy the rental(s). Like I said I'm not a CPA so talk to a CPA. 

http://www.ccim.com/education/course/spcr/

Yes it's a live online course. Let me try to get you a link. 

Yes, read the lease. Also, it may be below market rent looking at a per foot basis, but try to get ahold of the revenues for that location. If current rent is more than about 8% of gross revenue then rents are not really under market. Also, corporate guarantee is a loose term sometimes. I'd have an attorney review the lease to make sure the guarantee passes to the corporate entity 100%. 

There is a great class through CCIM about splitting profits. There's a million ways to do it. It would matter how much work you're doing. If you've never done improvements before be careful with hard money. You can end up over your head very quickly. 

Please, please listen to this advice and use a legitimate professional QI, not some attorney or anyone else. I have seen multiple investors end up paying taxes because the investor tried to get cheap and their cheap QI screwed something up. A good QI can do all kinds of things to defer the taxes: reverse exchange, exchanging in to development deals, etc. Once you decide on a solid QI take their advice. This is the IRS and there isn't wiggle room. Be diligent when identifying properties as well. You really only can ID 3, otherwise there's a new set of rules you have to abide by. 

I agree that Spring west of 45 is a good place to take a hard look. 77388 is undeserved in the rental market. There are new neighborhoods and older ones, but crime doesn't get bad. Close access to 99 and tons of retail coming online. 

I went and met with a representative from a similar company. Nice guy, everything seems legitimate with them, but I couldn't figure out why they'd leave meat on the bone for me. The rep I met with sends me deals all the time, I run the numbers, and the deal is less attractive than buying a retail type property off the MLS where I have time to get normal debt, get inspections, etc. I say this for two reasons: be diligent when running the numbers, and please let me know if this place leaves money in the deal! Welcome to BP.

All of the state taxes in Texas come from property taxes. There ks not state income tax, so overall taxes on investments are typically lower than other states. Non disclosure means that the tax assessor does not have access to MLS and had the burden of assessing taxes in other ways which aren't 100% accurate and they're forced to error on the low side. If you get your tax bill and you feel it's high you can contest the bill or pay a company to do so and usually save a bit. The tax rates will vary locally as well as you get in to different school districts, hospital districts, and other differences.

Just to add to all the other great comments: The way to not get screwed is to build a team: broker, attorney, CPA that can help you navigate the waters. There isn't any amount of research that trumps experience and relationships. Interview three or more brokers who specialize in the asset class you are most interested (looks like multi-family). Interview a couple of attorneys that specialize in real estate. Be careful to take their temperature regarding doing deals. In my experience there are two types of real estate attorneys: those who like to do deals and keep the clients goals in mind and those who are so adverse to risk they'll never advise you to do a deal. Go for the former. Find a CPA that does a lot of work with real estate investors. That shouldn't be too challenging. These people will protect you. The smaller concern is getting screwed. At least here, there are very few who are out to get you. The concern is that without this team you'll never be able to get in to a deal because the listing brokers job is to find a buyer who is ready, willing, and able to purchase the property. New investors usually have one or two, but not all three of these things. You need a broker who can sell your viability as a buyer to a listing broker and get you in to the deal.